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Specific Strategies and Mechanisms for Facilitating Access to Innovation
Specific Strategies and Mechanisms for Facilitating Access to Innovation
Summary and Overview
Krattiger A, RT Mahoney, L Nelsen, JA Thomson, AB Bennett, K Satyanarayana, GD Graff, C Fernandez and SP Kowalski. 2007. 2: Specific Strategies and Mechanisms for Facilitating Access to Innovation. In Executive Guide to Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices (Krattiger A, RT Mahoney, L Nelsen et al.). MIHR (Oxford, UK), PIPRA (Davis, USA), Oswaldo Cruz Foundation (Fiocruz, Rio de Janeiro, Brazil), and bioDevelopments-International Institute (Ithaca, USA). Available online at www.ipHandbook.org.
© 2007. A Krattiger et al. Sharing the Art of IP Management: Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged.
Innovation is a wonderful thing. Innovation occurs when any new knowledge is introduced into and utilized in an economic and/or social setting. People and institutions (agents) orchestrate this process. Simple economic theory states that such agents act in a rational way, responding to price signals as a way of maximizing investments. But modern innovation research indicates that this is not so, particularly when noncommercial or humanitarian goals are being pursued. Agents, both public (governments, universities, extension services) and private (small, medium, and large companies, as well as farmers, individual consumers, and communities) are essentially strategists who respond to other agents’ behaviors. For example, a governmental “behavior” in this context would be changing a range of policies, such as research, regulatory, trade, and IP (intellectual property) policies. Each of these agents directly or indirectly engages in the production, processing, marketing, or distribution of products and services. Simultaneously, agents engage in the processes of knowledge creation or dissemination and the application of knowledge through both market and nonmarket relationships.
Using this definition of innovation, public research institutions and universities may be invention creators. They are not necessarily innovators per se but are important actors in the innovation process. Their roles are strengthened if they are well connected. That is, they are stronger if they function in partnerships that extend beyond their primary missions and include others who can turn inventions and knowledge into products and services that become economically successful or that have major social and humanitarian impacts. This impact can be measured through three key conditions that jointly determine whether an innovation is adopted. These are:
- availability
- affordability
-
acceptability1
In addressing the needs of developing countries, achieving these three conditions concurrently can conveniently constitute global access. But translating the three into an effective innovation management plan or operational strategy is more challenging. To manage these goals, a strategy that consists of six thrusts should be considered:2
- Development of R&D capability by the public and private sectors
- Development of a safe and effective regulatory system that covers drugs, vaccines, and agricultural inputs and outputs
- Development of manufacturing capability for health products, seed production systems, and value-added processing
- Development of an IP system (legal framework, judiciary to enforce it, and institutional management capabilities)
- Development and expansion of national health or agricultural delivery systems, including an attractive, private-sector domestic market for health or agricultural products and services
- Development of international trade systems for health products (including global procurement funds) and agricultural inputs and outputs
Although IP management is but one of six components, it can be viewed as the thread that runs through the innovation process or as the glue that holds partnerships together. Partnerships are based on the mutual interests of two or more parties and agreed upon in contracts. The terms and provisions of a contract can be almost limitless (provided they are both legal and agreed to by the parties) and are discussed elsewhere in great detail.3 The present section focuses on the components that are most specific to global access. And one of the first and foremost sets of licensing terms, at least for universities and other public sector research institutions in the licensing of invention, is the reservation of certain rights. Indeed, Bennett4 urges universities and public sector institutions to ensure that they preserve the right to use licensed technologies for educational, research, and humanitarian goals—including distribution rights in developing countries.
In essence, the terms of a license can subdivide the rights with respect to a technology. Rights can be segmented and apportioned across:
- technological fields, markets, or economic contexts in which the technology is used (such as farm size, farm income, or income derived from a particular crop, in the case of agriculture; or certain drugs to combat neglected diseases in the case of health)
- income levels (for example, per capita gross domestic product)
-
geographic regions (by country, or by lowland or highland agricultural systems) or by customer (public procurement or private hospitals and pharmacies)5
This practice can be used by any technology owner to maximize the application of its inventions. Most importantly, subdividing and field-of-use licensing can allow both commercial and noncommercial uses of the technology to proceed in parallel and, thus, constitutes a central element in a global access strategy. Bennett provides suggestions for creating explicit reservation of rights in a commercial technology license. This will ensure that institutional objectives to support humanitarian applications of technologies that have applications to the needs of the poor are not inadvertently compromised.
The global importance of humanitarian licensing is also discussed in detail by Brewster, Hansen, and Chapman6 with pragmatic answers about the why, who, and how of the process. The authors encourage IP managers, in both private and public sectors, to adopt such strategies, noting in particular that they are not incompatible with commercially driven businesses. The why for humanitarian-use licensing is obvious, with the vast unmet health and agricultural needs of developing countries. The who is increasing as more and more organizations have been using IP management practices to promote the health and food security of poor people (and the chapter offers many recent examples). The how is discussed through a number of case studies7 on humanitarian licensing. The authors conclude, with others, that much can be achieved using best practices, many of which are enumerated at the end of the chapter.
Eiss, Hanna, and Mahoney8 look at the same topic but on the basis of how various product-development partnerships (PDPs) seized upon public and private sector strengths and how they are leveraging existing infrastructure and research in developed and developing countries. Although each of the PDPs reviewed are very different, they nonetheless share some common strategies for maximizing IP management for global health. These include:
- defining a discrete territorial market
- establishing different structural incentives in public sector and private sector markets
- extending field of use to make the product applicable to diseases in developed countries
- using royalties to benefit the party that needs the most incentive
- providing access to the developed technology, should the private sector not follow through on the project
The authors conclude that whereas these issues can be complex, they should be addressed as early as possible in the formation of partnerships. But most importantly, the chapter concludes with the observation—grounded in much experience—that an approach that takes into account the six components of innovation discussed at the beginning of this chapter will have a much better chance of success than those efforts that take a piecemeal approach to product development and distribution. Such a comprehensive effort should not be considered daunting, but rather an opportunity for creativity.
It is widely acknowledged that IP rights are important drivers of innovation, and this applies equally to the private sector and the public sector. This is especially the case for product patents. However, for research tools9 in both medical and agricultural innovation, Clift10 demonstrates that patents related to research tools can have negative implications and, hence, should be balanced carefully with disclosure to place inventions in the public domain. Developing countries need to think about how to implement patent legislation (that is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights, best known by its acronym TRIPS) while meeting their own objectives, particularly those related to genetic discoveries. For example, legislation should be formulated to set forth appropriate research exemptions, and patenting and licensing policies should be aimed at maximizing the availability of innovations in order to aid the development of urgently needed products.
For product patents, the decision to patent or not to patent is much simpler. For many products, even those aimed at developing countries’ needs, patenting provides a mechanism to extend licenses, with specific provisions for licensees to meet these needs according to well-understood and well-defined market conditions. But this only works if best licensing practices are adopted (such as those defined and spelled out throughout the Handbook). A compelling reason for best practices in IP management is well illustrated by Stevens11 who discusses how student activists ensured that Yale University and Bristol-Meyers Squibb quickly adopted humanitarian licensing (also called fair-access licensing).12 The objectives for such humanitarian licensing provisions should be to maximize the possibility that the patented invention will be produced and to structure arrangements for tiered pricing, which will allow the poorest countries access to the drug at the lowest cost.
Best practices adopted by PDPs have also had the following important effects:
- Large companies have been motivated to contribute their drug-discovery skills and resources because they are assured that others are responsible for funding late-stage clinical development.
- Small companies have secured funding to develop technologies with dual-market uses, with the PDPs securing license rights for developing countries at zero or low royalty rates and the small company retaining rights for use in developed countries.
- Academic institutions have had a new channel to advance their neglected-disease discoveries.
- Developing country pharmaceutical companies have found their production and distribution skills in demand.
For products needed in developing countries, it could be argued that the question of patenting should not even arise. Some argue that not to patent would be the best strategy. Others believe that open source licensing may be an effective option for managing intellectual property. Indeed, the chapter by Hope13 discusses the possibilities of open source licensing. Open source does not mean to place something squarely into the public domain nor does the decision to pursue open source licensing follow only from altruism: it can be based on commercial self-interest. Open source licensing has been most successful in the computer software field (Linux being the most prominent example), where anyone, anywhere, and for any purpose is essentially allowed to copy, modify, and distribute the company’s software (either for free or for a nominal fee) and, therefore, anyone is allowed full access to the software’s source code. The only condition is that everyone has to share its improvements with everyone else.
Open source is thus a form of IP licensing, and so it differs significantly from placing technology in the public domain via publication.14 An open source strategy may indeed be a viable approach to encourage the widespread adoption and development of an innovation. Some innovations (such as software) are automatically protected by copyright, so a license clarifies the terms of its use. An open source license gives the innovator the right to set terms of use and exclude users who will not abide by those terms. But most of the incentives for open source licensing are indirect: cost savings, productivity gains, the capital provided by a good reputation, and, most importantly, an expanded user base, which correspondingly expands complementary goods and services. As the market expands, revenues from sales, onetime licenses, dual licensing, and complementary products and services may be enough to offset the opportunity cost of open source licensing. IBM has successfully used this approach. Importantly, open source licensing can place an institution in a network of innovation with enormous collaborative potential. Finally, open source licensing can encourage the development of alternatives to proprietary technologies. The greater the number of nonproprietary tools in a given tool kit, the greater the incentive for everyone in the field to invest in developing substitutes for the remaining proprietary technologies, since it will allow freedom to operate for the whole tool kit.
All of the foregoing relates to software licensing. Despite several attempts to adapt open source approaches to the biological sciences in both health and agriculture, none has been successful. Given the possible benefits associated with open source licensing, pursuing it further is warranted but will require additional work. Hope discusses the various unresolved challenges in the biotechnological field. She distinguishes between “copyleft” and “academic” forms of open source licensing. Using a proposed five-step decision-making process, Hope shows how open source technologies, for example, can be tailored to serve small agricultural and pharmaceutical markets in developing countries. And given the growing reliance on computer technologies in the life sciences—bioinformatics software programs, for example—the possibilities for open source licensing in this field have great potential.
Returning to the PDPs and their goal of moving candidate products through various stages up to clinical development and eventual distribution, many PDPs face a series of highly practical challenges. The central challenges are ensuring high-quality and low-cost production, sustained supply, affordable pricing, and effective delivery of their products. Indeed, the World Health Organization’s Commission on Intellectual Property and Innovation in Health has found that many PDP research-and-development contracts defer issues related to manufacturing and distribution.15 As a result, PDPs now increasingly face both negotiating and operational challenges regarding manufacturing sites, pricing to the public sector, market segmentation, market sizing, ensuring the lowest sustainable cost of production while guaranteeing sustainable supplies, quality control, and post-launch issues, such as pharmacovigilance and product liability.
Elaborating the requirements and approaches for global access early on is critical; otherwise, plans are developed incrementally or even after the product is developed. This leads to delays and creates large inefficiencies for the crucial last steps of distribution in developing countries. In addition, negotiating power may be diminished after development. In such cases, product uptake can be sluggish or stalled due to a variety of downstream considerations. A useful way to approach these situations is to apply milestones in the initial licensing agreements to ensure that key goals are met along the product development pathway. The kinds of milestones will vary based on product profiles and target markets, but in all cases, as Oehler16 states, milestones require the following:
- intensive preparations
- detailed knowledge of the processes related to developing and marketing the product
- realistic forecasting of product potential
- persistence in quantitative forecasting and establishing a master plan for the entire product rollout
- a mission-driven mindset to establish optimum goals for the public sector
When public-private partnerships manage intellectual property, they are trying to balance the private sector’s commercial interests with the public sector’s goal of obtaining access to pharmaceutical products at the lowest possible cost. Although the goals and paradigms of the public and private sectors may appear too far apart, this chapter provides the tools and materials required to build the contractual architecture to span that divide. According to Oehler, a large part of the problem is simply a failure to communicate between the public and private sectors. Discussions between the public sector and industry are cross-cultural, no matter how well public sector players think they understand industry. In such a cross-cultural environment, there is nothing more dangerous and conducive to misunderstandings than to assume the obvious, since what is obvious for one person with a public sector background will not necessarily be the same for the other partner. Obligations and contractual performance cannot be left to vague best efforts and common sense.
The experiences of the Concept Foundation, which are the platform for the chapter by Oehler, demonstrate the successful use of milestones as a tool. The Foundation’s business model initially considers downstream issues such as product delivery, and it utilises contractual milestones to achieve its principal goal of providing developing countries access to new medicines.
Milestones and open source are but one way for institutions to have easier access to inventions from third parties; there are many other mechanisms to assemble intellectual property. Krattiger and Kowalski17 provide a brief overview of different IP assembly options (royalty collection agencies, information clearinghouses, technology clearinghouses, open source innovation clearinghouses, brokers and other kinds of facilitators, IP management services, IP commercialization agents, integrated commercial services, company-to-company arrangements, and other public technology transfer and financing mechanisms). The authors focus on the pros and cons of patent pools, which are receiving more and more attention as possible tools for improving technology transfer to developing countries.
There are many forms of patent pools: essentially they all allow for the interchange (cross-licensing) of rights to essential patents by a number of entities. They also include an agreed-upon framework for out-licensing the pooled intellectual property to third parties. A patent pool offers several benefits, a major one being that it cuts through patent thickets. But patent pools are also risky: the agreement to share technologies may run into problems based on antitrust legislation. Other considerations vis-à-vis patent pools include:
- They allow for the transfer of intellectual property. Know-how and trade secrets may also be required to use the intellectual property.
- They have generally flourished when all companies in a sector are stymied by restrictions on access to intellectual property. This makes them willing to compromise. It is unclear whether or not pharmaceutical companies feel similar inclinations. In agriculture, the interests of companies are not aligned to make patent pools feasible at the moment but this could be different for public sector organizations.
- They have been most successful in the electronics industry, since they facilitate industry-wide standards that create larger markets. Again, this may not apply to drug or agricultural biotechnology companies.
- They are typically expensive to create and maintain.
Despite these reservations, the benefits of patent pools are strong. They create an efficient “one-stop shop” for intellectual property, eliminate stacking licenses, avert litigation, decrease research and administrative costs, and can greatly improve the speed and efficiency of technological development. It is worth remembering, however, that patent pools are not the only ways to achieve these benefits. To help policymakers determine the appropriateness of patent pools for their unique situations, Krattiger and Kowalski provide a ten-step checklist for deciding whether or not to set up a patent pool and a ten-step procedure for setting one up. The authors point out legal pitfalls associated with patent pools and general suggestions are offered for identifying and avoiding them.
In sum, the reservation of rights, open source licensing, milestones, and different forms of IP assembly are all part of the toolbox of best practices that facilitate access to innovation. But to determine which specific rights should be retained, which elements should be licensed on an open-source basis, which milestones lead to the best results, and which assembly option works best, will always be difficult to determine because the answers depend heavily on the context. The context will include the actors involved in the innovative process, their relationships, and their connectivity within a global innovation network. Irrespective of which options are selected for greater global access, all strategies will require highly intensive preparations, detailed knowledge of processes related to the development and marketing of the product, detailed knowledge of markets, realistic anticipation and forecasting of product potential, and persistence in quantitative forecasting, as well as a master plan for the entire product rollout. The tools described in this section can be powerful for achieving public sector goals, and they are certainly worth the effort.
Endnotes
1 In the context of modern technologies, specifically food biotechnology, acceptability is particularly relevant.
2 The choice of the six strategic components stems from work in innovation theory and management and has been adapted for health by RT Mahoney (see Chapter 1.2 titled Building Product Innovation Capability in Health, p. 13).
3 See part 11 on Technology and Product Licensing, and part 12.
4 Chapter 2.1 by AB Bennett titled Reservation of Rights for Humanitarian Uses, p. 41.
5 See Chapter 11.8 by SL Shotwell titled Field-of-Use Licensing, p. 1113.
6 Chapter 2.2 by AL Brewster, SA Hansen and AR Chapman titled Facilitating Humanitarian Access to Pharmaceutical and Agricultural Innovation, p. 47.
7 The special insert in this Executive Guide offers 24 successful case studies.
8 Chapter 2.3 by R Eiss, KE Hanna and RT Mahoney titled Ensuring Global Access through Effective IP Management: Strategies of Product-Development Partnerships, p. 63.
9 These encompass a wide range of resources, including genes and gene fragments, cell lines, monoclonal antibodies, reagents, animal models, growth factors, combinatorial chemistry and DNA libraries, clones and cloning tools (such as the polymerase chain reaction or PCR), methods, laboratory equipment and machines, databases, and computer software.
10 Chapter 2.4 by C Clift titled Patenting and Licensing Research Tools, p. 79.
11 Chapter 2.5 by AJ Stevens titled Valuation and Licensing in Global Health, p. 89.
12 Yale University had granted an exclusive license for an anti-HIV compound to Bristol-Meyers Squibb, which also gave the company the right to file for patent protection in foreign countries. Fatefully, the company filed in South Africa, Mexico, and Egypt, among other countries. South Africa (and the rest of Africa) needed this anti-HIV drug (D4T), but it was far too expensive for all but a very few. Pressure was put on Yale University to make this drug available generically in South Africa. Yale resisted, but student activists brought the issue to the attention of the national press, and Bristol-Myers Squibb quickly acted to make the drug available at no cost to treat AIDS in South Africa.
13 Chapter 2.6 by J Hope titled Open Source Licensing, p. 107.
14 For a detailed discussion on patenting versus the public domain, see chapter 10.1 by S Boettiger and C Chi-Ham titled Defensive Publishing and the Public Domain.
15 WHO. 2006. Public Health Innovation and Intellectual Property Rights. Report of the Commission on Intellectual Property Rights, Innovation and Public Health. WHO: Geneva. www.who.int/intellectualproperty/en/.
16 Chapter 2.7 by J Oehler titled Using Milestones in Healthcare Product Licensing Deals to Ensure Access in Developing Countries, p. 119.
17 Chapter 2.8 by A Krattiger and SP Kowalski titled Facilitating Assembly of and Access to Intellectual Property: Focus on Patent Pools and a Review of Other Mechanisms, p. 131.
 Abstract
Ensuring Global Access through Effective IP Management: Strategies of Product-Development Partnerships
by Robert Eiss, Kathi E. Hanna, Richard T. Mahoney
Abstract:
In the last decade, product development partnerships (PDPs) have become significant components of efforts to develop and disseminate therapies for diseases in the developing world. PDPs seek to fill a gap left by the private sector—a gap that leaves 90% of the world’s disease burden with only 10% of the world’s research money—through innovative, comprehensive partnership strategies that tap into the strengths of both the private and public sectors. This chapter, based on the proceedings of a conference titled Ensuring Global Access through Effective Management of Intellectual Property in 2006, provides an overview of the history and approaches of numerous PDPs. The chapter is anchored by reports from eight different PDPs and aims toward explaining what potential problems to guard against, what does not work, and—above all what does work—when the public sector plugs into the dynamism of the private sector to try to meet the health and agricultural needs of developing countries. Recognizing that there is no single business model, PDPs employ a common toolbox to manage intellectual property for global health outcomes. It includes defining a discrete territorial market; establishing distinct structures for public sector and private sector markets; determining field of use in a strategic manner; establishing royalty rates to optimize incentives; and providing for access to the developed technology in the event that the research/industry partner abandons the project. Other key areas of discussion, where parallels between PDPs exist, include global-access strategies, pricing issues, the importance of market segmentation, production capacity, strategic early-stage licensing, the IP landscape, and systemic challenges. Collectively, PDPs have broadened the creative understanding of practical ways to resolve the public-policy dilemma of balancing private incentives to generate needed R&D investment with the goal of access to those in need.
Abstract
Facilitating Assembly of and Access to Intellectual Property: Focus on Patent Pools and a Review of Other Mechanisms
by Anatole Krattiger, Stanley P. Kowalski
Abstract:
This chapter reviews different forms of IP (intellectual property) “assembly” mechanisms (royalty-collection agencies, information clearinghouses, technology clearinghouses, open-source innovation clearinghouses, honest brokers, and other forms of facilitators, IP management services, IP commercialization agents, the services of merchant banks and venture capital enterprises, and patent pools). Emphasis is placed on patent pools, which are voluntary agreements between two or more patent owners to license one or more of their patents to one another or to third parties. Although there are many forms of patent pools, such arrangements fundamentally consist of the interchange (cross-licensing) of rights to essential patents by a number of entities, as well as an agreed framework for out-licensing the pooled intellectual property to each other and/or to third parties, including an agreed-pricing and royalty-sharing scheme.
There are both benefits and risks associated with patent pools. Benefits include greater ease with respect to resolving patent conflicts, making assembled patents in the pool available to others, and resolving disputes over blocking patents. Risks include antitrust liability. Under certain circumstances, patent pools have application in the area of humanitarian licensing as instruments of assembly of intellectual property.
Abstract
Facilitating Humanitarian Access to Pharmaceutical and Agricultural Innovation
by Amanda L. Brewster, Stephen A. Hansen, Audrey R. Chapman
Abstract:
Because certain patenting and licensing strategies can inhibit the development and dissemination of products for developing countries, intellectual property management strategies need to be developed that can help remove some of these obstacles. It is equally important to apply creative patent management strategies that actively promote access to needed products in developing countries. Care must be taken, however, to ensure that patents on research inputs do not discourage or unreasonably increase the cost for product development that targets needs in small or unprofitable markets. The American Association for the Advancement of Science project on Science and Intellectual Property in the Public Interest convened a working group to explore these issues in 2004. This chapter draws upon the expertise of that group to identify licensing strategies that are effective in promoting humanitarian access to health and agricultural product innovations and expanding their use among poor and disadvantaged groups, particularly in low-income countries. The chapter encourages more public sector IP managers to understand and employ strategies that will achieve these goals and seeks to help private sector licensees to understand the rationale behind and potential benefits of such strategies. Indeed, humanitarian licensing strategies should more and more become the norm by contributing to the development and dissemination of essential medicines and agricultural technologies for developing countries.
Abstract
Open Source Licensing
by Janet Hope
Abstract:
This chapter provides an introduction to open source software licensing. The chapter seeks to demystify the concept of open source so that intellectual property (IP) owners and managers can decide whether an open source approach is worth pursuing. The chapter explains the principles of free and open source software licensing and outlines the decisions that an innovator must make when deciding which strategy to use for developing a new innovation. Also explained are the differences between open source and public domain, and between the uses of the terms copyleft and academic to describe open source licenses, as well as the incentives (financial and otherwise) for open source licensing. Finally, the author identifies important considerations regarding the possibilities for open source licensing in fields other than software development, particularly biomedicine and agricultural biotechnology.
Abstract
Patenting and Licensing Research Tools
by Charles Clift
Abstract:
Research tools encompass a wide range of resources, including genes/gene fragments, cell lines, monoclonal antibodies, reagents, animal models, growth factors, combinatorial chemistry and DNA libraries, clones and cloning tools such as polymerase chain reaction, methods, laboratory equipment and machines, databases and computer software. Access to research tools is integral to advancing progress in biotechnological R&D, in both the biomedical and agricultural sciences. However, a complex web of research tool patents has arisen as a result of the revolution in molecular biology and coincident changes in public policy and patent law. These patents can pose a potential block to accessing research tools. For developing countries, several approaches can be formulated and then implemented in order to overcome potential problems associated with research tools. These include changes in patenting policies, research exemptions in patent law to reduce the risk of infringement in R&D, compulsory licensing to allow access to upstream technologies, and institutional adaptations to facilitate access to needed technologies, such as guidelines intended to promote more appropriate behavior by participants in the system. With carefully formulated, multitiered approaches, research tool patenting and licensing (and its possible impact on innovation in health and agricultural research) may be effectively managed.
Abstract
Reservation of Rights for Humanitarian Uses
by Alan B. Bennett
Abstract:
An explicit reservation of rights in a commercial technology license can ensure that the licensor’s institutional objectives to support humanitarian applications of its technology are not inadvertently blocked or sidetracked by overly broad terms in the commercial license. Many universities routinely use a reservation of rights to guarantee continued use of licensed technologies within the ongoing research or educational programs of the university. Clauses included in license agreements to reserve rights for humanitarian use of technology are still rare, but awareness is increasing of the utility and importance of such clauses, particularly as philanthropic-research sponsors begin to require grantees to ensure that results and discoveries will be made available for humanitarian purposes. The structure of a clause to reserve rights for humanitarian use ideally both expresses the philosophical intent of the licensee and clearly defines the boundaries of humanitarian use, particularly in relation to commercial use.
Abstract
Using Milestones in Healthcare Product Licensing Deals to Ensure Access in Developing Countries
by Joachim Oehler
Abstract:
When public–sector organizations and public–private product development partnerships (PDPs) manage intellectual property (IP), they need to balance the commercial interests of private–sector manufacturers with the public sector’s mission to obtain access to products at the lowest possible cost. An important tool for achieving this balance is the detailed definition of contractual milestones, which should clearly specify the terms for pricing to the public sector, territory and exclusivity, regulatory work, and time to market. Milestones should not, however, be cast in stone. Based on detailed analyses of market conditions, milestones need to remain adjustable throughout the life of the contract. When well defined, milestones can be used to ensure the availability of the most modern healthcare products to the developing world. After all, for the public sector, successful IP management is defined by how many poor people a product will reach, how easily it will be available to them, and who and how many will be able to afford the product. Accordingly, out-licensing intellectual property from public–sector-based organizations to private–sector partners requires the licensor to actively guard public–sector interests.
Abstract
Valuation and Licensing in Global Health
by Ashley J. Stevens
Abstract
The African Agricultural Technology Foundation Approach to IP Management
by Richard Y. Boadi, Mpoko Bokanga
Abstract:
For smallholder farmers in Africa, yields of major staple crops (maize, sorghum, millet, cassava, cowpea, bananas/ plantains) have remained stagnant or even declined in the past 40 years. Numerous biotic and abiotic stresses have contributed to this dire trend. Local research efforts to overcome these stresses have been hampered by declining support for agricultural research, limited access to elite genetic material and other technologies protected by IP rights, and the absence of commercial interest in these crops from private owners of agricultural technologies. The African Agricultural Technology Foundation (AATF) is a new initiative addressing the challenge of reversing the negative trend in agriculture by negotiating access to proprietary technologies and facilitating their delivery to smallholder farmers in Sub-Saharan Africa.
This chapter addresses the IP issues and partnership arrangements associated with the access, development, and deployment of agricultural technologies in Sub-Saharan Africa by AATF. The chapter explores the model developed by AATF, which incorporates the acquisition, development, and deployment of new technologies from private sector partners, to try to address the agricultural needs of resource-poor smallholder farmers in Sub-Saharan Africa.
Abstract
Compulsory Licensing: How to Gain Access to Patented Technology
by Carlos María Correa
Abstract:
Voluntary patent licenses are often difficult for institutions to obtain, particularly those in developing countries. This chapter discusses why, how, and by whom compulsory patent licenses may be obtained and used. The main focus is on patented research tools rather than patented end products.
Abstract
Defensive Publishing and the Public Domain
by Sara Boettiger, Cecilia Chi-Ham
Abstract:
IP (intellectual property) rights can reward innovators and encourage investment in developing new products and services. However, the exclusionary power of IP rights can sometimes have negative effects, making technologies less accessible and, thereby, potentially impeding innovation. To make informed decisions about how to balance access and protection requires an understanding of both the traditional IP rights system (patents, copyrights, trademarks, and trade secrets) and alternative mechanisms for preserving access to technologies. This chapter provides a brief introduction to the public domain and defensive publishing and examines issues concerning the choice behind the choice of whether to publicly disclose or to patent an innovation. Discussing the strategic use of defensive publishing in IP management, the chapter considers both the utility of defensive publishing and its limitations for supporting broad innovation. After an examination of the public domain and how it relates to other open-access concepts, such as open source and the commons, the chapter focuses on the practical considerations involved when using public-domain technologies and defensive publishing to manage intellectual property.
Abstract
Designing Patent Applications for Possible Field-of-Use Licensing
by Arne M. Olson
Abstract:
Patent applications should be organized and drafted with a long-term objective that carefully considers the multiple possibilities, and opportunities, of field-of-use licensing. This is particularly the case in the agricultural, pharmaceutical, biochemical, and chemical disciplines, as inventions can have multiple applications that are sometimes impossible to foresee. Technology managers must, therefore, focus strategically, not only on the basic idea of an invention but broadly, in order to consider the various ways such an invention might be put into more widespread and more profitable use. Therefore, the more details, examples and alternatives that are thought through and then disclosed in the patent application, the greater the opportunity for future divisional or continuation applications, as well as future claims that can be exclusively (field-of-use) licensed. By making all of the institution’s licenses, in effect, field-of-use licenses, the technology manager retains the ability to take a possible future use and license it to someone else, maximizing the benefits of the inventions and generating higher royalties for the institution.
Abstract
Ensuring Developing-Country Access to New Inventions: The Role of Patents and the Power of Public Sector Research Institutions
by Lita Nelsen, Anatole Krattiger
Abstract:
If universities adopt sound licensing practices, the universities will not only help stimulate investment in research on diseases that primarily afflict the poor in developing countries, but also ensure that the products of the research are affordable and widely available in those countries. Ensuring global access is one of the central goals of intellectual property management. But universities confront two main obstacles in their efforts to achieve the goal. First, university administrators, technology transfer officers, and business people are too often unaware of both the need to ensure access to new health technologies in developing countries and the manner in which patenting and licensing practices can be an integral component of global access strategies. Second, there is only a short history of experience in incorporating such concerns in negotiating licenses, so no best practices have yet evolved. This chapter offers a few possible approaches to ensuring broad access to university inventions while preserving incentives to development, including patenting inventions in a select list of developing countries. The chapter concludes by urging all of the players in this field to build upon their own experience and to take creative risks in the pursuit of new solutions.
Abstract
Field-of-Use Licensing
by Sandra L. Shotwell
Abstract:
Field-of-use licensing provides the licensor with greater control over the use of its intellectual property, while maximizing the use and value of the technology. In order to maximize the use of a given technology, managers will have some additional work to do as they identify, negotiate with, and manage more than one licensee. Special issues related to multiple licensees in distinct or overlapping fields will have to be handled with forethought and a balancing of interests. When is field-of-use licensing worth the extra effort? When more than one company is needed to fully develop a technology’s potential, when different licensees are needed to address different markets, or when field-of-use licensing has the potential to significantly increase the financial return from a technology. In all of these situations, field-of-use licensing can produce better results for everyone involved.
Abstract
Freedom to Operate, Public Sector Research, and Product-Development Partnerships: Strategies and Risk-Management Options
by Anatole Krattiger
Abstract:
Freedom to operate (FTO) is—first and foremost—a strategic management tool. It is the synthesis of scientific, legal, and business expertise coupled with strategic planning. Strictly speaking, however, FTO is a legal concept. It is a legal opinion by patent counsel on whether the making, using, selling, or importing of a specified product, in a given geographic market, at a given time, is free from the potential infringement of third-party intellectual property (IP) or tangible property rights. As such, it is one type of input among many that managers use to make strategic risk-management decisions in relation to R&D and product launch. For academic and public research institutions, bringing products to market is often not a main goal. However, as a portion of their research moves downstream into product development, FTO becomes—or should become—an integral component of their endeavors. This is particularly relevant for product-development partnerships (PDPs) in health and for various public–private partnerships (PPPs) in agriculture, as well as for the Consultative Group on International Agricultural Research (CGIAR) and national agricultural research systems (NARS), all of which are concerned about global access.
Research exemptions exist in many jurisdictions, so most university research does not generally need to be concerned with FTO unless product development takes place. But PDPs, such as the Malaria Vaccine Initiative or the TB Alliance, are in a different category since their purpose is directly related to the distribution of products in the developing world. This chapter discusses three main categories of options that are available to reduce risk and obtain a manageable level of FTO. In practice, a combination of two or more options will often be pursued concurrently. These are:
- Legal/IP management strategies: license-in, cross-license, oppose third-party patents, seek nonassert covenant, seek compulsory license
- R&D strategies: modify product, or invent around
- Business strategies: merge and/or acquire, wait and see, abandon project
Each option presents its own risks and opportunities. Any action—including the decision not to take action—carries risk. Delaying the licensing of third-party intellectual property, for example, could lead eventually to expensive licensing terms, the inability to obtain a license, or the possibility of being sued for patent infringement. But for some organizations, such as those developing genetically modified crops, the reverse may be the case. For the public sector, the challenge will be to balance the various types of risks that each option presents.
The chapter concludes by urging the public sector to judiciously evaluate whether and when FTO concerns should be considered, and to build in-house capacity to conduct patent searches and cursory FTO analysis (as opposed to legal opinions). This will lead to benefits like better competitive intelligence and culture change in public sector organizations engaged in product development. An FTO strategy, therefore, is a plan that begins with research and evolves into an attitude throughout a product’s R&D and commercialization/distribution cycle.
Abstract
From Science to Market: Transferring Standards Certification Know-How from ICIPE to Africert Ltd.
by Peter Munyi, Ruth Nyagah
Abstract:
This brief case study describes how the International Centre of Insect Physiology and Ecology (ICIPE) helped African growers maintain access to foreign markets and improve livelihoods by being able to achieve standards certification for agricultural export commodities. The process involved a characterization of the problem and a conceptualization and execution of a solution. The solution included creating a regional certification body in East Africa capable of providing globally recognized certification at costs that were locally affordable. The level of technical know-how needed by the certification body in order to be effective was significant, so the expertise of ICIPE was instrumental in creating the local certification body. Ongoing certification services provided by the certification body are highly market oriented, and because of this orientation the group was spun off as a private company, as Africert Limited.
Abstract
How Public–Private Partnerships Handle Intellectual Property: The PATH Experience
by Steve Brooke, Claudia M. Harner-Jay, Heidi Lasher, Erica Jacoby
Abstract:
PATH is an international, nonprofit organization that creates sustainable, culturally relevant solutions, enabling communities worldwide to break longstanding cycles of poor health. By collaborating with diverse public and private sector partners, PATH helps provide appropriate health technologies and vital strategies that change the way people think and act. PATH’s work improves global health and well-being. Over the past 28 years, PATH has demonstrated that public–private partnerships (PPPs) can effectively address unmet public health needs, particularly when managed with a clear understanding of both public and private sector objectives. Indeed, collaboration between public sector and private sector partners is an especially valuable way to develop and advance appropriate health technologies for use in developing countries. When developing and managing PPPs, PATH recognizes that intellectual property (IP) is an especially important component in the range of variables that affect the economic, technical, and programmatic feasibility of a new health technology intervention. Our goal, therefore, is to incorporate IP considerations as a fundamental part of the PPP process. We seek to manage IP strategically to avoid or quickly overcome any IP-related roadblocks. Using three case studies, this chapter illustrates PATH’s strategies for private sector collaboration, as well as PATH’s approaches to managing IP.
Abstract
IP Strategy
by Robert Pitkethly
Abstract
Negotiating an Agreement: Skills, Tactics, and Best Practices
by Richard T. Mahoney
Abstract:
License negotiations involve substantial real or potential value. They therefore should be supported by a team of experts. The essential skills and expertise needed for conducting successful negotiations include: business strategy and development for leading the negotiations, marketing for estimating commercial potential, law for evaluating IP and patents and carrying out a variety of related tasks, science and medicine for evaluating new and potential health products, manufacturing and production know-how to determine equipment and additional training needs, and finance for analyzing input from other experts on the team to combine into a comprehensive report. The strength of such a team is in its interdisciplinary composition; each of the skill areas can complement the other. From the perspective of international licensing, licensors can seek to improve the availability of health products in developing countries, possibly moving from the “traditional” approach to licensing toward one that incorporates public sector needs. The best approach for a public sector organization negotiating an agreement with a private sector entity is usually to offer initial terms that the organization would be willing to agree to if it were on the other side of the table. Negotiating a fair licensing agreement should not be seen as a process of “bargaining.” Rather, a licensing agreement is establishing, in written form, the rules of operation for an ongoing relationship where mutual trust and confidence will be necessary for success.
Abstract
Pragmatic and Principled: DNDi’s Approach to IP Management
by Jaya Banerji, Bernard Pecoul
Abstract:
The mission of the Drugs for Neglected Diseases initiative (DNDi) is to develop safe, effective, and affordable new drugs for patients suffering from neglected diseases and to ensure equitable access to these drugs. DNDi believes that intellectual property (IP) rights should not pose a barrier to access to these medicines. Hence, a balanced approach to IP management is critical for effective implementation of DNDi’s mission. The organization has written an IP policy that both encapsulates and articulates DNDi’s approach to IP based on core principles and beliefs. The policy reflects the DNDi philosophy, vision, and mission, ensuring that its products are accessible and affordable to patients who need them most. DNDi recognizes the reality of IP and seeks to implement its humanitarian mission using best, pragmatic practices for IP management. Indeed, DNDi has already demonstrated that this is feasible, having successfully negotiated with both private and public sector institutions in order to actualize its principled mission.
Abstract
Pricing the Intellectual Property of Early-Stage Technologies: A Primer of Basic Valuation Tools and Considerations
by Richard Razgaitis
Abstract:
This chapter introduces technology managers to certain key issues and to six methods of valuation and pricing. The value of a technology to a buyer (licensee) depends upon how it is to be commercially employed, taking into account the cost of development, the time the technology takes to generate returns, the extent of such financial returns, and the risk involved in the process. At the time of a licensing/sale transaction of an early-stage technology many, perhaps all, of such factors need to be assessed and quantified by making judgments about how the future will unfold with respect to the technology being developed. This assessment and forecast assessment are the essence of all pro forma business models. Valuing license rights for early-stage technologies is in this sense no different than making other future business forecasts, though the details may differ because the forecast time horizon may be longer, the uncertainties may be greater as to the market size and profitability, the operating performance of the technology as it will be used in commercial operation may be less well defined, and other factors. The price paid for a technology transferred between parties is the amount of money (present and future) and/or the financial value of noncash assets given in exchange for the transfer of the technology, which can only occur if both the seller (licensor) and buyer (licensee) have by some process reached a common, present understanding of value that makes agreement possible.
Abstract
The Use of Nonassertion Covenants: A Tool to Facilitate Humanitarian Licensing, Manage Liability, and Foster Global Access
by Anatole Krattiger
Abstract:
Nonassertion covenants (nonasserts for short) grant permission to third parties to practice a patent they would otherwise infringe. Legally, nonasserts are patent-infringement settlement agreements that are designed and drafted with the purpose of preemptively resolving future infringement disputes. Nonasserts can take three forms: (1) an agreement between two parties, (2) an agreement among several parties, or (3) a public statement. A non-assert can specify the release of only certain patent rights or fields of use, or it can be broad and specify release for entire patent families, including future inventions in a certain area. Public statements effectively place rights to patents, or elements thereof, into the public domain. Nonasserts nevertheless need to specify, precisely, which rights are granted in order to avoid ambiguity that could lead to equitable estoppel.
Nonasserts can have wide-ranging implications in terms of enhancing public sector R&D. One application could be with patent rights covering research tools that are critical for accelerating the development of essential biotechnological applications. Specifically targeted non-asserts can also be effective instruments for industry to permit the use of patented inventions anywhere in the world, provided such use is for the express purposes of addressing specific humanitarian needs in developing countries. This could have broad-ranging and significant positive impact, as this approach reduces transaction costs, encourages innovation to help the poor, and accomplishes this without any loss of commercial opportunities.
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