The Policy and Legal Environment for Innovation

Abstract:

Abstract: Public sector institutions help deliver public health goods. By extension, universities that receive public research funds must deliver a benefit to the public that goes beyond licensing a discovery to the private sector for development. In the United States, 25 years of experience with the Bayh-Dole Act, which governs the use of intellectual property (IP) derived from public research, offers both lessons and warnings for developing countries currently establishing their own IP systems. Bayh-Dole successfully created a large body of IP from publicly funded research. Absent a strong profit motive for the private sector, however, the Act has been much less successful at producing public goods for health. Current practice undervalues the “public benefit” aspect of the mandate, especially for the poor. Possible ways to address this mandate would be for public sector entities (and their academic partners in the biomedical sciences) to invest some of their earnings from licensing publicly funded discoveries into programs for neglected diseases of the poor. IP rights from public funded research could also be leveraged in negotiating licensing agreements with the private sector to address these neglected diseases. IP laws and institutions should be designed to encourage such sharing. The public and academic research sectors should also seek a new compact with the private sector aimed at reducing the burden of disease affecting the poor.

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Abstract: This chapter examines the outcomes of technology transfer policies adopted in the past 20 years by five middle-income countries: Brazil, India, Ireland, Israel, and Jordan. The outcomes in those countries suggest that nations whose governments enable the assimilation of new technologies grow faster, create more jobs, and reduce poverty levels. The outcomes suggest also that a mixture of government and market strengths are needed to efficiently use technology transfer. Without this balance, technology transfer will have limited effects.

Abstract: At universities in both developed and developing countries, increasing emphasis has been placed on promoting technology transfer. Unfortunately, technology transfer is sometimes undertaken for the wrong reasons, especially in the mistaken belief that technology transfer will lead to substantial additional income for the institution. While it is important to protect intellectual property arising from research and to actively promote the transfer of research results, generating income should not be the primary objective in the transfer of technology. This is particularly important for health science, where there is a risk that research results, if not properly protected, will be inaccessible to private or public entities seeking to use the research for public benefit.

International technology transfer benchmark data can be used to understand the implications of promoting technology transfer and the likely outcomes of a technology transfer initiative. The benchmarks indicate that average income to an institution, after eight to ten years of activity, is likely to be a modest 1%–2% of annual research expenditure. The income is, moreover, highly uncertain and variable. Institutional and public sector managers must understand the nature of this income and the dynamics of the technology transfer process in order to manage this emerging discipline effectively, because unrealistic expectations can lead to dysfunctional policy decisions. The data and dynamic model presented in this paper are intended to promote better decisions.

Abstract: This chapter reviews the options for effective public sector management of intellectual property (IP) in the life sciences, focusing on the need for a judicious, pragmatic choice of options along two axes: (1) deployment of exclusive rights over technology and (2) use of market mechanisms to bring a new technology to the public. The essence of public sector IP management is finding the right settings along these two axes that will deliver tangible outcomes in line with defined public-interest objectives. Experience shows that ex ante assumptions about how to gain optimal leverage from exclusive rights, and the appropriate degree of reliance on market mechanisms, are unlikely to serve a public sector IP manager well. In clarifying objectives and the practical means of achieving them, pragmatic coordination between the practical and policy levels is essential. Public sector IP managers are more likely to be assessed against public interest expectations than their private sector colleagues. In IP management in the life sciences, policy and practice are ultimately two sides of the same coin; practitioners cannot hope, expect, or plan to operate outside the broader policy perspective. Policy-makers therefore need to consider the actual practice of IP management when assessing a policy framework for innovation in the life sciences. IP managers should be open to using legal mechanisms flexibly for inclusion, or exclusion, as required to achieve their goals. Finally, managers should seek mechanisms to pragmatically structure and promote partnerships with those who have the resources necessary to bring life-sciences innovation to the public. Such partnerships may be centered in the public, philanthropic, or private sectors, but more likely fall into a hybrid mix of these categories.

Abstract: This chapter provides an overview of the current and potential impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on low- and middle-income countries. The chapter also summarizes the findings of a meeting in New Delhi, India and explores the legitimacy of concerns about TRIPS. Access to health products relies on many factors, including the successful innovation of new technologies. Innovation, in turn, is a complex process, involving many factors (intellectual property [IP] is just one) that influences product availability and price.

Pointing to the growth of global and national public–private product-development partnerships (PDPs), the chapter highlights one way these countries are seizing opportunities—and reveals how important effective IP management has become for them. Focused on high-priority diseases such as AIDS, malaria, and TB, PDPs require the development and implementation of sophisticated IP management policies and practices in both developed and developing countries in which PDPs operate. Finally, the chapter discusses the possible role of compulsory licensing and parallel trade. The value of these flexible options, provided by TRIPS, is yet undocumented and successfully implementing them represents a significant challenge. Crucially, countries have considerable freedom to control the effects of TRIPS on the availability of new health technologies. The countries can do this most effectively by building capacity for IP management and by formulating policies and practices, for courts, patent offices, and other institutions, that favor the poor.

Abstract: This chapter sets out the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as related to intellectual property in health and agriculture and the policy work done in the World Trade Organization (WTO). The first part focuses on matters related to public health, including the protection of patents and undisclosed information. An overview is given of the three key instruments addressing the flexibilities available to Members of the WTO: the Doha Declaration on the TRIPS Agreement and Public Health, the Decision on the Implementation of Paragraph 6 of this Declaration, and the Protocol amending the TRIPS Agreement. The second part looks into TRIPS provisions relevant to agriculture and sets out the issues reviewed in the Council for TRIPS with respect to optional exclusions to patentability and the protection to be given to plant varieties. The second part also addresses work related to the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD), including the suggested introduction of a disclosure requirement into the patent system, as well as the protection of traditional knowledge. In addition, two issues relating to geographical indications are taken up, namely, the ongoing negotiations on the establishment of a multilateral register of geographical indications for wines and spirits, and the extension of the higher level of protection currently available for wines and spirits to other products. To complete the picture, the third part discusses WTO programs aimed at enhancing capacities in the developing world with respect to the TRIPS Agreement.

Abstract: This chapter provides an overview of some of the legislative bills that have profoundly affected the evolution of technology transfer and intellectual property (IP) rights in the United States. The chapter references provisions of the specific bills as codified in U.S. law and explains their goals and historical circumstances. While not an exhaustive presentation of all of the bills that have contributed to laws governing IP, the codification references will provide a useful starting point for those researching the applicability of the laws to particular situations.

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: The promise of biotechnology relies on new science that is increasingly complex and specialized and depends on sophisticated, global intellectual property rights systems. This complexity requires a more open system of knowledge sharing than previous research and development programs. Studies suggest that successful innovation requires developing clusters of institutions, businesses, and personnel. “Location, location, location,” the battle cry for property realtors everywhere, is increasingly becoming the key phrase in studies of innovation dynamics and knowledge-based growth. Offering an overview of recent research on clusters in Canada, this chapter suggests that governments have an important role to play in the process of cluster formation and that ensuring a mix of “local buzz” and “global reach” is part of the recipe for success.

Abstract: There seem to be new biotechnology initiatives springing up in almost every country and every region, no matter how big or small. This is the case for both developed countries and many developing countries. At the same time, many studies seem to suggest that the industrial dynamics of the biotechnology sector strongly favor only a few globally important locations. These are characterized by well-established relations between small R&D companies and the presence of venture capitalists, big multinational corporations, and service providers. The tendency of biotechnology clusters to form in certain locations raises some questions. Can all these new initiatives be successful? Can biotechnology research clusters develop and prosper on a smaller scale? The aim of this chapter is to discuss ideas for building successful biotechnology clusters in less-developed places. Using the example of Turku, Finland, the chapter analyzes how public policy and local activity can “fill the gaps” in the innovation system, thereby facilitating the emergence of a biotechnology industry. Although this case study is from a developed country, many developing countries face similar challenges to those Turku has faced.

Abstract: This chapter describes the structure, policies, and operations of the Technology Licensing Office at the Massachusetts Institute of Technology (M.I.T.). The chapter emphasizes the licensing office’s role in generating spinout companies and considers the importance of the biotechnology cluster within the state of Massachusetts and it’s surrounding regions. Also discussed is M.I.T.’s approach to ensuring that licensing procedures maximize access to medicines and vaccines arising from M.I.T.’s research.

Abstract: Governments at all levels are showing great interest—and some are spending lots of money—in developing research clusters that they hope will benefit their local and national economies. Clusters are complex, however, and this chapter aims to help policy-makers maximize their benefits. The chapter offers a taxonomy of countries and their potential for cluster development and explains a five-stage process for realistic cluster building. Stage one assesses capacities, resources, and opportunities. Stage two involves choosing an anchor strategy. In stage three, organizational and institutional leaders are identified to take the lead in developing the cluster. In stage four, proactive tactics are chosen. Stage five identifies the cluster’s lifecycle and the strategies needed to sustain it. Cluster building is knowledge-based development, which is inherently different from traditional industrial development. For one thing, cluster building requires global links. Companies and skilled employees are less interested in fiscal incentives, public infrastructure, or other government support than in the innovation community and its networks.

Abstract: The rules that govern the collection and use of biological matter have changed dramatically in the last 15 years. Arising out of the Convention on Biological Diversity (CBD), the Access and Benefit-Sharing (ABS) project applies to research carried out for either purely scientific or commercial reasons, for which organisms or parts thereof and/or related traditional knowledge are obtained from countries that are party to the CBD and their local and indigenous communities. Other agreements have added new ABS legislation to govern the acquisition and use of biological material and related information. Everyone—including tourists, nature conservationists, scientists, photographers, and journalists—is subject to these new regulations. But scientists and researchers who seek to access and use proprietary genetic resources, biological matter, and related information (such as traditional knowledge and farming know-how) are especially affected by the ABS project. It is essential for scientists and researchers to understand the fundamental principles of ABS. This includes knowing the relevant rules, regulations, laws, customs, and conditions for benefit sharing in the country where one intends to conduct research and/or collect samples. One must carefully plan ahead for any such activities by contacting key organizations and filing the proper documentation. Lack of planning may lead to unfortunate and undesired outcomes, including fines, imprisonment, deportation, and denied future access. Planning is critical.

Abstract: How do biotech patent systems affect indigenous peoples, particularly in relation to health products? This question raises two distinct issues. First, the question of biopiracy—to what extent do patent systems necessarily exploit traditional indigenous knowledge to produce valuable medicinal products? Second, the question of patenting gene-sequence and gene-product information taken from living organisms, especially human beings—how can we justify patenting naturally occurring substances? And how should we negotiate the myriad ethical issues that arise from doing so? This chapter argues that the core of the biopiracy problem is not the availability of patents based on traditional indigenous information but rather the unfair acquisition of knowledge and the inequitable sharing of profits derived from developing such information into a valuable product. Solving this problem requires ensuring that traditional information is fairly acquired and that fair compensation is paid to the group from which the information derives. In regards to patenting gene-sequence and gene-product information, this chapter concludes that such issues equally affect indigenous and nonindigenous populations and that the best way to address them is by making policy changes.

Abstract: This chapter presents a theoretical framework to explain the role of intellectual property (IP) in innovation and applies the framework to the growth of the pharmaceutical industry. Developing countries progress through stages of capability to reach the status of Innovative Developing Country (IDC). To reach the status of an IDC, countries need to give concerted attention to six components of product innovation: R&D in the public and private sectors, regulatory mechanisms for drugs and vaccines to achieve safety and efficacy, the ability to manufacture to high standards new health technology products, national distribution systems in both the public and private sectors, international distribution systems (including supply of drugs and vaccines through international organizations such as UNICEF, the operation of global funds, and trade among countries), and systems for managing IP.

An analysis of pharmaceutical innovation in Korea’s vaccine industry concludes that its success in developing its impressive capabilities was achieved by paying close attention to all six components of innovation. Yet unknown is the extent to which the Agreement on Trade-Related Aspects of Intellectual Property will stimulate or thwart progress in the other innovation components when IP is quickly moved to an advanced stage.

Abstract: This chapter describes the current status of IP (intellectual property) management in the areas of health and agriculture in India with a focus on post-2005, at which time India became fully complaint with the Agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights). The major policy trends existing in India include (1) public sector expenditure for R&D is on the rise and is currently about US$5.0 billion (one US$ equals about 4 Rs); (2) pharma industry R&D expenditures were on the rise and had reached Rs 15.0 billion, or close to 4.0% of their turnover; (3) several major policy initiatives had been undertaken by the government, including the National Health Policy (2002), National Policy on Indian Systems of Medicine and Homeopathy (2002), and National Biotechnology Policy (2005). Other major initiatives to promote IP generation include the creation of a Central Drug Administration, a new national body for the registration of medical devices, a National Registry for Clinical Trials, and a law similar to the Bayh-Dole Act that provides for the sharing of IP with inventors. The Departments of Science and Technology and Biotechnology, the Council of Scientific & Industrial Research, the Indian Council of Medical Research, the Indian Council of Agricultural Research, and so forth, have initiated large R&D programs in the health sector for the generation of new diagnostics, vaccines, and drugs largely focused on current health problems of India. A few indigenous products are being tested for safety and efficacy before use in the public health system. A new thrust and focus are being given for public–private partnerships involving both national and international partners. In agriculture, besides a substantial allocation of funds for R&D, two new initiatives—the National Agricultural Innovation Project (NAIP) and the Indo-U.S. Agricultural Knowledge Initiative (AKI) were started in 2005. The NAIP is a World Bank-supported project worth approximately Rs 11.7 billion that is expected to strengthen basic and strategic research in agriculture in India. The AKI is expected to address a large number of issues including education, research services, and commercial linkages in agriculture.

Abstract: This chapter presents Brazil’s intellectual property (IP) system and identifies relevant experiences of IP management in the fields of health and agriculture. Brazil takes advantage of the flexibilities offered by relevant international agreements, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and attempts to implement an equitable system. During the 1990s, Brazil revised its industrial property and copyright laws, and other related laws, and enacted new legislation that includes provisions for plant variety protection and for access to biological resources.

Abstract: There is an upward trend in demand for intellectual property protection in agriculture. While international agreements exist to protect agricultural biodiversity, the specific rights, benefits, and responsibilities of parties entering into commercial agreements that involve the use of genetic resources still must be clarified. This chapter provides practical guidance for creating agreements around the use of biodiversity resources, as well as guidance that may provide valuable insights for creating similar agreements on the use of unique agricultural resources.

Abstract: Health and agriculture are at the very core of the European Union’s policies for socio-economic development. One of its most active efforts is the Framework Programmes for Research and Technological Development. With a specific focus on international cooperation, this is the European Union’s main financial instrument to promote and strengthen research and technological cooperation within the European Union (E.U.). Through the E.U. Framework Programmes, actors from different countries and sectors (industry, research centers, small- and medium-sized enterprises, universities, and so on) work together to improve science and create a better standard of living.

Given the massive movement of scientists and experiences exchanged through these Programmes, it seems that the E.U. is on the right track. However, these Programmes can only be used to their fullest potential when participants understand and appropriately handle the intellectual property rules governing them.

Abstract: Business incubators, as economic tools, have become increasingly common in the last decade and a half for stimulating local development. Incubators provide facilities and services (for example, business planning and legal, accounting, and marketing support) to catalyze small-business growth. In fact, incubated companies have a dramatically higher rate of survival than an average spinout does. This chapter explains what steps to take to set up an incubator, including the basic structure and the kinds of services generally offered. Successful incubator programs are discussed, and a helpful bibliography focused on case studies is provided.

Abstract: This chapter discusses how Brazil has dramatically increased technology transfer and innovation through the State University of Campinas, or Unicamp. The leader in patenting and licensing activities in Brazil and Latin America, Unicamp has vaulted to this position in the short span of two and a half years through its technology transfer office, Inova. Providing background information about Brazil’s legal framework and practices, especially as it concerns the ownership of intellectual property and benefit sharing, the chapter discusses government incentives for innovation in light of Inova’s impressive results. Two successful cases of technology transfer are presented as guides to realistic expectations about investments, terms of license, and royalties.

Abstract: Ethical concerns and controversies about patenting are playing an increasingly prominent role in the development and applications of the biosciences. Despite the growing importance of ethical issues, there is currently no consensus or clarity on the ethical principles that should guide patenting of human, animal, and plant genes and cells. The three major areas of contention are: (1) whether some or all patents on genes and cells are unethical per se, based on concerns such as commodification, dignity, and similar concepts; (2) how tissue samples are collected, particularly in reference to the principles of prior informed consent and benefit sharing; and (3) how patents are used to restrict access to medical and agricultural use of biotechnology innovations. Given the lack of any agreed guiding principles for navigating these issues, policy-makers, decision-makers, scientists, and users of biotechnology have no choice but to address these contested ethical concerns using a case-by-case approach.

Abstract: Plant breeders and research managers need to understand how intellectual property (IP) restrictions on germplasm and traits affect freedom to operate for a breeding program. Access to patented germplasm and traits is restricted and can only be used under some form of material transfer agreement or similar contract. Patented materials have to be maintained under strict provisions of the contract. This adds to the cost of breeding, parent seed, and production programs. Moreover, maintaining separate versions and precise records of patented materials increases the number of seed lots that a program must maintain. For example, different versions of inbred lines of maize must be maintained for each patented trait. Otherwise, stacking two or more traits produces lines with each trait and also lines with every combination of those traits.

Abstract: This chapter reports the results of a recent study of the current state of technology transfer in Chile, including recommendations for the development of a new technology transfer system. Currently in Chile, few commercially viable technologies are transferred from research institutions to the private sector. This means that many universities should review their role and implement innovative ways of contributing to society.

Abstract: During its relatively brief history of IP (intellectual property) rights protection, China has achieved early success, thanks to the strengthening of governmental IP rights legislation, the establishment of an IP rights management system, the promotion of public knowledge about IP rights, and increasing opportunities for international exchange and cooperation. IP rights protection in the fields of health and agriculture has increased investment in these sectors, encouraged innovation in health and agricultural science, increased farmers’ incomes, and improved the quality of life for Chinese citizens. Dramatic increases in patent applications in China suggest that widespread implementation and greater enforcement of IP rights are stimulating inventive activity, encouraging technology transfer, and driving greater and greater innovation.

Abstract: An institutional IP (intellectual property) policy forms the very foundation of IP management and, as such, serves as the starting point for a system of institutional best practices. The IP policy should be entirely consistent with the mission of the institution. Whether the role of the institution, as defined by its mission, is primarily disseminator of knowledge through teaching and publication, generator of research, technology transfer engine, or promoter of economic development through education and service and/or through technology transfer, the institutional IP policy should be drafted and enforced in a manner consistent with the mission. Doing so will bring efficiency and clarity to IP management, since all the components of the policy, including IP ownership, patenting, confidentiality, and disclosure can be written into the policy. Moreover, the intellectual property will serve the mission in a way that strengthens the institution’s credibility, reputation, and public image.

Abstract: This chapter presents an operational model used by Fundación Chile to develop commercial biotechnology products. The first section highlights the challenges faced by a developing economy of which the main crops are so-called orphan crops. Fundación Chile’s experience has shown that establishing public–private collaborations and a solid international network are critical to overcoming obstacles and increasing the probability of success. Indeed, accessing various technology components and managing intellectual property and regulatory issues are serious challenges for a small, export-oriented economy like Chile, and Fundación Chile’s response has been to implement a model that includes the participation of companies and local research organizations with specific expertise at different points along the value chain. International agencies complement the activities and contributions of these local organizations. The chapter’s second section gives some specific examples of new products being developed with the new tools of biotechnology.

Abstract: This chapter provides guidance about parallel trade to developing country policy-makers and other stakeholders in intellectual property. What is parallel trade? And how can it be utilized to promote access to medicines and support poor farmers in developing countries? Engaging in parallel trade is an option provided by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organization. Furthermore, the 2001 Doha Declaration on TRIPS and Public Health confirmed that developing countries could use parallel imports to support public health. As a result, developing countries can ensure access to lower-priced patented and/or branded products, such as medicines and basic agricultural inputs, by incorporating legislation to allow for parallel imports. When implementing measures to facilitate parallel trade, developing countries can establish and maintain an effective system by adequately regulating the quality, safety, and health of parallel imports. At the same time, developing countries need to prevent low-priced patented products available in their countries from entering high-priced developed country markets.

Abstract: Technology transfer is a rewarding process for the university, researchers, students, the business community, the public, and the professionals who make it all happen. Technology transfer brings new products, services, and jobs. But it is a complex process, one that requires sustained dedication at every level. This chapter offers advice about some of the most important policy and strategy issues: five are economic issues and five relate to implementation. The chapter concludes with a discussion of technology transfer pitfalls caused by unrealistic expectations. The chapter emphasizes the role of senior management in changing the IP (intellectual property) culture, the need for transparent conflict-of-interest policies, and the importance of sufficient autonomy and infrastructure support for technology transfer officers.

Abstract: Ready access to venture capital investments is vital to the success of start-up companies in the capital intensive high-technology sectors such as biotechnology. But there is a common misconception that an abundance of venture capital will spawn the formation of new companies. In fact, the opposite is true: new companies actually attract venture capital. This chapter provides an overview of the venture capital system, explains its importance, and identifies what qualities of a company make it attractive to venture capital investors. Some of the factors can be influenced by government action, so the chapter offers several ways that governments can encourage venture capital investment.