The Policy and Legal Environment for Innovation
Topic Guide for Senior Administrators

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: 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: 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: 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.

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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.

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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.

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: 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: 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: 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: 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.