CHAPTER 312}
`
`Lessons from the Commercialization
`
`of the Cohen—Boyer Patents:
`The Stanford University Licensing Program
`MARYANN P. FELDMAN. Illzller Dzstzngms/7edProfé5rar m Hzgker Educatzon.
`Institute ofHzg/ier Fducatzon. Unz1/er.rz'zy 0fGmrgzfl. U.S./I.
`ALESSANDRA CO LAIANNI, Centerfar Genome Ethics, Law, and Policy, Duke University, USA.
`CONNIE KANG LIU, [grep/7 L. Rotmzm Sc/mo] oflllzmagemmz‘, Um'Liem'zj/ 0fTarom‘o, Canada
`
`AB ST RACT
`The Cohen-Boyer licensing program, by any variety
`of metrics, was widely successful. Recombinant DNA
`(rDNA) products provided at new technology platform
`For a range of industries, resulting in over US$55 bil-
`lion in sales for an estimated 2,442 new products. Over
`the duration of the life of the patents (they expired in
`December 199/),
`the technology was licensed to 468
`companies, many of them fledgling biotech companies
`who used the licenses to establish their legitimacy. Over
`the 25 years of the licensing program, Stanford and the
`University of California system accrued US$255 million
`in licensing revenues (to the end of200l ), much ofwhich
`was subsequently invested in research and research infra-
`structure. In many ways, Stanford’s management of the
`Cohen—Boyer patents has become the gold standard for
`university technology licensing. Stanford made pragmatic
`decisions and was flexible, adapting its licensing strategies
`as circmnstances changed.
`
`I.
`
`INTRODUCTION
`
`The licensing of the Cohen—Boyer patents by
`Stanford University represents one of the most
`successful university technology licenses. The
`discovery covers the technique of recombinant
`DNA and allows for the useful manipulation of
`genetic material. Examining Stanfordis licensing
`of the intellectual property is best understood
`in context and as part of the university’s larger
`strategy. Moreover, designing and setting up the
`licensing program involved uncharted territory at
`
`that time. The first patent issued on December
`2, 1980, after 6 years under review at the U.S.
`Patent and Trademark Office: the original appli-
`cation was filed in November 1974. This date was
`
`two weeks before the effective date of the Bayh—
`Dole Act, which assigned intellectual property
`(IP) rights over faculty discoveries from federally
`funded research to universities and emphasized
`the university’s responsibility for commercializa-
`tion.l The intention was to provide a means for
`economic growth, technological change, and en-
`hanced U.S. competitiveness.
`The Cohen and Boyerls discovery provided
`tools for genetic engineering and was the subject of
`controversy that led to a lively public debate dur-
`ing the decade of the 1970s. Sally Smith Hughes
`documents Cohen and Boyer’s scientific discovery,
`Stanford’s decision to pursue patents, and the pub«
`lic controversies surrounding recombinant DNA}
`The debate Was symbolically resolved with the June
`1980 U.S. Supreme Court ruling on Dzlzmoml 1/
`Chzkrabarlj/, a landmark 5-4 decision, which
`111ade the patenting of life forins possible with the
`Court’s oft—quoted clause, “an;/thing under the sun,
`that it made 5] mam.” This decision cleared the way
`for the Cohen—Boyer application, which covered a
`fundamental technique, with the potential to be-
`come a platform technology that essentially led to
`a new paradigm in biotech research.
`
`Feldman l\/\P,A Colaianni and C Liu. 2007. Lessons from the Commercialization ofthe Cohen—Boyer Patents: The Stanford
`University Licensing Program. In Intellectual Property Management in Health and Agricultural /nnovati'on:A Handbook of
`Best Practices (eds A Krattiger, RT I\/lahoney, L Nelsen, et al.) MIHR: Oxford, UK, and PIPRA: Davis, LJ.S.A. Available online at
`WWW.l pl-landboolcorg,
`
`CC) 7oo7,MP Feldman,A Colaianni and C l iii, Sharing thPArtof.'P /I/lfli’7.’1gP:”flPI’iT' Photocopying and distrihiition through the
`Internet for noncommercial purposes is permitted and encouraged.
`
`HANDBOOK OF BEST PRACTICES |'|797
`
`Sanofi/Regeneron Ex. 1043, pg 1067
`
`Mylan Ex. 1043, pg 1067
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`

`
`FELDMAN, COLAIANNI & LIU
`
`Of course, once the patent was granted,
`Stanford University, as the assignee, was required
`to design a licensing program that would be con-
`sistent with the public—service mission of the
`university and provide sufficient
`incentives for
`private industry to invest the requisite resources
`to bring products to market while producing rev-
`enue for the university. Feldman, Colaianni and
`Liui detail the history of Stanford’s licensing pro-
`gram, focusing on the process and the logic that
`guided the commercialization regime. Given the
`early controversy surrounding the Cohen—Boyer
`patent, the eventual success required a great deal
`of creativity, strategy, and persistence. Certainly,
`the professionals involved all contributed to the
`success, from Donald Kennedy, then president of
`Stanford, Robert Rosenzweig, then vice president
`for public affairs, Nils Reimer, founding director
`of the Stanford Office of Technology Licensing
`(OTL) Lo Katherine Ku, then licensing associate
`and current director of the OTL.
`
`The purpose of this chapter is to summa-
`rize lessons learned from Stanford’s design and
`implementation of the Cohen—Boyer
`licensing
`program. Many universities attempt to emulate
`Stanford University’s success at technology trans-
`fer; however, there is a limited appreciation for
`the high degree of creativity and adaptability of
`the Stanford Office of Technology and Licensing
`(OTL) in setting up its licensing prograrn and
`making the myriad decisions that guided the
`ultimate outcome. In spite of many obstacles,
`Stanford University pursued the recombinant
`DNA patents and designed a strategy that met the
`public—service goals of the university by broadly
`lice11sir1g the technology; provided incentives for
`private companies to commercialize derivative
`products; and contributed to the creation of an
`innovation system that benefited Silicon Valley
`and reached across the American economy.
`
`2. A LIST OF LESSONS LEARNED FROM
`COHEN-BOYER
`
`2.1 Keep wider university goals in mind
`Despite the economic success of the licensing
`program, profit Was not
`the primary motive.
`
`1798 | HANDBOOK OF BEST PRACTICES
`
`'
`
`Stanford University had four goals that guided
`the development of the Cohen—Boyer license:
`'
`to be consistent with the public—service ide-
`als of the university
`to provide the appropriate incentives in
`order that genetic engineering technology
`could be commercialized for public benefit
`in an adequate and timely manner
`to manage the technology in order to mini-
`mize the potential for biohazard
`to provide income for educational and re-
`search purposes
`
`'
`
`°
`
`Robert Rosenzweig, vice president for public
`affairs at Stanford, in a 1976 open letter addressed
`to “Those Interested in Reeornhinant DNA,” Wrote
`
`“It 175 a fizet that the finaneing of]>rz'z2zzte an1'verszT-
`tie: is more elzfiicult now than at any time in re-
`cent memory and that the most lihelj/predletionfir‘
`/hefulure is that a hard struggle will he required lU
`main/ain their quality.” As a result of these finan-
`cial concerns, he concluded, “we cannot lightly
`alisezznl the poxxihility ofsignzfieant income that is
`deriuedfionz aetizlity that is legal, ethical, and not
`elestraetiz/e ofthe values ofthe z'nstz'tutz'on.”
`The balance of financial objectives against
`other goals is further demonstrated when Stanford
`decided not to pursue extending the patent life.
`The original 1974 patent application had claimed
`both the process of making recombinant DNA
`and any products that resulted from using that
`method. These applications were subsequently di-
`vided into the process patent and two divisional
`product applications: one claimed recombinant
`DNA products produced in prokaryotic cells
`and the other claimed the products ir1 eukaryotic
`cells. Stanford filed a terminal disclaimer, which
`
`meant that all subsequent applications claiming
`recombinant DNA, regardless of how long the
`patent prosecution process took, would expire
`on December 2,
`l997—the same date as the
`
`original 1980 patent} in effect, Stanford agreed
`to give up royalty rights on the life of the sub-
`sequent patents (issued in 1984 and 1988) that
`would have extended past the original patent’s
`expiration date. This limited Stanford’s collection
`of royalties because of the time delay inherent in
`commercialization, especially of pharmaceutical
`
`Sanofi/Regeneron Ex. 1043, pg 1068
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`Mylan Ex. 1043, pg 1068
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`

`
`CHAPTER 17.22
`
`products. Stanford honored its obligation to the
`licensees with tl1e realization that, as Kathy Ku
`wrote at the time “...it would not be goocipnlaiic
`polity orpublie relations we were to izskfior or even
`get snob an extension. ”
`Stanford did not require other nonprofit re-
`search institutions to take a license in order to use
`
`the technology. Niels Reimers and Kathy Ku re-
`port that the thought oflicensing the technology
`out to other nonprofit research institutions had
`never entered into discussions about the licens-
`
`ing program. This licensing practice established a
`research exemption, or research—use exemption,
`which is consistent with the norms of open sci-
`ence,5 and stands in contrast to recent develop
`ments in research—use exemption policies, such as
`Duke 1/. Mndey and the VVARF stem—cell licens-
`ing program.‘
`To summarize, engaging in commercial ac-
`tivity encourages higher education institutions to
`act like for—profit entities.
`lntellectual property
`has no value unless it is defended. Stanford set up
`a litigation reserve fund that provides a credible
`threat of enforcement of the license. Despite sev-
`eral attempts to withhold payments from a variety
`of large and small companies plus one attorney
`who made challenges to the patents a “hobby,”
`Stanford was able to settle these disputes infor-
`mally and without formal litigation. This stands
`in Contrast to the recent upswing in litigation by
`U.S. universities, including a recent law suit filed
`by the University of Alabama to prevent an artist
`from using the universities athletic colors.
`
`2.2 Consult widely to build consensus
`\While intellectual property typically involves
`limited disclosure, Stanford University engaged
`in a pattern of consulting widely across various
`stakeholders to achieve consensus and to ensure
`
`its actions were supported. For example,
`that
`Rosenzweig worked to achieve consensus with
`both the facility and the National Institutes of
`Health (NIH) as the sponsoring agency. In a 1976
`open letter, he asked the faculty to comment on
`whether the university should proceed with the
`patent process. Rosenzweig also sent a letter to
`Donald Fredrickson, NIH director. asking his
`opinion on patenting the Cohen—Boyer discovery
`
`and enclosed a copy of the memorandum sent to
`faculty. Fredrickson responded by sending a n1ass
`mailing to “a broad range of individuals and insti-
`tutions,” asking them for their comments on the
`patent question. 7 Fredricksonis letter laid out five
`possible alternatives that NIII could take regard-
`ing recombinant DNA patenting and subsequent
`licensing: In response, Fredrickson received ap-
`proximately SO letters.
`A compromise consensus emerged from
`among a list that Frederickson generated that
`Stanford should be able to patent recombinant
`DNA research but with nonexclusive licensing.
`A nonexclusive license ran counter to economic
`
`logic, contrary to the subsequent preferences ar«
`ticulated in the Bayh—Dole, Act and ignored peti-
`tions from Genentech and Cetus who stood to
`
`gain from exclusive licenses. The logic was that
`rDNA was a platform technology and that any
`one company could not exploit all the possible
`applications. Broad nonexclusive licensing not
`only contributed to the economic success of the
`patents but also created a population of compa-
`nies who drove the technology forward.
`There are other instances when Stanford
`
`sought transparency that was consistent with the
`actions ofa university. \While applicants generally
`keep patent applications secret from the date they
`are filed until they are granted and therefore pro«
`tected, Stanford opened the patent prosecution
`file to the public. This was an unusual move that
`was consistent with reducing subsequent ques-
`tions about the technology and was also consis-
`tent with the public mission of the university.
`Stanford engaged in an open process that at-
`ten1pted to build consensus across a wide range
`of stakeholders. W/hile the university did stand to
`profit from the licensing program, their actions
`were consistent with the university’s larger and
`more traditional societal goals.
`
`2.3 Don’t behave opportunistically
`The most successful university technology trans-
`fer involves relationships that develop over time.
`Signing a licensing agreement represents a trans
`action that is a first step in a relationship that re-
`quires maintenance and oversight. Each licensee
`received an annual letter from the Stanford OTL.
`
`HANDBOOK OF BEST PRACTICES | 1799
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`Sanofi/Regeneron Ex. 1043, pg 1069
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`Mylan Ex. 1043, pg 1069
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`

`
`FELDMAN, COLAIANNI & LIU
`
`That went a long way in establishing long—term
`relationships a11d encouraging dialogue.
`When Stanford initiated its licensing pro-
`gram, no precedent existed for specific licensing
`terms of the IP. Keeping with its practice of con«
`sulting widely and building consensus, Stanford
`interviewed a variety of companies representing
`different markets when the license terms, particu-
`larly the royalty rates on end products, were be-
`ing formulated. Through this effort, licenses were
`pre—sold anti unrealistic terms were avoided. To
`make the licensing process easier, the OTI. took
`great pains to categorize the different potential
`recombinant DNA products and to offer appro—
`priate royalty rates. In the end, the OTI. settled
`on four diH:erent product categories: basic genetic
`products, bulk products, end products, and pro-
`cess improvement products. By scaling the rates
`to reflect the visibility of the licensee’s product
`and the expected revenue from each license, the
`UTL encouraged compliance. A graduated royal-
`ty system ensured that smaller companies weren’t
`penalized with low sales volume.
`Stanford made pragmatic decisions about
`pricing its intellectual property and kept the an-
`nual Fees and royalty rates reasonable. While this
`lTaVC l‘CflCCtCd 3 Stl‘atCgy t0 deal With SOITTC
`of the weaknesses with the patent, the university
`could have been greedy and pursued higher rates.
`Nils Reimers recalled at least one alumnus writ
`
`ing, “You?/e got 4 parent; you tun dominate ezIe1y-
`tning here. W/by me you c/Jurging Juan 4 low royally?
`You know Srunfor/,l could use the money. Cluzrge u
`/fig/oer royulzj/.378 This advice was not taken. The
`rates that were chosen were selected after con-
`
`sultation with industry about accepted practices
`and did not exploit the university’s monopoly
`position.
`Furthermore, Stanford created special provi-
`sions for lower licensing fees and royalty rates for
`small firms in l989. At this time, 209 Hedging
`biotech firms, most of them in the San Francisco
`
`Bay Area, signed licensing agreements.
`
`2.4 Beflexible and experiment
`Over the 17 years of the licensing program
`Stanford experimented With five versions of
`the standard license agreements and provided
`
`licensing agreements. A total of
`three special
`468 companies licensed the Cohen—Boyer tech-
`nology. Licensing the patents was very much a
`learning process that balanced the capabilities of
`companies, especially in the embryonic biotech
`industry, with the economic potential of the
`technology. Ku later noted, “Stanford was [ry-
`ing to license an imiention for zuliir/J pro:/urn /ma.’
`never been xolol mm’ w/J1’:/J would apply to many
`zlzileme, estrzblis/aed z'ndu51‘rz'e5,
`in addition to the
`
`newly emerging I/z'oz‘ez.'/analogy z'n5lusz‘ry.”9 Table 1
`summarizes the various licensing regimes and
`the number of companies that signed up under
`each version. Certainly the economic impact
`would have been less without this flexibility and
`adjustments.
`The first version of the license provided two
`incentives to encourage companies to sign up.
`Remember that the technology was already in the
`public domain through publication and that the
`open patent files and companies were already us-
`ing rDNA. It was not clear that companies would
`comply with the terms. The first incentive for
`companies to take a license in l98l was a credit
`tOVV3rCl fUtUrC fO)7HltiCS OVCf
`[TIC first fiVC YCHIS,
`up to a total of US$300,000. The second incen-
`tive came when companies were advised that
`the licensing terms would change and encour-
`aged them to sign up early. In response to this
`news, 82 companies signed up. The largest share
`of earned royalties from product sales accrued to
`these firms.”
`The first licenses terms were a US$l0,000
`
`up—front fee with a minimum annual advance
`(MAA) of US$10,000. Earned royalty rates on
`products were provided on a graduated basis for
`bulk products, end product sales, and process im-
`provements on existing products based on pro-
`duction cost savings. Under the licensing agree-
`ments, Stanford received unprecedented royalties
`on downstream drug sales in a stipulation known
`as reuelr-tlwouglr licensing: Stanford received end-
`product royalties based on a percentage of final
`product sales. The Cohen—Boyer IP rights ex-
`tended to all products developed using the tech«
`nology. If companies did not sign a license agree-
`ment. any end products they developed that used
`rDNA could potentially be contested.
`
`1800 | HANDBOOK OF BEST PRACTICES
`
`Sanofi/Regeneron Ex. 1043, pg 1070
`
`Mylan Ex. 1043, pg 1070
`
`

`
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`HANDBOOK OF BEST PRACTICES | 1801
`
`Mylan Ex. 1043, pg 1071
`
`
`
`
`
`
`

`
`FELDMAN, COLAIANNI & LIU
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`1802 \ HANDBOOK OF BEST PRACTICES
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`Nmow3fiver.xm_co_mcmmmm_Eocmm
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`Mylan Ex. 1043, pg 1072
`
`

`
`CHAPTER 17.22
`
`The second standard licensing agreement
`dropped the royalty—credit incentive and an ad-
`ditional 15 companies signed the agreement. In
`August 1985, the OTL issued its third standard
`version of the license agreement, which allowed
`for negotiation by providing a space to write
`in agreed—upon rates. In practice,
`though,
`the
`earned—royalty rates were almost always at the
`same graduated rates that were used in the sec-
`ond version. This fact may be attributed to the
`sharing of information among potential licensees
`about prevailing terms and what terms might be
`expected. Another ten firms signed up under this
`licensing agreement. Another adjustment was
`made in November 1986, with the fourth stan«
`
`dard licensing agreement. Instead of a graduated-
`royalty rate, a flat rate of 1% on end products
`and 3% on bulk products was used. These were
`the highest rates under the prior version and re-
`llected tl1e realization tl1at tl1e patents could earn
`higher rates. In response, perhaps motivated by
`the possibility of further increases in the future,
`21 more firms signed licensing agreements. The
`fifth Version of the Cohen—Boyer standard licens-
`ing agreement, adopted in September 1989, dem-
`onstrated further strategic changes. In order to
`encourage licensing by small start—up companies,
`consideration of company size was introduced.
`For companies with fewer than 125 employees,
`the sign—up fee and MAA fee remained the same,
`at US$10,000 each. The strategy worked—209
`small biotech firms became licensees under this
`
`version, along with 12 large companies.
`In addition to the standard agreements, there
`were three nonstandard licensing agreements that
`provided alternative agreements, making sure
`that Stanford could collect as much revenue as
`
`possible without being unfair to companies with
`special circumstances. The first was an alternative
`license for small distributors or resellers 0frecom—
`
`binant DNA products. Fifty companies signed on
`under this alternative agreement, accounting for
`17.5% ofthe total 275 licensees signed after 1991
`and providing US$462,000 in licensing revenue.
`At the end of 1994, a research and development
`license agreement, with greatly reduced rates, was
`developed to encourage start—ups that would not
`realize product sales within the patent lifetime.
`
`Another 39 companies signed the research and
`development license agreements, and, although
`these licenses did not yield much licensing
`revenue, they were important to the legitimacy of
`the small companies. A third nonstandard licens-
`ing agreement was offered in the final year to tie
`up a few loose ends.
`In total, the Cohen—Boyer licenses generated
`US$254 million in revenue during its 17-year
`term. The initial sign—u p and annual fees generated
`US$26 million, which was 10% of the total licens-
`
`ing income. The licensing program certainlywould
`have been less successful without these revisions
`
`and accommodations. A whopping 90% of the
`total revenue (US$228 million) was from royalty
`income from product sales. This mirrors the com-
`mercial success of recombinant DNA products.
`
`2.5 Technology transfer is all
`about skewed distributions
`\X/hile others have noted that the distribution of
`
`technology transfer revenues are highly skewed,
`with a few blockbusters accounting for most rev-
`enues, o11r examination of the companies that
`licensed the recombinant DNA technology and
`their products demonstrates that even within a
`single license, highly skewed outcomes account
`for the high revenues. Commercial products de-
`veloped by the licensees generated over US$35
`billion dollars in sales of recombinant DNA
`
`products over the life of the patent. Stanford
`reported 2,442 products based on recombinant
`DNA by the time the Cohen-Boyer patent ex-
`pired in December 1997, refiecting a range of ap-
`plications in a variety of industries.“ Starting in
`1991, 400 new products, 011 average, were being
`brought to the market every year. Recombinant
`DNA product sales
`reached US$500 million
`dollars in 1987 and then doubled from 1988 to
`
`1990. Sales doubled again from 1991 to 1994
`and yet again from 1994 to 1998.
`The revenue received from each ofthe Cohen-
`
`Boyer licensees ranged from US$4.24 million to
`US$54.78 million dollars. Of the 468 licensees
`
`of Cohen~Boyer technology, ten companies alone
`provided 77% (US$197 million) of the total li-
`censing income. One company, Amgen, account-
`ed for over one—fifth of the total revenues received
`
`HANDBOOK OF BEST PRACTICES | 1803
`
`Sanofi/Regeneron Ex. 1043, pg 1073
`
`Mylan Ex. 1043, pg 1073
`
`

`
`FELDMAN, COLAIANNI & LIU
`
`under the licensing program. Figure 1 provides a
`breakdown of the royalty share provided by dif-
`ferent companies.
`Table 2 lists these ten companies and the
`products developed under the license. Many of
`the products were developed under strategic al-
`liances between start—up biotech firms and large
`pharmaceutical firms, or between biotech firms.
`All of the top—ten companies, except
`lV1ercl<
`(which signed the agreement in 1984) signed the
`first standard agreement in December 1980. The
`next 10 companies accounted for another 10%,
`while the remaining companies generated less
`than 13% of total royalty revenue.
`
`3. CONCLUSIONS
`
`In the 1970s, universities becaine more entrepre-
`neurial, looking for different streams of revenue
`that supported the university’s mission. As a re-
`sult, anew system of technology transfer emerged.
`Certainly the Cohen—Boyer patents and Stanford
`University’s licensing prograin were at the heart
`of the debate and central to the evolving system.
`
`It would be a mistake to look back at
`
`Stanford’s success with the Cohen—Boyer licenses
`and think that its success was inevitable or that
`
`the licensing process was easy. An examination
`of history reveals many episodes where Stanford
`University could have behaved opportunistical-
`ly’ Or l:'¢1l(CI1 3. VVI‘OI1g tLlII1. TIIC II1lStakCI1 I10l:lOI1
`that Stanford and the University of California
`system were pursuing revenue as a primary goal
`ignores the controversies that faced Stanford at
`that time and the creativity and discipline that
`Stanford had to employ to surmount
`them.
`Stanford’s licensing program is a good example,
`not just in terms of its monetary success, but
`in terms of the lessons it affords to others who
`
`work in the area of licensing and technology
`transfer. \Vhile many universities have now in-
`stituted licensing programs and are aggressively
`pursuing intellectual property rights, our study
`demonstrates that this process is not at all easy
`or straightforward. in retrospect, Stanford’s li-
`censing venture might have failed at several
`turns and Stanford was forced to be innova-
`
`tive to accommodate the great uncertainties
`it faced. Had Stanford and the University of
`
`FIGURE 1: DISTRIBUTION or ROYALTIES
`
`Others 13%
`
`Arngen 21.5%
`
`Genentech 14%
`
`Lily 14%
`
`Source: Compiled by the a uthors.
`
`Sanofi/Regeneron Ex. 1043, pg 1074
`
`Mylan Ex. 1043, pg 1074
`
`
`
`Next 10 10%
`
`Chiron 2%
`
`Genetics Institute 2%
`
`Norvo Nordisk 3%
`
`Merk 4%
`
`Abbott 4%
`
`J&J 5%
`
`Schering 7%
`
`1804 | HANDBOOK OF BEST PRACTICES
`
`

`
`CHAPTER 17.22
`
`F TABLE 2: BLOCKBUSTER DRUGS or TOP TEN LICENSEES or COHEN-BOYER PATENT
`
`COMPANY
`
`PAID ROYALTIES
`(US DOLLARS)
`
`PRODUCT TRADE NAME
`
`Amgen
`
`$54,783,507
`
`Epogen
`Procrita
`
`Neupogen
`
`YEAR STARTED TO PAY
`EARNED ROYALTIES
`
`FY 1989-1990
`
`
`
`Genentech
`
`$34,737,780
`
`FY 1985-1986
`
`Humulind
`Protropin
`Roferon A‘
`Activase
`Nutropin
`Pulmozyme
`Nutropin AQ
`Actimmune
`Kogenate
`
`
`Johnson &Johnson
`$13,418,280
`Procritg
`FY1992—1993
`
`Abbott
`$9,804,444
`Various in vitro HIV
`FY1987—1988
`diagnostics
`
`
`Genetic Institute
`$5,946,978
`Recombinate
`FY1993—1994
`
`
`
`Partnered with Ortho and Johnson and Johnson.
`Partnered with Gene-ntech.
`Partnered with Centocor.
`
`Partnered with LiIIy.
`Partnered with Roche
`
`Partnered with Biogen.
`Partnered with Amgen and Ortho,
`Partnered with Biogen.
`Partnered with Berliex.
`
`.3_C°‘"*‘T°_0-."!3'.‘“
`
`
`HANDBOOK OF BEST PRACTICES I1805
`
`Sanofi/Regeneron Ex. 1043, pg 1075
`
`Mylan Ex. 1043, pg 1075
`
`

`
`lost sight of their larger goals to society and to the
`scientific enterprise.
`
`ACKNOWLEDGEMENTS
`
`This work was supported in part by the Center for Public
`Genomics, Duke University, under grant P50—HG003391
`from the National Human Genome Research Institute
`and the US. Department of Energy.
`
`MARYANN P. FELDMAN. Miller Dzszznguis/mi Profmor in
`Hig/yer Education, Inrtitutc ofHig/7cr Education, University
`of Georgia, 2021/éfvfeigs Hall. Athens, GA. 50602. U.S.A.
`micldman (raua. cdu
`
`ALESSANDRA COLAIANNI, Center fir Genome Ethics, Law,
`anc[Po/in); Duke University; PO. Box,97082, Nort/7 Building,
`Rcscarc/7 Drive Dur/mm, NC 27708. USA. cac28
`ukc.
`
`m C
`
`ONNIE KANG LIU, jorcpn L Rozman School of/Wanagcmcnt,
`Unir/cr5it_)/ofroronto, I 05St. GcorgcStrcct, 7?1ronto, Ontario,
`M5S3F6, Canada. Qnnir; [iu0Z@z‘oQ2zaz; ummzgm ca.
`
`1
`
`Previously, individual faculty members had been able
`to file patents, negotiating the IP (intellectual proper—
`ty) rights with the federal agency that had sponsored
`the research.
`
`3
`
`4
`
`5
`
`CA
`
`C
`
`2006.
`Liu.
`1980-1997.
`
`2oo1. Making Dollars out of DNA.
`SS.
`2 Hughes
`The First Major Patent
`in Biotechnology and the
`CUiiIii|Ci(.ldllAdLlUiI of Molecular Biology,
`i9/4—i98o.
`Isis 92-541-75.
`and
`Feldman MP, A Colaiahni
`Commercializing
`Cohen—Boyer:
`Unpublished.
`"The Patent Office often requires terminal disclaimers
`to prevent an applicant seeking to extend patent life
`from filing continuation applications." See Reimers N
`1987. Tiger by the Tail. Chemtech 17(8):464—71.
`their
`in
`The OTL did recognize and account
`for,
`subsequent licensing programs, the possibility that
`a research institution would develop a commercially
`useful transformant (a cell modified by recombinant
`DNA techniques) that would then be licensed or sold
`to a company. The OTL would then require any such
`company to take out a license on the patents.
`The Wisconsin Alumni Research Foundation (WARF),
`in 2002, signed its first licensing agreement, for stem
`cells, with a commercial provider and also signed
`a separate license agreement permitting U.C.—San
`Francisco, an academic provider listed on the NIH
`registry, to distribute human embryonic stem cells
`worldwide for use in research.
`
`7 Letterfrom Donald Fredrickson to Robert Rosenzweig,
`dated 2 March 1978. Obtained from: United States.
`Office ofthe Director, NIH. Recombinant DNA Research:
`Documents Relatingto"NlH Guidelinesforl\/lolecules,"
`
`Sanofi/Regeneron Ex. 1043, pg 1076
`
`Mylan Ex. 1043, pg 1076
`
`FELDMAN, COLAIANNI & LIU
`
`California taken only financial considerations
`into account, it is likely that they would have
`opted for much higher royalty rates or a more
`lucrative limited—use exclusive license. Stanford
`
`made very pragmatic decisions about pricing
`its intellectual property. In addition, it might
`have had to aggressively litigate instead of play-
`ing a defensive litigation strategy. Moreover, the
`process was not finished once the first licensing
`agreement was formulated; Stanford made prag-
`matic decisions and proved flexible, adapting its
`licensing strategies as circumstances changed.
`Had it not been for Stanford’s enlightened
`licensing practices, the Cohen—Boyer technology
`might have been placed in the public domain
`where the technology could have remained un-
`developed or in the laboratories of large estab-
`lished pharmaceutical companies. Or it might
`have been licensed exclusively and the rise of a
`biotechnology industry might have been delayed
`for years or decades. Small companies gained le-
`gitimacy through licensing the Cohen—Boyer pat-
`ents, making it easy for the companies to attract
`funding and strategic alliances. Hundreds ofsmall
`biotech firms were founded on the recombinant
`
`DNA technology, some of which have grown
`into large and successful firms.
`in total, 2,442
`known products were developed from the recom-
`binant DNA technology, among them drugs to
`mitigate the effects of heart disease, lung disease,
`anemia, HIV«AIDS, cancer, diabetes, and numer«
`ous other diseases and disorders. Stanford and
`
`the University of California received a quarter of
`a billion dollars that was used to fund internal
`
`research and provide infrastructure. lt would be
`interesting to trace how those funds were actually
`used and what additional benefits may thus have
`been generated.
`Stanford University’s licensing program still
`provides a reference point for the future prac-
`While
`tices of university technology transfer.
`the amount of licensing revenue received and
`the value of the commercial product generated
`are awe inspiring, it should be remembered that
`this process was neither easy not straightforward.
`The Stanford OTL was very creative and adaptive
`in designing their licensing program. They never
`
`1806 | HANDBOOK OF BEST PRACTICES
`
`

`
`CHAPTER 17.22
`
`June 1976 to November 1977. Department of Health,
`Education, and Welfare (DHEW).
`ibid.
`
`8
`
`9
`
`1983. Licensing DNA Cloning Technology.
`K.
`Ku
`Presented at the LES USA/Canada Central/Western
`RegionalMeeting,Scottsdale,Arizona,February.Acopy
`was obtained from the Stanford University OTL, 17
`August 2004.
`10 Amgen was grandfathered into this version of the
`iicensingterms
`11 Compiled from OTL Archives.
`
`HANDBOOK OF BEST PRACTICES l 1807
`
`Sanofi/Regeneron Ex. 1043, pg 1077
`
`Mylan Ex. 1043, pg 1077