Key Implications and Best Practices
Summary and Overview
Krattiger A, RT Mahoney, L Nelsen, JA Thomson, AB Bennett, K Satyanarayana, GD Graff, C Fernandez and SP Kowalski. 2007. 5: Institutional Policies and Strategies. 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.
The boundaries of any property must be clear. As a farmer needs to know where his or her field begins and ends, an innovator must know exactly the definition of his or her invention. But it is more difficult by far to delineate where rights to something intangible begin and end. In addition, intangible assets can be difficult to keep track of, to share, and to use. Yet in a research-and-development environment, intangible assets are often the most valuable and important ones. How then, can they be leveraged to reinforce the mission of an institution? How can the specific objectives be achieved more effectively and efficiently through the incorporation of best practices in IP (intellectual property) management? What are these principles and practices? And how does an IP policy relate to an operational IP strategy?
This section offers insights into achieving and maintaining clarity about the ownership of intellectual property in public sector institutions and stresses the value of IP strategies and IP policies. These are important for achieving success and have been increasingly encouraged—or required—by certain donors as a strategy to ensure global access. Global access, especially by the poor, and ownership of intellectual property go hand in hand. Indeed, the most important aspect of IP protection is that it bestows control over intellectual assets. If an organization—especially a public institution—fails to obtain IP rights for its inventions, it risks losing control over them. Failure to maintain rights may result in private entities appropriating elements of the value without major regard to the mission of public institutions, or it could lead to the intellectual assets becoming useless due to lack of further investment and development. This is the most important reason why the public sector should take IP management more seriously than it traditionally has. IP management is a fundamental element in the public sector’s strategy of putting intellectual property to work for the public good.
Appropriately, the first chapter in this section of the Handbook is a comprehensive discussion on IP strategy by Pitkethly.1 His definition of strategy relevant to IP management is:
- the formulation and adoption of courses of action enabling the reaching of long-term goals and objectives of an institution
- the allocation of resources (financial and human) necessary for carrying out these actions
By extension, IP strategy is an integral part of an overall business strategy that uses IP rights to manage technology.
Pitkethly begins by mapping out how IP rights systems fulfill four purposes:
- providing incentives for innovation
- allowing for the packaging of intellectual assets into innovative processes
- encouraging the diffusion of technical information
- enabling the capturing of added value (economic and/or humanitarian) through the control of intellectual assets
Viewed in this way, IP rights systems can be instrumental in enabling the diffusion of technological information. For example, patent specifications provide detailed embodiments of inventions, which are available for all to see. Using the Internet, these records can be accessed for free anywhere in the world. This availability of and access to information greatly facilitates innovation, since others will be able to work to improve or invent around the disclosed patented invention. Patents can also be useful sources of information for scientists, since the patent application may be the first and only publication about a competing innovation.
Organizations should have both external and internal IP strategies. Broadly speaking, this is referred to as litigation, licensing, and learning.
An external IP strategy involves exploiting inventions (by developing them in-house, selling them, or licensing them). Litigation denies IP rights to others; licensing allows rights to others. Learning can be a part of technology out-licensing, since it not only gives others access to these technologies but also provides learning opportunities for the organization. This strategy is especially effective if an institution’s aim is to diffuse technology as widely as possible and ensure global access.
As a result, donors are increasingly requiring grantees to take IP management seriously. Ballantyne and Nelki2 of the Wellcome Trust (the Trust) in the United Kingdom, a major charitable funder of biomedical research, is one such pioneering funding entity. The Trust requires institutions that have produced intellectual property using the Trust grants to determine whether the public will benefit from the protection of that property and whether all participants in the process receive proceeds proportional to the amount of money, equipment, knowledge, or labor they contributed. But above all, the Trust insists that intellectual property arising from its grant awards be adequately exploited; the Trust does not shy away from taking over activities if grantees fail to adequately exploit the intellectual property. The chapter ends with a series of case studies that illustrate the practical aspects of IP strategies.3
Grantees more and more frequently will need to present IP management strategies as part of their proposals. In the case of the Bill and Melinda Gates Foundation, certain grantees are required global access strategies4 that outline how recipients will manage new and existing intellectual property. Certain minimum standards may also be required, such as:
- keeping the research field open by prohibiting any licensee from enforcing intellectual property against universities and research institutions that carry out noncommercial activities
- retaining licensable research rights to any invention developed with donor funding
- obtaining freedom to operate for all background intellectual property owned by collaborating institutions
- ensuring good IP management, which includes exploitation of intellectual property, with the goal of ensuring its use in developing countries
Some granting agencies also require prospective grantees to explicitly state their IP policies. Kowalski5 reviews and discusses several institutions’ policies and concludes that, at a minimum, an IP policy should define IP ownership, outline the patenting policy, describe the manner in which an institution will handle confidential information, set out the principles of its IP licensing and marketing approaches, explain how income arising from intellectual property will be distributed, and delineate the rights and obligations of inventors and the institution, as well as any rights the institution will retain (such as for research and for humanitarian uses).
Any new or revised IP policy (and IP strategy) will have to be “sold” to people both inside and outside an institution. It is important to explain what the policy contains and why the policy is designed the way it is. And perhaps staff at multiple levels should be involved in developing and revising, as needed, the IP policy. This group will be able to have extensive discussions about the role and function of intellectual property in the organization. These discussions will be an effective mechanism for building capacity and staff support of the policy. Some of the most controversial issues can be resolved before they become an obstacle, such as: Who owns what? Who benefits and how?
These sometimes-troublesome questions are discussed by Weidemier,6 who reviews how universities in the United States are handling these aspects. Her chapter examines eight possible cases that illustrate and clarify the somewhat abstract principles of ownership of university inventions and are followed by a series of hypothetical scenarios. Weidemier, among others, concludes that universities should require all employees and visitors to sign invention assignment agreements on their date of arrival. Neither an employee handbook that discusses patent assignment nor a published university patent policy may be enough to ensure that the university is assigned ownership.
With the assignment of ownership rights to an employer comes the duty to disclose that an invention has been made. Indeed, an inventor is responsible for and has much to gain by making timely disclosures of his or her invention to the technology transfer office (TTO), the first step in enabling technology transfer. Di Sante7 points out that successful commercialization is built on a foundation of good relations between inventors and technology transfer professionals. Such relationships should be established long before the transfer services of the technology transfer office are required, since this will enable technology managers to negotiate both faculty and business concerns about licensing agreements whenever the opportunity arises. The role of the inventor in the entire IP protection and IP licensing/transfer process cannot be overstated and should continue throughout the life of the technology.8 For example, years after a patent has been licensed, the inventor may be the best-placed person to alert a TTO that a certain product being sold may infringe the patent.
But dealing with inventors is not always easy.9 Inventors are prone to fall in love with their own creations, and, perhaps unreasonably, anticipate that theirs is the next great thing. It is the technology transfer professional’s responsibility to tactfully ensure that the inventors’ expectations are kept in line with reality.
Establishing good relationships with inventors is an important way to identify the intellectual property being generated in the research institution. But from an institutional point of view, a more comprehensive perspective on intellectual property is often warranted. This applies particularly to times when an organization develops a strategic plan or IP management strategy. In this context, IP audits can be essential and often form the basis for an internal review and a revision of IP strategy. Blakeney10 provides a comprehensive overview of IP audits. Indeed, the importance of IP audits is becoming more and more apparent, in the private sector as well as in the public sector, as public entities increasingly deal with other parties’ intellectual property.
An IP audit seeks to accomplish three broad objectives for an institution. First, it seeks to identify the intellectual property generated by its researchers. This intellectual property is an asset, with value that an institution ought to identify, assess, and manage. Second, an audit seeks to identify and review the management of third-party intellectual property as a way of avoiding liability for misuse. The IP audit is thus a systematic, methodical identification of the intellectual property within the institute.11 As the chapter shows, the audit follows a procedure, from start to finish, so that at the audit’s conclusion senior managers are able to frame and implement good IP management practices. This is the third broad objective of an IP audit: to contribute to the formulation and execution of the IP policy and IP strategy.
From a practical point of view, an IP audit reviews a number of existing practices and establishes the context in which intellectual property is being handled. For example, a research institute’s ownership and control over any intellectual property will depend on its legal status as an entity. An IP auditor will review the incorporation documents to identify what powers the institute has to own and to deal with intellectual property. For universities and government institutions, such a review will also include the prevailing government policies.
The IP auditors will also scrutinize the IP policy of the institute, if indeed there is a policy. It should ask questions, such as: Where is it posted? What does it say? Are new employees required to read it? IP audits may also uncover potential conflicts of interest. Bennett12 offers a primer on issues related to the management of conflict of interest and conflict of commitment. Conflict of interest occurs when the financial interests of an institution’s researchers are incompatible with the institution’s mission, policy, or goals. Conflict of commitment may arise when the time a researcher spends in external activities related to, for example, downstream technology development, interferes with his or her attention to duties to the institution (for example, teaching or extension responsibilities).
While conflicts of interest should not be seen in a negative light, making exceptions to the rules is both dangerous and potentially harmful. Someone with a potential conflict of interest is not guilty of anything; rather, he or she may actually be a more valuable “asset” because of the potential conflict. This applies most strikingly when a professor has an interest in forming a spinout company based on university research. Potentially, larger issues will arise due to undisclosed conflicts of interest. What a university needs is to define a clear chain of command and in rare circumstances to establish oversight committees. Committees tend to slow the process with significant delays in time, which typically makes the process unmanageable and useless.
Most conflicts arise when potential conflicts are not disclosed. Conversely, a major tactic in managing conflict of interest is to disclose potential conflicts. And most conflicts of interest can be managed fairly easily provided the policy is clear and precise. M.I.T., for example, manages an unusually large number of spinouts and, therefore, has a very strict conflict of interest policy (this is discussed by Nelsen13). A technology transfer officer’s role is to creatively craft arrangements within the rules, not to use these rules as deterrents. Put differently, Nelsen describes M.I.T.’s operating motto: “A firm wall between university and industry—but a wall with many doors… In sum, technology transfer inevitably brings conflicts of interest. The challenge is to manage them.”14
1 Chapter 5.1 by R Pitkethly titled IP Strategy, p. 459.
2 Chapter 5.2 by Z Ballantyne and D Nelki titled Management Policy: A Donor’s Perspective, p. 475.
3 The following are reviewed in detail: the development of a typhoid vaccine, malaria drugs, the single nucleotide polymorphisms (SNP) consortium, and the International HapMap Project.
4 For an example of how global access strategies can be incorporated into product development partnerships and vaccine development, see Mahoney RT, A Krattiger, JD Clemens and R Curtiss III. 2007. The Introduction of New Vaccines into Developing Countries IV: Global Access Strategies. Vaccine 25(2007): 4003–4011.
5 Chapter 5.3 by SP Kowalski titled Making the Most of Intellectual Property: Developing an Institutional IP Policy, p. 485.
6 Chapter 5.4 by BJ Weidemier titled Ownership of University Inventions: Practical Considerations, p. 495.
7 Chapter 5.5 by AC Di Sante titled The Role of the Inventor in the Technology Transfer Process, p. 507.
8 An important exception to this is licensing. A TTO officer typically would not have the inventor participate during negotiations with potential licensees, although rare exceptions may apply.
9 See also Section 8 dealing more exhaustively with inventions and inventors.
10 Chapter 5.6 by M Blakeney titled Conducting IP Audits, p. 515.
11 This may include: patentable biological assets, such as germplasm resources, DNA libraries and enabling technologies (marker genes, probes); technological know-how; confidential information; patents, utility models and industrial design rights in equipment; copyrighted information (database rights, computer programs, and databases); publications; CD-ROMs; video materials; online materials; trademarks; and more.
12 Chapter 5.7 by AB Bennett titled Conflict of Interest and Conflict of Commitment Management in Technology Transfer, p. 527.
13 See Box 1 for M.I.T.’s policy (Chapter 3.13 by L Nelsen titled The Activities and Roles of M.I.T. in Forming Clusters and Strengthening Entrepreneurship, p. 309).
14 Chapter 6.1 by L Nelsen titled Ten Things Heads of Institutions Should Know about Setting Up a Technology Transfer Office, p. 537.