Lessons from the Commercialization
`of the Cohen-Beyer Patents:
`The Stanford University Licensing Program
`MARYANN P. FELDMAN. 1\1zfler Dzstznguzshed Proftssor zn Hzgher Educatzon.
`institute ofHzgher Fducatzon. Unwersity of Georgia. U:S.A.
`ALES SANDRA COLAIANNI, Center for Genome Ethics, Law, and Policy, Duke Univmity, U.S.A.
`CONNIE KANG LIU, Joseph L. Rotman School of1vfanagement, University ofToronto, Canada
`
`ABSTRACT
`The Cohen-Boyer licensing program, by any variety
`of mctrics, was widely successful. Recombinant DNA
`(rONA) products provided a new technology platform
`for a range of industries, resulting in over US$35 hil(cid:173)
`l ion in sales for an estimated 2,442 new products. Over
`rhe duration of the life of rhe parents (they expired in
`December I'J9/), rhe rechnolo8Y was licensed to 46R
`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
`C"niversity of California system accrued US$255 million
`in licensing revenues (ro the end of200 1 ), much of which
`was subsequently invested in research and research infra(cid:173)
`structure. In n"lany V\'ays, Stanford's n1anagen"lent of the
`Cohen-Buyer parents has become the gold standard for
`universiry technology licensing. Stanford made pragmatic
`decisions and was flexible, adapting its licensing strategies
`as circwnstances changed.
`
`INTRODUCTION
`1.
`The licensing of the Cohen-Buyer patents by
`StanfurJ University represents one of the must
`successful university
`technology licenses. The
`Jiscovery covers the technique of recombinant
`DNA and allows for the useful rnanipulaiion of
`genetic material. Examining StanfurJ's licensing
`of the intellectual property is best understood
`in comext 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(cid:173)
`cation was filed in November 1974. This dare was
`two weeks before the effective date of the Bayh(cid:173)
`Dole Act, which assigned intellectual property
`(IP) riglns over facull y Jiscuveries from feJerall y
`funded research to universicies and emphasized
`the university's responsibility for commercializa(cid:173)
`tion. 1 The intention was to provide a means for
`economic growth, technological change, and en(cid:173)
`hanced U.S. competitiveness.
`The Cohen and Boyer's discovery provided
`tools for generic engineering and was rhe subject of
`comroversy that led to a lively public debate dur(cid:173)
`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(cid:173)
`lic controversies surrounding recombinant DNA. 2
`The debate was symbolically resolved with the June
`1980 U.S. Supreme Court ruling on Diamond v
`C'hakrabarty, a landmark 5-4 Jecisiun, which
`made the patenting of life forms possible with che
`Court's oft-quoted clause, "anything under the sun,
`that is made by man." This decision cleared the way
`for the Cohen-Boyer application, which covered a
`fundamental technique, with the potential to be(cid:173)
`come a platform technology rhar essentially led ro
`a new paradigm in hiorech research.
`
`Feldman MP, A Colaianni and C Liu. 2007 Lessons from the Commercialization oft he Cohen-Boyer Patents: The Stanford
`Untversity Licensing Program. In fntef!ectual Property Management in Health and Agricultural innovation: A Handbook of
`Best Practices (eds A Krattiger, RT Mahoney, L Nelsen, et al.) Ml HR: Oxford, U.K, and PIPRA: Davis, U.S.A. Available online at
`www.1 pHandbook.org.
`
`CCJ ?007 MP Felrlmen, A roiCJienni CJnrltl itL Sharing the Artnf!P Manogement Photocorying end rlistrihution through the
`Internet for noncommercial purposes is permitted and encouraged.
`
`HANDBOOK OF BEST PRACTICES ]1797
`
`Sanofi/Regeneron Ex. 1 043, pg 1 067
`
`Merck Ex. 1043, pg 1093
`
`

`
`FELDMAN, COLAIANNI & LIU
`
`Of course, once rhe patent was granted,
`Stanford University, as rhe assignee, was required
`to design a licensing program that would be con(cid:173)
`sistent with the public-service mission of the
`university and provide sufficient incentives for
`private industry w invest the requisite resources
`to bring products to market while producing rev(cid:173)
`enue for the university. Feldman, Colaianni and
`Liu1 detail the hiswry of Stanford's licensing pro(cid:173)
`gram, focusing on the process and the logic that
`guided the commercialization regime. Given the
`early controversy surrounding rhc Cohen-Boyer
`patem, the eventual success required a great deal
`of creadvity, strategy, and persistence. Certainly,
`the professionals involved all cunrribured to the
`success, from Donald Kennedy, then president of
`Stanford, Robert Rosenzweig, then vice president
`for public affairs, Nils Reimer, founding direcror
`of the Stanford Office of Technology Licensing
`(OTL) Lo KaLheriue Ku, Lheu licemiug assuciale
`and current director of the OTL.
`The purpose of this chapter is to summa(cid:173)
`rize lessons learned from Stanford's design and
`implementation of the Cohen-Buyer licensing
`program. Many universities attempt to emulate
`Stanford University's success at technology trans(cid:173)
`fer; however, there is a limited appreciation for
`the high degree of creativity and adaprability of
`the Stanford Office ufTechnulugy and Licensing
`(OTL) in setting up its licensing program and
`maldng 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
`licensing the technology; provided incemives 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 morive.
`
`Stanford University had four goals rhar guided
`the development of the Cohen-Boyer license:
`to be consistent with the public-service ide(cid:173)
`als of rhe university
`to provide the appropriate incentives in
`order that genetic engineering technology
`could be commercialized for public benefit
`in an adequare and timely manner
`to manage the technology in order to mini(cid:173)
`mize the potential for biohazard
`to provide income fur educational and re(cid:173)
`search purposes
`
`•
`
`Robert Rosenzweig, vice presidem for public
`affairs at Stanford, in a 1976 open letter addressed
`to "Those Interested in Recombinant D1VA," wrote
`"It is a fact that the financing of private uniwrsi(cid:173)
`ties is more difficult now than at any time in re(cid:173)
`cent memory and that the most likely prediction for
`the future i> that a hard >truggle will be required tv
`maintctin their quttlity." As a result of these finan(cid:173)
`cial concerns, he concluded, "we cannot lightly
`discttrd the possibility of significant income thttt is
`derived from activity that is legal, ethical, and not
`destructive of the values of the institution."
`The balance of financial objectives against
`other goals is further demonstrated when Stanford
`decided not to pursue extending the patent life.
`The uriginal197 4 patent application had claimed
`both the process of maldng recombinam DNA
`and any producrs that resulted from using that
`merhod. These applications were subsequently di(cid:173)
`vided into the process patent and rwo divisional
`product applications: one claimed recombinant
`DNA products produced in prokaryotic cells
`and the other claimed the products in eukaryotic
`cells. Stanford filed a terminal disclaimer, which
`meant that all subsequent applications claiming
`recombinant DNA, regardless of how long the
`patem prosecution process took, would expire
`on December 2, 1997-thc same date as the
`original 191l0 parent. 4 Tn effect, Stanford agreed
`to give up royalty rights on the life of the sub(cid:173)
`sequent patents (issued in l 984 and l 988) that
`would have extended pasr rhe original patent's
`expiration dare. This limired Stanford's collection
`of royalties because of rhe time delay inherem in
`commercialization, especially of pharmaceutical
`
`1798 I HANDBOOK OF BEST PRACTICES
`
`Sanofi/Regeneron Ex. 1 043, pg 1 068
`
`Merck Ex. 1043, pg 1094
`
`

`
`CHAPTER 17.22
`
`products. Stanford honored its obligation to the
`licensees wich che realization chat, as Kathy Ku
`wrote ac che time " ... it would not be good public
`policy orpubtic relations if we were to ask for or even
`get such an extension."
`Stanford did not require other nonprofit re(cid:173)
`search instimtions to take a license in order to usc
`the technology. Niels Reimers and Kathy Ku re(cid:173)
`port that the thought oflicensing the technology
`out to other nonprofit research institutions had
`never entered into discussiuns about the licens(cid:173)
`ing program. This licensing practice estahlished a
`research exemption, or research-use exemption,
`which is consistent with the norms of open sci(cid:173)
`ence,5 and stands in contrast to recent develop(cid:173)
`ments in research-usc exemption policies, such as
`Duke u. Madey and che \VARF stem-cell licens(cid:173)
`ing program."
`To summarize, engaging in commercial ac(cid:173)
`Livily encourage~ higher educalion iusLiluLions lo
`act like for-profit entities. lntellectual property
`has no value unless ic is defended. Stanford set up
`a litigation reserve fund that provides a credible
`threat of enforcement of the license. Despire sev(cid:173)
`eral attcmprs 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(cid:173)
`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 imdlectual property typically involves
`limited disclosure, Stanford University engaged
`in a partern of consulting widely across various
`stakeholders to achieve consensus and to ensure
`that its actions were supported. For example,
`Rosenzweig worked to achieve consensus with
`both the faculty 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 mass
`mailing to "a broad range of individuals and insti(cid:173)
`tutions," asking them for their comments on the
`patent question. 7 Fredrickson's letter laid out five
`possible alternatives that NII I could take regard(cid:173)
`ing recombinant DNJ\. patenting and subsequent
`licensing: In response, Fredrickson received ap(cid:173)
`proximately 50 lerters.
`J\. 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(cid:173)
`ticulated in the Bayh-Dolc, J\.ct and ignored peti(cid:173)
`tions from Genentech and Cetus who stood to
`gain from exclusive licenses. The logic was that
`eDNA was a platform technology and that any
`one company could nol exploiL all Lhe po~siGle
`applications. Broad nonexclusive licensing not
`only contributed to the economic success of the
`patents but also created a population of compa(cid:173)
`nies who drove the technology forward.
`There arc other instances when Stanford
`sought transparency that was consistent with the
`actions of a university. While applicants generally
`keep patent applications secret from the date they
`are filed until they are granted and therefore pro(cid:173)
`tected, Stanford opened the patent prosecution
`file to the public. This was an unusual move that
`was consistent with reducing subsequent ques(cid:173)
`tions about the technology and was also consis(cid:173)
`tent with the public mission of the university.
`Stanford engaged in an open process that at(cid:173)
`tempted to build consensus across a wide range
`of stakeholders. While the universiry 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(cid:173)
`fer involves relationships that develop over time.
`Signing a licensing agreen1.ent represents a trans(cid:173)
`action that is a first step in a relationship that re(cid:173)
`quires maintenance and oversighr. Each licensee
`received an annual letter from the Stanford OTL.
`
`HANDBOOK OF BEST PRACTICES 11799
`
`Sanofi/Regeneron Ex. 1 043, pg 1 069
`
`Merck Ex. 1043, pg 1095
`
`

`
`FELDMAN, COLAIANNI & LIU
`
`That went a long way in esmblishing long-term
`relationships and encouraging dialogue.
`When Stanford initiated its licensing pro(cid:173)
`gram, no precedent existed for specific licensing
`terms of the IP. Keeping with its practice of con(cid:173)
`sulting widely and building consensus, Stanford
`interviewed a variety of companies representing
`different markets when the license terms, particu(cid:173)
`larly the royalty rates on end products, were be(cid:173)
`ing formulated. Through this effort, licenses were
`pre-sold and unrealistic terms were avoided. To
`make the licensing process easier, the OTL took
`great pains to categorize the different potential
`recombinant DNA products and to offer appro(cid:173)
`priate royalty rates. In the end, the OTL settled
`on four different product categories: basic genetic
`products, bulk products, end products, and pro(cid:173)
`cess improvement products. By scaling the rates
`to reflect the visibility of the licensee's product
`and Lhe expecled revenue from each license, Lhe
`OTL encouraged compliance. A graduated royal(cid:173)
`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(cid:173)
`nual fees and royalty rates reasonable. While this
`might have reflected a strategy to deal with some
`of the weaknesses with the patent, the university
`could have been greedy and pursued higher rates.
`Nils Reimers recalled at least one alumnus writ(cid:173)
`ing, "You've got a patent: you can dominate every(cid:173)
`thing here. Why are you cha1;rjng such a low royalty?
`You know Stanford could use the money. Charge a
`higher royalty." 8 This advice was nut taken. The
`rates that were chosen were selected after con(cid:173)
`sultation with industry about accepted practices
`and did not exploit the university's 1nonopoly
`position.
`Furthermore, Stanford created special provi(cid:173)
`sions for lower licensing fees and royalty rates for
`small firms in 1989. At this time, 209 fledging
`biotech firms, most of them in the San Francisco
`Bay Area, signed licensing agreements.
`
`2.4 Be flexible and experiment
`Over the 17 years of the licensing program
`Smntord experimented whh five versions of
`the standard license agreements and provided
`
`three special licensing agreements. A total of
`468 companies licensed the Cohen-Boyer tech(cid:173)
`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 wtls try(cid:173)
`ing to license an inuention for which products had
`neuer been sold tlnd which would t~pply to milny
`diuerse, estt~blished industries, in t~ddition to the
`newly emerging biotechnology industry." 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 dnuugh publicaliuu and Lhal Lhe
`open patent files and companies were already us(cid:173)
`ing rDNA. It was not clear that companies would
`comply with the terms. 1he first incentive for
`companies to take a license in 1981 was a credit
`tmvard future royalties over the first five years,
`up to a total of US$300,000. The second incen(cid:173)
`tive came when companies were advised that
`the licensing terms would change and encour(cid:173)
`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. 10
`The first license's terms were a US$10,000
`up-front fcc 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 irn.(cid:173)
`provements on existing products based on pro(cid:173)
`duction cost savings. Under the licensing agree(cid:173)
`ments, Stanford received unprecedented royalties
`on downstream drug sales in a stipulation known
`as reach-through I icensing: Stanford received end(cid:173)
`product royalties based on a percentage of final
`product sales. The Cohen-Boyer IP rights ex(cid:173)
`tended to all products developed using the tech(cid:173)
`nology. If companies did not sign a license agree(cid:173)
`mem, any end pro duns they developed that used
`rDNA could potentially be contested.
`
`1800 J HANDBOOK OF BEST PRACTICES
`
`Sanofi/Regeneron Ex. 1 043, pg 1 070
`
`Merck Ex. 1043, pg 1096
`
`

`
`TABLE 1: COHEN-BOYER STANDARD LICENSING AGREEMENTS HISTORY (IN U.S. dollars)
`
`CONTINUED ON NEXT PAGE
`
`Sanofi/Regeneron Ex. 1043, pg 1071
`
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`)> z
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`
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`
`Merck Ex. 1043, pg 1097
`
`

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`
`TABLE 1 (CONTINUED)
`
`R&D
`agreement
`
`Endof1994 Sign-uppayment
`waived;
`all future MAA as
`one-time payment
`
`N/A
`
`N/A
`
`NA
`
`36
`
`$553,083
`(0.22%)
`
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`
`Sanofi/Regeneron Ex. 1 043, pg 1 072
`
`Merck Ex. 1043, pg 1098
`
`

`
`CHAPTER 17.22
`
`The second standard licensing agreement
`dropped the royalty-credit incemive and an ad(cid:173)
`ditional 15 companies signed the agreement. In
`Augu~t 1985, the OTL is~ued it~ third ~tandard
`ver~ion 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(cid:173)
`ond version. This fact may be attributed to the
`~haring 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 rhe fourth stan(cid:173)
`dard licensing agreement. Instead of a graduated(cid:173)
`royalty rate, a flat rate of 1 o/o on end products
`and 3% on bulk products was used. These were
`the highest rates under the prior version and re(cid:173)
`JlecLed Lhe realizaLiun d1al Lhe palenl~ could eam
`higher rates. In response, perhaps motivated by
`the possibility of further increases in the future,
`21 more firms signed licensing agreements. !he
`fifth version of the Cohen-Boyer standard licens(cid:173)
`ing agreemem, adopted in September 1989, dem(cid:173)
`onstrated further strategic changes. In order to
`encourage licensing by small stan-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 wotked-209
`small biotech firms became licensees under this
`version, along with 12 large companies.
`In addition to the ~candard agreement~, there
`were three nonstandard licensing agreement~ that
`provided alternative agreements, making sure
`that Stanford could collect as much revenue as
`po~sible withom being unfair to companie~ with
`special circumstances. The first was an alternative
`license for small distributors or resellers of recom(cid:173)
`binant DNA products. Fifty companies signed on
`under this alternative agreement, accounting for
`17.5 o/o of the total275 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 w encourage sran-ups chat would not
`realize product sales within the patent lifetime.
`
`Another 39 companies signed the research and
`developmem license agreemems, and, although
`these licenses did not yield much licensing
`revenue, they were important to the legitimacy of
`the ~mall companie~. A third nonstandard licens(cid:173)
`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-up and annual fees generated
`US$26 million, which was 10% of the totallia:ns(cid:173)
`ing income. The licensing program certainly would
`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(cid:173)
`mercial success of recombinant DNA products.
`
`2.5 Technology transfer is all
`about skewed distributions
`While ochers have noted that the distribution of
`technology transfer revenues are highly skewed,
`with a few blockbusters accounting for most rev(cid:173)
`enues, our 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(cid:173)
`veloped by the licensees generated over US$35
`billion dollars in sales of recombinant DNA
`produces over the life of the pacem. Stanford
`reported 2,442 products based on recombinant
`DNA by the time the Cohen-Royer parent ex(cid:173)
`pired in December 1997, reflecting a range uf ap(cid:173)
`plications in a variety of industrie~. u Starting in
`1991, 400 new products, on average, were being
`brought to the market every year. Recombinant
`DNA product sale~ 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 of the Cohen(cid:173)
`Buyer 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(cid:173)
`censing income. One company, Amgen, account(cid:173)
`ed for over one-fifth of the total revenues received
`
`HANDBOOK OF BEST PRACTICES 11803
`
`Sanofi/Regeneron Ex. 1 043, pg 1 073
`
`Merck Ex. 1043, pg 1099
`
`

`
`FELDMAN, COLAIANNI & LIU
`
`under the licensing program. Figure 1 provides a
`breakdown of the royalty share provided by dif(cid:173)
`rerent companies.
`Table 2 li~t~ the~e ten companie~ and the
`product~ developed under the license. Many of
`the products were developed under strategic al(cid:173)
`liances between start-up biotech firms and large
`pharmaceutical firms, or between biotech firms.
`All of the top-ten companies, except l\1erck
`(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 became more entrepre(cid:173)
`neurial, looking for different streams of revenue
`LhaL supponed Lhe universiLy's mission. As a re(cid:173)
`sult, a new system of technology transfer emerged.
`Cenainly the Cohen-Boyer patents and Stanford
`University's licensing program 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 pruce~~ wa~ ea~y. An examination
`of history reveals many episodes where Stanford
`University could have behaved opportunistical(cid:173)
`ly or taken a wrong turn. The mistaken notion
`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
`uansfer. \Vhile many universities have now in(cid:173)
`stimted licensing programs and are aggressively
`pursuing intellectual property rights, our study
`demomLraLes LhaL Lhis process is uol al all easy
`or straightforward. In retrospect, Stanford's li(cid:173)
`censing venture might have failed at several
`turns and Stanford was forced to be innova(cid:173)
`tive to accommodate rhe great uncertainties
`it faced. Had Stanford and the University of
`
`FIGURE 1: DISTRIBUTION OF ROYALTIES
`
`Others 13%
`
`Arngen 21.5%
`
`Next 1010%
`
`Chi ron
`
`Norvo Nordisk 3%
`
`Genentech 14%
`
`Schering 7%
`
`Source: Compiled by the authors.
`
`1804[ HANDBOOK OF BEST PRACTICES
`
`Sanofi/Regeneron Ex. 1 043, pg 1 07 4
`
`Merck Ex. 1043, pg 1100
`
`

`
`CHAPTER 17.22
`
`TABLE 2: BLOCKBUSTER DRUGS OF TOP TEN LICENSEES OF COHEN-BOYER PATENT
`
`Amgen
`
`$54,783,507
`
`Epogen
`Procrit'
`Neupogen
`
`FY 1989-1990
`
`,,,,,,,
`
`,,,,,,,
`< >
`? ? >
`..... , ... .. , ......... , . •• , •••• ) >
`. .... , ... .. , ......... , ... , ....
`<< < i < i <
`<< < i <
`FY 1985-1986
`
`,,,,,,
`>< > < ? >
`>< ) )/ ? ..... , ... , ....
`........... , ....
`.}. ? << }. i < i <
`
`/ ? ..... , ... , .... \'
`< }. ? < ::::: "'""
`
`Genentech
`
`$34,737,780
`
`Humulind
`Protropin
`Roferon A'
`Activase
`Nutropin
`Pulmozyme
`Nutropin AQ
`Actimmune
`Kogenate
`
`Johnson &Johnson
`
`$13,418,280
`
`Procrit"
`
`FY 1992-1993
`
`Abbott
`
`$lJ,804,444
`
`Various in vitro HIV
`diagnostics
`
`FY1987-1988
`
`Genetic Institute
`
`$5,946,978
`
`Recombinate
`
`FY1993-1994
`
`a. Partnered with Ortho and Johnson and Johnson.
`
`b. Partnered with Gener1tech.
`c. Partnered with Centocor.
`d. Partnered with Lilly.
`e. Partnered with Roche
`
`f. Partnered with Biogen.
`
`g PertnNerl with Amgen end Ortho
`
`h. Partnered with Biogen.
`Partnered with Berliex.
`
`HANDBOOK OF BEST PRACTICES 11805
`
`Sanofi/Regeneron Ex. 1043, pg 1075
`
`Merck Ex. 1043, pg 1101
`
`

`
`FELDMAN, COLAIANNI & LIU
`
`California taken only financial considerations
`imo accoum, it is likely chat they would have
`opted for much higher royalty rates or a more
`lucrative limited-use exclusive license. Stanford
`made very pragmacic decisions about pricing
`its imellectual property. In addition, it !Tlight
`have had to aggressively litigate instead of play(cid:173)
`ing a defensive litigation strategy. Moreover, the
`process was not finished once the first licensing
`agreement was formulated; Stanford made prag(cid:173)
`matic decisions and proved flexible, adapting its
`licensing strategies as circumstances changed.
`Had it nor 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(cid:173)
`developed or in the laboratories of large estab(cid:173)
`lished pharmaceutical companies. Or it might
`have been licensed exclusively and the rise of a
`Gioledmulugy induslry miglH have Geen delayed
`for years or decades. Small companies gained le(cid:173)
`gitimacy through licensing the Cohen-Boyer pat(cid:173)
`ents, making it easy for the companies to attract
`funding and strategic alliances. Hundreds of small
`biotech firms were founded on the recombinant
`DNJ\ technology, some of which have grown
`into large and successful firms. In total, 2,442
`known products were developed from the recom(cid:173)
`binant DNA technology, among them drugs to
`mitigate the effects of heart disease, lung disease,
`anemia, HIV-AIDS, cancer, diabetes, and numer(cid:173)
`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. It 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(cid:173)
`tices of university technology transfer. While
`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 nor straightforward.
`The Stanford OTL was very creative and adaptive
`in designing their licensing program. They never
`
`lost sight of their larger goals co society and to the
`scientific enterprise.
`
`ACKNOWLEDGEMENTS
`This work was supported in part by the Center for Public
`Genomics, Duke University, undergrantP50-HG003391
`from Lhe Nacional Hwnan Genome Research InsLiLULe
`and che C'.S. Department of Energy.
`
`MARYANN P. FELDMAN. Jv!iller Distinguished ProfoSJor in
`Higher Education, Institute of Higher Education, University
`of Georgia, 2024 1\Ieigs Hall, Athens. GA. 30602, U.S.A.
`mfi:ldmanCii>uga.edu
`
`ALES SANDRA COLAIANNI, Center for Genome Ethics, Law,
`andPoliCJ; Duke University, P.O. Box97082, North Building,
`Research Drive, Durham, NC 27708. U.SA. cac28@duke.
`edu
`
`CONNIE KANG Ll U, joseph r. Rotman School of Management,
`Univer.rity ofToronto, 105 St. George Street, Toronto, Ontario,
`M5S 3F6, Canada. connie liu07 @mtman utomnto ca
`
`Previously. individual faculty members had been able
`to file patents, negotiating the IP (intellectual proper(cid:173)
`ty) rights with the federal agency that had sponsored
`the research.
`
`Hughes 55. 2001. Making Dollars out of DNA
`The First Major Patent in Biotechnology and the
`CormnercialiLa lion ur Molecular Biology, 1914-1980.
`Isis 92·541-75·
`
`Feldman MP, A Colaianni and C
`Commercializing
`Cohen-Buyer:
`Unpublished
`
`Liu. 2006.
`1980-1997
`
`4
`
`"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.
`
`The OTL did recognize and account for, in
`their
`subsequent l1cens1ng 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 I icense on the patents.
`
`6
`
`The Wisconsin Alumni Research Foundation (WARF).
`in 2002, signed its first licensing agreement, for stem
`cells, with a commercial provider and also signed
`license agreement permitting U.C.-San
`a separate
`Francisco, an academic provider listed on the NIH
`registry, to distribute human embryonic stem cells
`worldwide for use in research.
`
`7 Letter from Donald Fredrickson to Robert Rosenzweig.
`dated 2 March 1978. Obtained from: United States.
`Office of the Director, NIH. Recombinant DNA Research:
`Documents Relating to "NIH Guidelines for Molecules,"
`
`1806J HANDBOOK OF BEST PRACTICES
`
`Sanofi/Regeneron Ex. 1 043, pg 1 076
`
`Merck Ex. 1043, pg 1102
`
`

`
`CHAPTER 17.22
`
`June 1976 to November 1977- Department of Health,
`Education, and Welfare (DHEW).
`
`8
`
`Ibid
`
`9 Ku K. 1983 Licensing DNA Cloning Technology.
`Presented at the LES USA/Canada Central/Western
`Regiona I Meeting, Scottsdale, Arizona, February. A copy
`was obtained from the Stanford University OTL, 17
`August 2004.
`
`10 Amgen was grandfathered into th1s version of the
`l1cens1ng terms.
`
`11 Com pi led from OTL Archives.
`
`HANDBOOK OF BEST PRACTICES 11807
`
`Sanofi/Regeneron Ex. 1 043, pg 1 077
`
`Merck Ex. 1043, pg 1103