Health Care Intellectual Property: Strategies for Hospitals and Health Systems

Kevin Noonan, Partner, McDonnell Boehnen Hulbert & Berghoff LLP, and Keith Graff, Principal, ECG Management Consultants, discuss why health care intellectual property (IP) is important for hospitals and health systems and effective strategies for managing health care IP. They talk about the different types of IP, the Bayh-Dole Act, measuring performance, patient confidentiality and HIPAA requirements, and what to avoid when managing an IP system.

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Transcript

Speaker 1: 0:06

This episode of A H L A speaking of health law is brought to you by A H L A members and donors like you. For more information, visit american health law.org.

Speaker 2: 0:21

Hello, everybody. My name is Kevin Newnan, and I'm a partner at the law firm of McDonald Banyon Holberton Bar Bergoff in Chicago. I'm a biotech patent lawyer, and I've been doing this for about 35 years. And, uh, happy to be joined here by Keith Graff. Keith,

Speaker 3: 0:36

Hi, I'm Keith Graff. I run the research service line at E C G Management consultants and have been focused on academic research, including commercialization for about 25 years. We wanted to talk today a little bit about intellectual property management strategies, uh, within academic health systems and within other entities as well, and all of the considerations that you as audience members should be considering. Uh, we're gonna jump right in. Uh, Kevin, I guess given my intro there, you know, the audience here really spans everything from massive academics to health systems, to smaller practices, to payers, to life sciences. Why should they care about healthcare intellectual property?

Speaker 2: 1:18

Well, I think that, you know, IP or intellectual property is kind of everywhere. It comes out of everything that people who are involved in anything creative are doing. And certainly for research, there's a lot of that. There's some misconceptions about that, that I think we'll talk about during this, during this time. But if you want to sort of characterize them and put them into buckets, they're the first one people mostly think about are patents, uh, because that's where, uh, people have inventions. And those inventions can be protected under US law by a patent of limited terms of exclusivity, which means that if you define whatever your invention is, uh, appropriately with the government, so they get a, you get a patent, you have 20 years from that time to have an exclusive right. And the beauty of that, in terms of why it's important is that once that exclusivity is over, then it's free to use by everyone. So it gives an incentive for that 20 years of exclusivity. But it's unlike something like a trade secret, which we'll talk about later, which as long as it's a secret, you keep it Coca-Cola formula being the obvious one. Um, and then you keep it forever. There's no forever in patent law. It's only 20 years. And so it's a, what we call the quid pro quo in the patent system. You give me everything you know about your invention so that when your exclusivity is over, anybody can use it. And I will have that 20 years, or my, the inventor will have the 20 years of exclusivity. Uh, the other three are a little bit less relevant, but they're not totally relevant for, for academics. Um, one is trademarks and trademarks really are more for branding that almost explicitly commercial. But you wouldn't want, or I wouldn't imagine the people at Cleveland Clinic or Mayo Clinic would want somebody to open up shop in Arizona or Montana and start calling themselves the Mayo Clinic or the Cleveland Clinic. And it is a way to as to associate your professional and, and quality sort of, uh, uh, what you bring to the public, uh, with you. And so nobody else can pretend to be you and run a scam on the internet, for example. So trademark's a little bit less important for academics cause they're not, frankly commercial, but they're not unimportant. Period. Copyright is probably the most restricted and limited form of ip, cuz it's exactly that. You can't copy something. Exactly. And usually for academics, the copyright on what's most important to them, which is their writings is held by the publisher. So there isn't really, uh, very much that's that important for academics, except that I've seen some academics do keep their copyright and, and, uh, and that's something's made to understand that that's a much more long, much longer period of exclusivity. Um, more like around about hundred years. But even then it will things go into the public domain and can be used by everybody. The last one, um, would be trade secrets. And trade secrets tend to be this favorite for a lot of reasons. Um, they are exactly that, their secrets. And so their limitation is the moment they're not a secret anymore, they're not protected. And for academics, part of the role of an academic is to, uh, take their knowledge and publish it in papers or otherwise. And you can't keep a trade secret that way. Plus, there's a, there's also the fact that when people do the kind of research that happen in, in academic settings, particularly medically related academic se settings, there's no incentive. And in fact, it's, it's sort of dirty pool to try to keep that secret because that isn't really what most of these people have gotten into the, into the, the, uh, their academic discipline to do. Going back to patent rights, typically what happens is, you know, academics and, and universities and, and hospitals and such don't actually ever make anything. And so usually their patent rights are gonna be licensed, and the licenses are either produce a royalty by somebody who makes them, or sometimes what are called milestone payments. If the PE person makes an enough, a certain amount, then they, they give a bulk sum to the patentee. And these are all additional things we'll talk about a little bit later. But there's some things that come out of academic medicine, uh, or, or university science, like things that can produce a drug that really require an exclusive license, uh, from the patentee of the university to the drug company because they then have to use that license to protect all the investment that goes into making a drug. I forget the name of the drug now, but there's a spanking new, not so new now, uh, engineering building in Princeton University. That's made from the royalties, it got from Blockbuster drug that was developed there. And we'll talk a little bit more about universities and patenting a little later. But the other thing to keep in mind is, is that, is that there are frequently what are called grant back clauses that are in these licenses. So even though the exclusive license is given to a company, the company gives back a license to the university so that the students and the faculty can practice the inventions, uh, and, and it, that doesn't inhibit, uh, university research in any way. Having said that, I think we have to acknowledge the fact that there are tensions between things that happen, uh, for commercial development. And, and what I think most medical doctors and scientists want is patient access. So people will be able to, to, uh, reap the benefits of, of the work that they've done. And we'll talk a little bit about how the patent rights are limited in that way. But, but I do think we have to recognize there is that tension, uh, that arises. And yet if there's something that needs investments in order to be brought to market, then you need to have the patents to protect the rights, uh, or the person who's making that investment.

Speaker 3: 6:54

Kevin, you mentioned grants as part of this, and federal grants really fund about 30 to 40% of total life science r and d in today's environment. But back in 1980, we saw the passing of the BY act, which was a key legislative advancement, which really allowed those grant recipients to think differently and pursue commercialization with private sector partners, uh, let it be, um, co-creation with other entities or, uh, in the financing of it. Uh, for those not familiar with b, how do you define the key takeaways from that regulation?

Speaker 2: 7:31

Okay, let's a little bit of history on this. Up until the Bile Act was passed in 1980, and it's called that because Birch Bay and Bob Dole, uh, won of the Democratic senators from Indiana, the other Republican senator from Kansas, uh, sponsored the bill in Congress. Um, up until that act was passed, that bill was passed to become the act. Um, there was a prohibition, an absolute prohibition of patenting anything that was made by federally funded research. And maybe it's the law of unintended consequences, but what would happen is that other people, uh, industry people mostly, whether they were from the United States or abroad, would sit apocryphally reading the P N A S and other journals that would come out and would be able to glean from the scientific papers that were published right by, as a result of the federally funded research inventions, and then commercialize those inventions. And nobody had the patent rights to those. Um, and even though patents can be important, there's a first mover, uh, there's a first mover, uh, aspect here of the view who did that. And plus many times what was actually ultimately commercialized was independently patentable because there was some distinctions that were made between what was reported in the journal article and what was actually found done. So this was something that, that was not a good idea. Uh, in terms of, of our United States intellectual property and intellectual might, one of the things I think most people believe in this country, from at least when I was taught, you know, about Mor and Singer and, and the guy who built the, the corn thresher and things like that, and the sewing machine, these are all inventions from the 19th century that had American inventors. And and that is an important part of the American story, if you will, of having that sort of entrepreneurial and inventive spirit and to take the bulk of it that was coming, especially if you think about it, at that time, uh, Nixon's war on cancer was actually beginning to bear some fruit in those days. The biotechnology industry was developing, the computer science industry was developing, and so many of these things were related to, um, to, uh, universities and university work. And to have that essentially as a free giveaway was a bad idea. So what the Bible Act provided was a way to encourage what we call today technology transfer, and then encouragement was really by requiring it. Uh, and the requirement was that if you have a faculty member that's fed me federally funded, uh, you the university have a responsibility to sort of overlook that, to encourage and explain to the faculty member, which was also, of course put into all the federally funding, uh, funded, um, uh, grant proposal, grant requirements, that, that if something that could, was inventive, something that could be commercially uh, produced, was something that was discovered, invented in the lab, that they would have to be an invention disclosure that went to an office at the university, the technology transfer office, and then a decision would have to be made whether or not, um, you would, the university would look to protect that by patent and that the university didn't have to, but if they didn't want to, they had to offer it to the federal government first. So the federal government would get to apply for a patent, and the federal government had no interest. They would also have to give it or give the opportunity to the individual inventors to do it. And so there was this hierarchy of who got to, to develop the technology, starting with, I think most efficiently the university who could do it in a kind of an organized way. And I think the tech transfer offices are sort of, uh, explain that. And the incentives besides getting a patent and starting a startup company, uh, from that came from, from some of the licensing money that would come back to the university, would go to the actual inventors themselves, and some would go to their departments. So now you had that intermediate step where I'm a department chairman, I'm encouraging the bright young academics that are in my department as assistant and associate professors. I'm encouraging them to, to be part of that system because if you got monies coming, coming back from license saying the department got, uh, got some of that money, and the university's got some as well. And so you, it was a, an incentive, a very American incentive to do that. But, but the reason, the basic policy goal here that, that, uh, senators Bain Dole, uh, used to justify and, and promoted was, look, this is a way to have commercialization of inventions, because after all, inventions and discoveries are nice, but if you can commercialize them, so you're able now to, to bring a practical benefit to people, whether they're drugs or other things, um, through this federally funding and having a preference, which is in the bill, in the, in the act for US industry. So not only do you get these fruits and federal funding happening, but you also then have creating jobs, people, us industries. And the requirement is for US industry, unless you can show and establish that there's no US industry that's interested in this. So it really, if you think about the way that that laws try to try to incentivize people to do things, this act really provided incentives for everyone to, to try to do this. And I think the success of the last 40 years of, uh, what's happened, if you look at the reports of, of what's happened through the vital act and the type of industries that that had been, uh, arisen because of it, um, bear out the fact that this was a very good idea and it's been very useful, uh, for the, for, for all these reasons.

Speaker 3: 13:03

Now. Those are, those are great points. And, and I know one of the things that I've seen, uh, here and there is just really sometimes even the, the challenge of, uh, really distributing, uh, some of those funds back to the researchers themselves, um, especially as they move on from the entity where, uh, this, the discovery had occurred and, uh, perhaps moved back to, um, a home country or, or something along those lines.

Speaker 2: 13:27

Agreed.

Speaker 3: 13:28

Well, let's, let's talk a little bit maybe about, um, some of the, the tech transfer offices that, that you just, uh, you mentioned. Um, one of the things that, uh, that I personally have seen out there is really, uh, who manages this varies based on entity. The large academics almost all have a tech transfer office that will sit typically at the university level, but sometimes within the academic health system. Uh, other smaller, uh, research hospitals and, and entities along those lines will often look to an outsource model, uh, specifically around patents and and licensing in many cases. One of the, the most important components that I, I think is, uh, is out there today still is around how do we measure the performance of these tech transfer functions, uh, overall, and I like to break it down into four areas. Uh, first the inputs, uh, when we're starting to think about commercializing research and monetizing ip, often we can get so far with some of the, the work that's been funded by federal or non-federal agencies yet, uh, it's really important to start thinking about the impact of having GAP or accelerated fund accelerator funding to further technology. Uh, we see many entities across the country, uh, launching venture funds, but at the same time, even sometimes, uh, thinking smaller around, uh, bridging dollars to, to market become, you know, quite important. The second thing that I like to call out is really around, um, the, the staff really should be focused on deals versus other administrative functions. In, in many organizations, what we end up seeing is that because there are so many jds, uh, and PhD jds who are staffed in, uh, the tech transfer offices, that many different agreements will make their way through. So we think about, uh, CBAs or material transfer agreements and, and those components, which are all very important, but our often time drain as well. Uh, and so really thinking more about licensing and, and bringing things to market, uh, becomes, uh, even more important. Years ago, I had a chance to look around the country really at the, the success factors of some of the tech transfer offices. And one of the things that we saw were, in many cases, entities would have individuals who were, uh, PhDs and specialists in functional areas of research who have, but what we saw in the end though, was that it, it wasn't staffing people who really knew what was coming forward, which was important. It was really those experience with deals, uh, and really maintaining those staff as long as you possibly could. Tech transfer offices and these functions o overall. The the second area that I always like to break it down to is kind of more of the activity function. Um, these are really perceived black holes, uh, especially when they're doing non-legal work. Often ideas will make their way through, uh, and they'll be submitted to tech transfer offices. And, and even with those entities that have very successful operations, what we end up finding is that, uh, if the technology is not something that, uh, is looked highly upon, uh, there's, there's no feedback. That kind of goes back to the researcher or the researcher's team. Uh, the other thing that I like to break down from an activity perspective is the more successful organizations do a great drop, great job of proactive marketing of those technologies. Uh, some entities just dump everything that they have, uh, from an IP perspective on a website and hope people come, uh, looking for them. Uh, others might take more of a business development initiative and, and really kind of go out and work with, uh, potential life science partners or finance partners to really push the technologies further. When we start to think about the outputs of these offices, uh, what the first, and really the most primary one in, in any organization is gonna be around streamlining all processes, uh, to accelerate licensing those with the most streamlined processes. They, they typically are organizations that, uh, we'll see just, uh, more, more outputs, uh, from a revenue perspective. Uh, most tech transfer offices try to at least break even on their expense in versus the, um, kind of the, the, the revenue generated. And then finally, as we're starting to think about how a tech transfer office functions and what its overall impact is to the entity, uh, going big to your point on the Princeton story is great. It helps a lot, uh, Lipitor, fantastic story, uh, Cleve and other, uh, fantastic story. Yet at the same time, the larger and more, more diverse portfolio to me, uh, the, the better the, the, the function is performing within an organization, because you're not just really looking at a single researcher or single, uh, patentable technology, but you're really thinking more wider around, you know, how do we continue to, uh, focus on translation and bringing things to market.

Speaker 2: 18:53

Yeah, I agree with that. Uh, Keith, it's, it's funny as you're talking about that, I'm thinking that in my experience with tech transfer offices, uh, they are really, it's, it's, I have some sympathy for them because, uh, it, it's a difficult role for them. I think, on the one hand, administratively, I think that they do a great job in, in complying with the bi, uh, requirements that I mentioned before. And yet it really is, uh, I think difficult in many ways. You, you know, you don't always know what technology is gonna be the one that's gonna take off, and yet that's really a certain amount of their function is to try to help do that and to figure out the best, uh, sort of marketing and licensing strategy that can lead to some difficulties with professors who tend to be tenured and who tend to be the people around whom the university revolves for obvious reasons. Um, and most of the folks, even people who are lawyers from an academic perspective can be just lawyers to an academic. And I think there's a functionality there that I see people at tech work very, very hard, um, to try to, to try to get the best deal from, you know, frankly, instances where, um, I would say that the, some of the industry partners are, are very experienced in making deals, and they're gonna wanna make the most favorable deal to them. So it's an interesting role for them. Um, but, but as you're talking, I was also thinking, well, the other piece that's laid over this, uh, especially with medically related stuff, is patient confidentiality and, and HIPAA requirements that, you know, we, we have, if you think about what the, what the fodder is for one of a better word, of, of what's the dr the, the, the grist in the mill in this, it's, it's people and, and they're medical data, and there's a great sensitivity towards that and understandably so. And so, uh, my question for you is, how do you think, or how in your experience has sort of that, those HIPAA considerations, how do they, um, sort of impact both, how did they impact tech transfer and how does tech transfer impact them?

Speaker 3: 20:53

Yeah, that's a great question, Kevin. As you said, especially medical research, uh, so much patient information is key to, to really driving the technology here. And one of the, you know, there's also been a long history related to, uh, potential misuse at times of, of patient data when it comes to research, uh, overall. And so I, with my client base, we see hypersensitivity, uh, very frequently around, uh, that exact interaction between tech transfer, the research program that led there and, and then HIPAA and plus, um, another area of course really being around the commercialization of data and the monetization of data, uh, as, as many organizations, uh, ebb and flow with, with their exact wave of how they want to treat that. One of the things though is, uh, obviously clinical trials are, uh, an opportunity as well as an on the investigator initiated side. And to me, I, I see a lot more IP considerations in contracting today. And I also see a lot of IP hesitancy, uh, from the provider side, uh, who are receiving the clinical trials, uh, and really performing the work in exactly what they're willing to accept, uh, from the intellectual property terms, uh, which has really, uh, led to some unfortunate cases where, uh, contracting is so delayed that we're not actually taking those novel clinical trial cases, uh, to market yet at the same time. Uh, overall I think the, the simplest answer is, you know, HIPAA protections apply, uh, with regard to all patient information as they do, um, elsewhere. Uh, I think we see a lot more blinded information, uh, overall. But, uh, what I've, uh, also found more recently in some conversations with, uh, data scientists throughout the country is that even with that de-identified, uh, information, one of the things that we're, we're seeing is a, a heavy risk of multiple sources of similar de-identified information, uh, really leading to potential, um, the ability to really identify the, the actual individual. So we're seeing data management concerns kind of come into some of the treatment of this. Um, overall though, uh, you know, I do think that there are certain elements that are, are quite important for, for reporting, uh, especially around, uh, commercializing ideas. If we think about pulse oximeters and sort of how they've hit the news and that they didn't necessarily, uh, read, uh, skin types outside of white, uh, you know, it becomes very important when we're taking technologies to market to really have an understanding of the gender and ethnicity of those, uh, individuals who are, uh, really part of the, the studies and the patient information, um, that's important for anybody who might actually be, uh, later on treated by whatever's been commercialized there.

Speaker 2: 23:48

Yeah, I mean, have you, have you seen any instances where the very act of, and you may may have alluded to it, the very act of of, of de-identifying if you don't do it properly, in fact, impedes development of, of the i p either development of the technology, or more importantly, the development of the IP in this sense because you, you lose something that's necessary maybe to appreciate what the, what the invention is or what its applicability or commercialization, uh, possibilities will be,

Speaker 3: 24:18

You know, that it's funny you bring it up. Yes. Uh, just recently in conversations, uh, with a client that was, uh, discussing that exact issue, um, by, um, by de-identifying too much information, um, they felt that they were having a, a harder time tracking, uh, long-term sustainability of the technology that they were, they were really trying to push to market. It's a little different of a story, but, um, but one that, uh, that is a concern, but it does. But to me, Kevin, it does actually make me start to think about patient data overall. Uh, and really kind of the question of whether you can use it. What have you seen out there?

Speaker 2: 25:00

Well, I think that, that, what I tell clients when they have the circumstances, first of all, I think of it as think of your patient data as, as kind of as a, as a, as a black box there is in there is if, if that's what you can do. If you can let people access the data in a way that, that they can, it can be used. It's that accumulation piece. That's what's important. It's the fact that you've accumulated two stories. One is mirror genetics, uh, which I did not represent, but I know that I know those folks. But they, um, as everybody knows, were the people to first commercialize the BRCA gene test with obviously to their ultimate, well, I would say their ultimate this chagrin, but not really. Uh, they're still a thriving company. Um, but they were the folks who brought it to market. We could have a very, very long discussion about, and which we're not gonna have today about why ultimately, um, the, the, the net there was a net benefit to society bec because they did. So what's important is that they had accumulated the data. And if you think about it, they had, initially the patents teases had looked at a certain number of individuals, and mostly a lot of it historical data, because if you remember, myriad Genix came outta the University of Utah. And one of the things that Utah had was, uh, was their, was their, uh, family histories because of the way Utah Salt Lake City was. The, was was, um, settled. They had these family histories that went back 150 years or so. And so they were able to look at, uh, records of what somebody's great-great-great aunt had died from. And people recognized breast cancer. Even then. It wasn't that that was, that it wasn't unknown. And so was by able to look at those family histories and, and build, you know, remember from genetics class, you know, the, the, the, the, the hand histories with the circles in the squares and different colors and that sort of thing. But when they looked at the genes, they could do the correlations. Well, as you might imagine, when modern technology was, was applied to that, now you had millions and millions of data points as more and more people had their, had their DNA being, uh, looked at. You got a lot more data. And the interesting thing is that what most people haven't, who aren't geneticists, haven't thought about, is that we are all individuals down to our d n A level, which means that if you look at a BRCA gene from somebody, you're gonna find the, what we'll call the canonical sequence, right? The one that is the standard. And then they have may or may not have these mutations, these variants that are been associated with disease. Then they have other variants that they call variants of unknown significance because maybe they're not frequent enough, or maybe just by happenstance they haven't been associated with disease in the past. And myriad that database was, was open, and so people could actually see, and as more and more people's dna n a was being tested, uh, those, some of those variants of unknown significance became variants of known significance because they would come up with, with either breast or ovarian cancer. Well, after the whole kerfuffle started with, with gene patenting in the A C L U myriad just shut that off and said, we're not, we're not, uh, letting anybody know what these other variants are, which created the, the issue of if I was a physician, I would want my patient to have the myriad test. Why? Because if there's truly a variant of unknown significance, and it still was, that's what the test would say, but what if Myriad had figured it out? They were under no obligation to tell the world that they'd figured it out at that point. And so now you have a company that has the patent rights being able to control that. I don't think that's a good outcome, but I do think it illustrates that you in fact have, uh, the ability here to, to, um, produce intellectual property that's useful based on a patented test in this case, that by just by accumulating the data will give you, will give you, uh, more and more information. So I think that it comes down to access. And when you mentioned hipaa, there's obviously privacy that you don't want to be able to devolve that, to identify exactly who it was that had the data point, but you don't need to, if all you want people to do is get a more global view of what, of what that access is, and that's, and that can be monetized. So in other words, if you, if you have your database black box, and I can not look into it, I can't go wandering around this thing, what's there, I can propose a question, right? And, and that question could be, for example, here's the sequence that I have, or, you know, what, how many variants that you know of that's associated with breast, ovarian cancer are in your database? And that has nothing to do with anybody's individual, uh, d n A. In fact, it really comes down to noticing that, that several people have, that this is a consistent variant that has that consequence. Um, and that kind of information that doesn't depend on identity and in some ways doesn't depend on ethnicity be, or because you're not asking, what's the likelihood that my patient, depending upon their ethnicity, is gonna get this disease. And the likelihood comes from the data regardless of that, uh, because is it in there or isn't it? And so I do think you have that ability to do it, and that gives you, I think, a way to, to get this correlation between some sort of a diagnostic marker, uh, a genotype and the phenotype, the disease that, that it's correlated with. So, so that just by the accumulation itself, and that's important for this because in the last 10 years, the US Supreme Court in its wisdom has decided that medical diagnostic testing is essentially not, not constitutional, that it should not be pen eligible. And there are ways that some limited form of protection is out there that again, goes beyond the scope of our talk today. But pretty much, uh, it's, it's impossible to get a patent on diagnostics. And I said before, trade secrets are not something that, that is, is, uh, palatable, but this is a little different, right? Cuz this isn't a trade secret per se. This is something that by accumulating the data may give you a way that you can, that you can, um, um, be able to provide some sort of protection, uh, for, for that, for that diagnostic invention. The other thing I would say is that, uh, that in general, the thing that's important, I think, I think universities would be what I'll call the ethical use of their inventions. And one of the things that trade secrets, in this case, in this database, or patents in those instances that can be patented, one of the things that gives you is the ability to prevent people from doing things you don't want them to do. And the thing that comes to mind at first is crystal babies. But that's something that there's other ways to prevent, but there are many things that can be done with the patented invention that maybe you don't want to be done, you think it's unethical. If you're the patentee, then you have a way to prevent that. And if you're the person who has control of that database, similarly, you are in a position to decide who gets accessed and what questions you permit somebody to interrogate the database over. So it does provide, besides all of the economic benefit, it does provide the, that what I'll call the ethical component. That, that if you are in fact, as a university or as a medical center concerned about the way that technology that you developed is used, these are two ways that you can, um, use that, that your, your, your IP rights to at least inhibit, if not prevent the sorts of things that, that you believe are not really ethical applications of your technology.

Speaker 3: 32:58

Okay. I'm glad. I was gonna say, I'm glad you brought that up, Kevin. I, you know, as you were kind of going through some of the examples, I, I know it's more common rule oriented, but first in my head was the Henrietta l uh, scenario, but for data. Um, and I, I work with a lot of faith-based organizations that are really struggling because they're in underserved communities, and exactly what do they do when they start to think about monetizing their data, especially with an, an underserved population because of the just, uh, historic, um, challenges with, um, you know, not necessarily, uh, consenting, uh, you know, patients, uh, for, you know, in her case taking the immortal cells. Um, but, you know, overall, uh, what are you seeing in the market when it comes to, I guess the, you know, how aggressive, uh, organizations are as they start to think about monetizing, you know, and, and really, um, thinking about data as ip?

Speaker 2: 33:54

Well, I think that they do, I think that the, I mean, Henry and Alax is a, is a, it's funny, I have a little bit of problems with that cuz it's what I'll call ex post facto reasoning. Um, nobody knew that her cells would be valuable when, when they obtained them. Um, and in fact, you could make a counter, uh, factual argument or a counter argument to say there were millions and millions of dollars that were wasted by people who thought they'd isolated a tumor cell line from tumor X that at the end of the day turned out to be her cells because of, uh, poor cell turing techniques, that sort of thing. Um, and, and it, she just happened to have a, a tumor cell that grows in culture really well. And that's, you know, sort of a lightning bolt, sort of a Shazam. And of course, remember it was, it was, she had cancer. And so I'm sure that if, if she could have made a deal with somebody to get every cancer cell out of her that was in her body, she, I would've made that deal if I was her. Cause you know, she didn't want it. It just turns out that unfortunately, those cells turned out to be so valuable 30 years later when biotechnology came along. So it really comes as sort of backwards thinking of if we'd known how valuable they would've been, that would've been a different story. But I do think you raise, and it has been raised in the past, this issue of, you know, uh, when people, if you look back 30 and 40 and 50 years ago, there was a lot less focus on there being a, a, uh, well, we'll call informed consent. Uh, the fact that, that people would have to recognize that there would be a, there would be, uh, value and importance in this. Uh, uh, Lori Andrews here at Kent, one of our academics here at, at Kent School of Law, um, has written extensively about this and, and what is before the Henry and Wax story came out, uh, the way it did. But you know, what, what really is the responsibility, uh, when you have people who the, the university or the medical center benefiting from the folks whose day they've used, it's not an easy, uh, situation. Cause in the head of Randy LAX case, it was one person. But what if you have a hundred thousand people whose individual information isn't very significant or important, however, in aggregate they are. And there may be ways I've not seen anybody who's had to been forced to do it. But I do say if, if you're in that circumstance, if you think there's gonna be that situation, then you might think about, for example, if that's valuable and you're making money on it, taking some of that money and maybe using it for support groups or help to the people who have a particular disease, if that's what we're talking about, especially a genetically inherited disease. There are, there are ways that, and, and you get that now with people, some of the people who are funding some of this research, so not by doll private groups are, uh, groups of, of the families, of people who have these diseases. And whether it's GoFundMe or something else, you have ways now that people can aggregate and, and, and make and donate and make money and support research. And there was a very famous case for a professor, uh, that used to be in Chicago and then went down to Florida who got themselves in trouble with this. But, but it came down to, there hadn't been a consideration at the time that there should have been an agreement from the beginning that if, if they, these folks were going to be supporting the research, then there should be something that just out of fairness that they, a benefit they would get, uh, from the results of that research. I think people are way more attuned to that now than they were 20 or 30 or 40 years ago. And I think that's a good thing because it's a way that, that you, you have what I'll, again, I'll call the equitable distribution of benefit from this, that permits, permits people to benefit from something they've contributed to. And I think that's just basic fairness.

Speaker 3: 37:44

Yeah. I really like how you pivoted to giving it back to the community, let it be through rare disease, um, you know, even sickle cell, uh, being included in their or, or really, you know, in other ways just trying to think of, uh, of way, you know, really kind of, you know, can you even, uh, set up your, your tech transfer arm to the point if you are, uh, going to the startup, uh, world, can you do that in a way that you're engaging some of the community that, um, you're benefiting from as well?

Speaker 2: 38:15

I think it's evolving, right? And I think that that's a good thing. So we've spent, you know, 20, 30 minutes talking about, talking about these ba the basics, but in any human system, there are things that we should avoid. And I think we would be, we'd be remiss if we didn't spend a minute, and I'll start with you Keith, and ask you, you know, what, what have, have you seen and what do you think, uh, our listeners should realize? You know, don't do this cause it just causes problems.

Speaker 3: 38:43

Yeah. I'll, I'll start, I'll, I'll give a top five list, Kevin, and then I'll, I'm curious what your top five is. Uh, for me, uh, things organizations should really, uh, avoid. Um, kind of going back to what I said related to the tech transfer offices earlier. Uh, first is, uh, not scattering the team so that they're working on, uh, 90 different activities and they're not focused on deals. Uh, I think that's a way to, you know, really, uh, maximize, uh, staff retention, uh, as much as possible. And, uh, and also, uh, you know, really the faculty engagement. So that, that would be my number one. Second is just a, avoid making the disclosure process so complex. Uh, have clear lines of communication, reach back out, give updates, uh, throughout the entire, uh, process. Uh, overall, um, my third, I'm gonna go with the royalty sharing component and making sure that those are not muddy, uh, at all and that they're very clear. I think one of the components that we're often thinking of, um, is what, what goes in our wallet? And I have met many faculty, very frustrated by, uh, unclear royalty sharing, uh, agreements. Another, um, my number four, uh, would probably be thinking about the community, but then also those that are involved in the entire commercialization process. Um, and I would avoid not having training out there. Uh, I, I think you did such a great job to start about talking about the different types of ip. I very rarely see that sort of training, uh, within any entity. Um, and I think it's important to really get out there and communicate and say, and really talk about, you know, what is, uh, something that could end up in our tech transfer pipeline. Um, and that, no, not every great idea is something that's gonna make its way through, but, uh, but let's really kind of focus on, uh, you know, bringing, um, the good stuff forward and investing in, in those opportunities. And then the last one I would toss out is more of like, how do we measure our success? Um, what are the produ productivity metrics? Uh, a a lot of, uh, tech transfer areas, um, they don't necessarily have those in place, um, and, and report off of it, but licenses should be, um, number one to me, uh, as to the primary productivity me, uh, metric that they should be reporting on to leadership and frankly to the research, uh, community. What are your

Speaker 2: 41:15

Top those are all, those are all good? Yeah, I, I would say, I mean, I think that I have one overarching, uh, issue and then they have the sort of subparts, but I said before, you know, you really do have kind of a class of cultures and not nec not necessarily one, but that happens. And even when it comes down to just the way people do and think, right? And I think that one of the things that comes up specifically is that it's easy for there to be a conflict of interest that you have a, a researcher who, and will now take a researcher who is, is interested in tech transfer, who's interested in starting a company. And, and we have a lot of researchers that are like that, and especially junior researchers. And, and so it's, you have to realize, and you have to have help realizing, because you know, I mean lawyers are trained in this a little bit, but most people aren't, is just to be able to facilitate because you can't necessarily avoid conflict of interest, but to facilitate how to act properly in that when you have your university researcher, faculty member hat versus your company hat, and nobody I think wants to do things that are, that are, um, uh, sort of wrong. But I think that you, you do need to, uh, maybe put a little bit more top of mind. Uh, we are the responsibilities in every instance lie. And that can, cannot, sometimes cannot be be easy. And I think that that the more there's a even a discussion about that, uh, and that people realize, okay, if you're gonna do this, um, faculty member, uh, even if you're not gonna be say the cs o of a company, what if you're just gonna be a consultant? Because that's something that frequently will happen for the reason very simply that, uh, you don't publish everything. In fact, you don't publish the stuff that doesn't work. And so one of the things that a company just licensing, uh, something from a faculty member will wanna do is to have the faculty member come on as a consultant because then they can ask them, well, what didn't work right? What shouldn't we waste our time doing? And that can be very, very valuable because, you know, there are many ways that somebody might try to do something in commercialization that had they known, uh, they wouldn't waste their time doing it. And so, but there's no, if all you have is a, is a, is a, a license, sort of a hand arms length license, there's no obligation to tell them, um, except of course you want them to succeed, but this way it's a way that it happens. Well, if that happens though, because it's common, then you have to have a way to make sure that the university person understands exactly where the different lines of, of the interests are and where the conflict arises. Another place that that arises is, is with students and even with, with, uh, faculty members, with publications, because I said before that trade secrets are not something the universities typically are involved in for a health, uh, a wealth of reasons, not the least of which is that's not the university's role. They'll keep things a secret. Their their whole role is to, is to do research or to publish it. But what happens is there's a way to accommodate that by timing. And, and one of the things I tell, uh, my university inventors and tech transfer offices is, you know, uh, treat me like your priest. You're gonna tell me everything and I'm your lawyer, so I can't tell anybody, but I can file patent applications and I can make sure that if you're gonna go to a meeting that we're protected. And all I can tell you in, in, in, in what I want from, from you in, in, in response to that is it's very easy to get into conversations with people. And the one place that you do have to think about this is if you're standing talking about your work, whether it's a poster or after presentation, and you get a brilliant new idea. You don't have to talk about it with that person at that moment. And if you feel that you're, you're not fully participating in, in the give and take of science, then make sure you get their card to their contact info. And after I've had a chance to protect it, you can talk about it all you want. Okay? And so I think that that, but you do have to accommodate the fact that you can't keep things secret. We don't want you to keep things secret, but we do want you to, um, to be able to properly disclose things in a way that you are, that you are protected. And then I guess the other thing that comes down in this sort of difference in, in cultures, uh, I I, I know people who scientists who without even thinking about it, uh, come to the process by saying, especially if they wanna start a company by saying, I'm a really bright guy. And, and frankly, it's true, they are. And I'm a university professor and have a PhD and I do this research and, and, and all that. And, and so that's fine. My brother-in-law is a successful businessman compared to me. He's an idiot, okay? So I love him, but he's not really all that bright. So business must be easy cuz if people like him can be successful in it, then I'm a professor, I should be even more successful. And of course, the problem is that they really are yin and yang. They're just to two totally different ways of approaching things. And many times I've seen companies get themselves into trouble, especially startup companies where they have a, a very powerful platform technology, but they get investors. But to actually bring something to market, they have to pick something of the many things they could do at their platform. They have to pick something to do. And that's where I've seen companies hesitate because if you pick something, you can pick the wrong thing and then you can fail. And, and people understandably are very<laugh>. They don't wanna fail. And so I think that, that you have that, again, you're sort of adapting a business sort of perspective on top of PE with people who are scientists. And it's a different way of thinking about things. And that even comes down, and you were talking about before with text transfer folks, because they're trying to make deals with license licensees companies, and you don't always have, and necessarily, I hear companies complain sometimes justifiably that the text transfer offices overvalue the technology. And a way, another way of putting that is that the, the, um, and, and the public does it as well that, oh yes, the government spent a million dollars on development's technology, yes, but it took a billion dollars to get it to market. So even though there's that million may be a little bit more heavily weighted in favor of recompense, because without it, you'd have nothing. You can't discount the billion dollars that the company had to spend in order to get it to market. So sometimes, you know, you, you really can't make money if you have to give 50% of your net profit to the university as a licensing fee. And so sometimes, and very few people do that, by the way, but my point is you even ask for it. But my point is that you do sometimes see, especially when you're negotiating licenses, that sometimes it's not that you're on, that you, that you're in favor of the licensee who's on the other side of the table. Of course you're advocating for your client, but you do see their point and you do see what they're, when you try to explain this is really why, what you are asking for may not be as reasonable as you think it is, and we'll, we'll make that argument. But if, if you wanna help the client, sometimes you have to explain this is what really the realm of reality and possibility is. And it isn't always consistent with what the text transfer person thinks or wants or may needs depending upon the politics and their, and their university. So it, it, it comes down to maybe being a facilitator of trying to actually get, get something where everybody wins to the extent that they can and that this is a successful, um, program, including, of course, making sure that things like milestones we talked about before are such that you can have the company sit on the technology and not develop it until the patents run out and then be able to get it free and clear. And, and it doesn't ha again, it doesn't happen often, but it isn't with outside the realm of possibility. So part of our, I think our role as outside council is try to look at it a little bit dispassionately and say, all right, what's the best way to get to something where you maximize the likelihood of success, um, for, for your client? And sometimes that doesn't mean getting a hundred percent of what they want, but it means getting the best that they can get with the realities of commercial realities that sometimes they're, uh, somebody is not always, uh, as attuned to as, as, as experience might, might make them be.

Speaker 3: 49:35

That's a great example.

Speaker 2: 49:38

All right, I think we're at the end of our time. And then, Keith, I gotta tell you, I thank you very much for, uh, your time and, and, and contribution to this. And I, I've had fun.

Speaker 3: 49:47

Yeah. Thank you, Kevin. I, I always enjoy our conversations. I always learned something. I I love the examples.

Speaker 1: 49:59

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