Intellectual Property Rights: Problems and Solutions

Anatole F. Krattiger

Adjunct Professor, Cornell University Research Professor, Biodesign Institute & Sandra Day O’Connor College of Law at ASU

International Consultant (bioDevelopments LLC)

Transgenic plants for food security in the context of development Pontifical Academy of Sciences, Vatican, Rome

15-19 May 2009

intercontinental Consultants

(c) 2009. Anatole Krattiger.(c) 2009. Anatole Krattiger.

These slides may be used freely for any educational and non-profit uses, provided the source is properly acknowledged.

For any commercial uses, please contact:

Anatole F KrattigerCornell UniversityBiodesign Institute & Sandra Day O’Connor College of Law at ASUbioDevelopments LLC (International Consultant)PO Box 26Interlaken NY 14847, USA

Phone +1-607-532 4413Fax +1-212-504 8287Skype Anatole35anatole@bioDevelopments.com or afk3@cornell.edu

Authoritative and ethical stewardship of intellectual property is at the core of partnerships and will become increasingly important in the management of the “knowledge commons”.

Institutions working for the “public good” operate at the nexus of public and private and should take IP management more seriously as a critical component in any strategy aimed at directing innovation to the poor.

Main take-home messageMain take-home message

1. What is IP?

2. What are they key problems with IP?

3. Solutions are “beyond” IP: Principles of innovation management

4. Golden Rice case study

5. Conclusions: Managing the “Knowledge Commons”

Intellectual propertyIntellectual property

• A legal concept: Copyright, trademarks and geographic indications, patents, trade secrets, plant variety protection

• A social construct that defines “intangible” borders (as opposed to tangible, real property borders)

• A business asset that can be valued and traded

• An instrument to achieve humanitarian objectives

• A policy tool to foster investments in innovation

Effects of the introduction of PVPEffects of the introduction of PVP

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Yield index of major crops (1930 = 1.0)

Private sector investmentsinto corn breeding (excl. biotech(US$, millions, 2000 equivalent)

But…But…

To benefit from stronger plant variety protection:

1. Vibrant public sector breeding

2. Farmer choice (competition & antitrust)

3. Healthy farm economies

Plato (400BC)Plato (400BC)

Virtue … unity … community … abolish the private.The Republic

Plato (400BC) Plato (400BC) Aristotle (350BC)Aristotle (350BC)

Virtue … unity … community … abolish the private.

Wrong objective and impracticable:

The roots of evil are in men’s (sic) inherent wickedness.

Aristotle, Politics

The Tragedy of the CommonsThe Tragedy of the Commons

Even supposing that it were best for the community to have the greatest degree of unity, this unity is by no means proved to follow from the fact 'of all men saying "mine" and "not mine" at the same instant of time,' which, according to Socrates, is the sign of perfect unity in a state. . . That which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest. . . Everybody is more inclined to neglect the duty which he expects another to fulfill. . .

Aristotle, Politics, II

Tragicomedy?Tragicomedy?

Compare:• Tragedy of the Commons• Tragedy of the Anticommons

M Heller & R Eisenberg, 1998

• The Gridlock EconomyHeller, 2006

• “Communal” resource management (land, fisheries, airwaves, etc)

The Contribution of the RomansThe Contribution of the Romans

The Romans embedded property rights (dominium) into elaborate laws.

The Middle-AgesThe Middle-Ages

Self-denial…

Property is the source of evil, capable of corrupting the soul and leading to sin.

Ciborium of S. Giorgio in Velabro, Italy,with frescoes of Cevallini.

St. Augustine of Hippo (400 AD)St. Augustine of Hippo (400 AD)

A property-less society can only exist in Paradise.

It requires perfection to succeed.

Monarch of Medieval Europe Issues First Monarch of Medieval Europe Issues First MonopolyMonopoly

The Venetian Republic grants monopoly in 1443 to conveyor belt inventor (Inventor Bylaws, 1474).

The British Crown follows in 1623 (Statue of Monopolies).

The first US Patent: 1790The first US Patent: 1790

Right enshrinedin US Constitution:

… promote progress of science and useful arts

… exclusive right for a limited time

Industrialization and the 19Industrialization and the 19thth Century Century

• Those who wanted to acquire industries were leading the debate to create the Paris Convention in 1883:

…for the protection of industrial property… and the repression of unfair competition…

Many unresolved issuesMany unresolved issues

Eg. Interface of “western” system with other cultures

Principles Themes of PropertyPrinciples Themes of Property DiscussionsDiscussions

Balance between

Politics Stability Freedom, social unrest

Ethics Fruits of one’s No equal own labor opportunity

Economics Efficiency Wasteful competition, gridlock

Psychology Self-esteem Greed

Take-home lessons #1Take-home lessons #1

IP is a compromise, an imperfect solution. In absence of alternative, the best we have.

Search for balance has accompanied societies for millennia.

IPRs are instruments of public policy to confereconomic privileges on individuals or institutions for the purposes of contributing to the greater public good. The privilege is a means to an end, not an end in itself.

The devil is in the details on how this balance is struck

1. What is IP?

2. What are they key problems with IP?

3. Solutions are “beyond” IP: Principles of innovation management

4. Golden Rice case study

5. Conclusions: Managing the “Knowledge Commons”

Key problems of IP to achieve food securityKey problems of IP to achieve food security

Industry: – Incentives are not always at the right place

(the “wisdom” of the “herd”)– Broadly accepted codes of ethics lacking in regard

to IP management– Insufficient experience in managing technologies for

dual purposes (economic and humanitarian)– Liability law (tie-in of IP with product liability), due to

“expression” of IP in material property

Key problems of IP to achieve food securityKey problems of IP to achieve food security

Industry

Donor organizations: – Slow in funding IP capacity building in the public

sector– Late in requiring sound IP management plans

(eg. Bill & Melinda Gate Foundation’s “Global Access Strategy”)

Key problems of IP to achieve food securityKey problems of IP to achieve food security

Industry

Donor organizations

Governments: – Slow in adapting to changing circumstances and

new technologies– Unresponsive to public sector needs– Weak in enforcing anti-trust regulations

(competition, collusion, etc)

Key problems of IP to achieve food securityKey problems of IP to achieve food security

Industry

Donor Organizations

Governments

Public sector: – Mistrust vis-à-vis private sector– Though of IP to be the sole purview of the private

sector for too long– Slow in uptake of IP management policies and practices– Misunderstanding of public good and private good

1. Non-rivalry in consumption(a good whose use by one person does not compete with or rival its use by another person)

AND

2. Non-excludable(no person can exclude other persons from its use)

A public good is…A public good is…

Take-home lessons #2Take-home lessons #2

Public and private goods meet every day at the intersection of IP.

Private is not the opposite of public.

A public good is never (or rarely) free.

1. What is IP?

2. What are they key problems with IP?

3. Solutions are “beyond” IP: Principles of innovation management

4. Golden Rice case study

5. Conclusions: Managing the “Knowledge Commons”

Innovation is…Innovation is…

Doing something that creates (more) value.

6 components of innovation management

Research, Sci & Tech

Regula-tions IP

Manu-facture

Domestic Market

Export Market

Research

Development

Commer-cialization

Source: Mahoney 2004

Important roles by public and private sectors

Research, Sci & Tech

Regula-tions IP

Manu-facture

Domestic Market

Export Market

Research

Development

Commer-cialization

Role of Public Role of Private

The innovation management framework:The innovation management framework:

• Interconnected (progress in one requires progress in others)

• Implemented through networks

• Dynamically linked (absence of one cannot be compensated by emphasis on another one)

• Global Access Strategy or Innovation Management is all about STEWARDSHIP.

• “PDPs” in health were set-up for this purpose.

What are Product-Development Partnerships?What are Product-Development Partnerships?

• Using private sector approaches and resources to tackle R&D challenges

• Target one or more neglected disease • Focus on products suited for use in developing countries• Take candidates through to the commercialization

value chain• Primarily pursuing public health objectives• Employ multi-candidate/portfolio management approaches:

– Business Plan, Scientific Blueprint, Pharmaco-Economic Analysis, Rigorous “Go—No-Go” Milestones.

Global Access StrategyGlobal Access Strategy

eg. A live recombinant attenuated Salmonella anti-pneumococcal vaccine for newborns

“… an innovation management plan to achieve a beneficial public health outcome.” Krattiger, 2005

First 4 year of the anti-pneumococcal vaccineFirst 4 year of the anti-pneumococcal vaccine2005 2006 2007 2008 2009

S. typhimurium & other Salmonella vectorsEngineering & Characterization

Discovery & Characterization of new S. pneumoniae AgsSeroepidemiology Study

Plasmids Construction & Characterization

Reagents Generation

Live rAttenuated Salmonella anti-pneumococcal Vaccine(s)

Development Overview

New Vaccine Candidates Engineered and Characterized

2010

RAStyV = Recombinant Attenuated Salmonella typhi Vaccine RASV = Recombinant Attenuated Salmonella Vaccine

First Generation RAStyV Evaluated in Human GNG

GNGSecond Generation RASV Evaluated in Human

First Generation RAStyV Engineering & Characterization

GNG Go, No Go Decision

Principal outcomesPrincipal outcomes

BroadDeveloping and delivering an anti-pneumococcal vaccine for newborns, particularly for developing countries

Specific Availability of specific vaccines A platform for other vaccines Ensure Access: affordability

acceptability adoption

Principal components of ASU’s GASPrincipal components of ASU’s GAS

1. Science and research

2. Regulatory aspects

3. IP management

4. Production/Manufacture

5. Meeting national needs

6. Trade/export markets

3. IP management3. IP management

Key drivers Ensure necessary incentives are available for

product development, clinical trials, manufacture and distribution/marketing

Make scientific and technological advances available as widely as possible

Use IP as a tool to facilitate global access and widespread adoption

Principal Tools• Project-related IP policy• In-licensing strategy to obtain FTO• Patenting strategy• Licensing strategy• Confidentiality and protection of regulatory data, if

helpful• Branding strategy (trademarking)• Laboratory notebook and invention disclosure policy• Patent enforcement and infringement policy• Law, jurisdiction, dispute resolution, indemnification,

liability, insurance.• Etc.

Major issues to be resolved (triggered by milestones)• What background IP is available and necessary• Willingness to pay: developed country and higher

middle income countries• Manufacturing capabilities in developed an

developing countries • Financing of production capabilities• FTO strategy• Source of value

Some elements for negotiation/incorporation into Some elements for negotiation/incorporation into licenses with public sector goalslicenses with public sector goals

Rights to Practice IP rights includedFieldTerritory

DurationDegree of exclusivity

Commercial Data Product/MaterialProduction

SOPs

Future Improvements From LicensorFrom Licensee

From other LicenseesRights to Payment(s) for

Right to Sublicense Conditions forSplit of fees

ImprovementsGrant backs

Patent Expenses Maintenance CostsForeign filings

Prosecution CostsDefense of Patents

General Indemnity Product Liability Ownership Issues

Quality Control TestingLaboratory Services

Trademark Policing

Regulatory Approval Pre-ClinicalClinical I-IV

DataDossiers

Infringement Issues Studies and opinionsFreedom to Practice

Suits (against infringers, by third parties)

FTO strategiesFTO strategies

Legal/IP Management Strategies1. License in2. Cross-license3. Oppose third party patents4. Seek nonassertion covenant5. Seek compulsory license

Krattiger 2007.

FAKE… itz the new REAL!FAKE… itz the new REAL!

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FTO strategiesFTO strategies

Legal/IP Management Strategies1. License in2. Cross-license3. Oppose third party patents4. Seek nonassertion covenant5. Seek compulsory license

R&D Strategies6. Modify product7. Invent around

Krattiger 2007.

Source: lachschon.de

FTO strategiesFTO strategies

Legal/IP Management Strategies1. License in2. Cross-license3. Oppose third party patents4. Seek nonassertion covenant5. Seek compulsory license

R&D Strategies6. Modify product7. Invent around

Business Strategies8. Wait and see9. Abandon project10. Merge and/or acquire

Krattiger 2007.

© Jim Lavrakas, 2000.

In Practice:

A combination of several options implemented concurrently

FTO strategiesFTO strategies

Marketing and branding• Conduct of large scale vaccine-introduction trials• Consensus on the need for the vaccine • Recommended use practices• Assurance of adequate and competitive supply• Creation and sustenance of funding mechanisms to

procure the vaccine• Effective communications with health professionals,

scientists, and the public about prevention and control

• Establishment of advocacy groups

Take-home lessons #3Take-home lessons #3

The 6 principal factors of innovation are interconnected.

Innovative organizations build and maintain networks that allow them to address each of the factor.

Innovative organizations are largely characterized by the number of “connections”

Cross-sector (public/private) cooperation is essential.

1. What is IP?

2. What are they key problems with IP?

3. Solutions are “beyond” IP: Principles of innovation management

4. Golden Rice case study

5. Conclusions:™

The IP situation with golden riceThe IP situation with golden rice

• ~70 patents and patent applications might be applicable to golden rice when all patents issued in or applied for in all countries were considered.

 • A dozen material transfer agreements were also

identified, 1 of which needed a license.

• The published analysis, and legal opinion, concluded that, in practice, only a few patents were applicable in developing countries.

Kryder et al., 2000 

Resolving the IP constraints with golden riceResolving the IP constraints with golden rice

1. Assembly of IP and tangible property rights:- within a few months, in licensing, for humanitarian use,

led by Zeneca (Adrian Dubock), of key IP components (Bayer AG, Monsanto, Novartis AG, Orynova BV, Zeneca Mogen BV, others)

2. Out-licensing, by Syngenta, via the inventors, the bundled IP to public sector institutions in developing countries:- Bangladesh India, Indonesia, Philippines, Vietnam and

many more - Policy support from Syngenta’s chairman, Heinz Imhof

Krattiger & Potrykus, 2007

Principal terms of the humanitarian licensePrincipal terms of the humanitarian license

• For use by resource-poor farmers (< US$10,000/year from farming)

• Use of public varieties• No technology fee• Farmers are allowed to reuse harvested seeds• No release in countries lacking biosafety regulations • Export to licensees for research and use is permitted• Improvements:

– Humanitarian use allowed (Syngenta already licensed many improvements)

– Commercial rights to improvements are granted back to Syngenta

Take-home lessons #4Take-home lessons #4

A case study on how public & private sector innovations can be put to work to help the poor with focused public sector IP management.

The preliminary FTO “analysis” of golden rice served as a wake-up call for the public sector, and donors.

Other constraints are much more critical (eg. biosafety) but failure to address IP would make IP critical.

1. What is IP?

2. What are they key problems with IP?

3. Solutions are “beyond” IP: Principles of innovation management

4. Golden Rice case study

5. Conclusions: Managing the “Knowledge Commons”

www.ipHandbook.orgwww.ipHandbook.org

Broad conclusionsBroad conclusions

1. Move away from IP management.

Place emphasis on knowledge management.

2. Government policy everywhere should be focused on maximizing the public good which should include appropriate private incentives.

3. Public sector institutions should explicitly manage IP with the dual goals of creating economic value and achieving humanitarian goals.

Specific conclusions for food securitySpecific conclusions for food security

1. IP management is an effective, and essential tool, in achieving humanitarian objectives.

Proven approaches include:– donations– different types of product-development partnerships– creative licensing practices through

various forms of market segmentation

All require IP management!

2. Insufficient attention has been paid by the public sector to managing IP.

This lack of focused attention must be corrected.

Public sector must appreciate how it can use its own IP—and leverage that of others—to help meet its social mission.

3. PVP and plant genetic resources:

The trend of restricting germplasm flow is one of the most important threats of future progress in plant breeding.

The open exchange of plant genetic resources for breeding purposes, particularly by the public sector, must be maintained/improved.

4. “Downstream” responsibilities require larger networks.

Collaboration with the private sector, both upstream and downstream, should often be build much earlier in the innovation continuum.

Authoritative IP management is an important pre-requisite for this.

Donors have an important role to play in applying pressure on leveraging an innovation network of outsiders.

5. “Knowledge management”

The need for models in creatively managing the “knowledge commons”.

How can we leverage a growing network?How can we leverage a growing network?

Anatole F KrattigerCornell UniversityBiodesign Institute & Sandra Day O’Connor College of Law at ASUbioDevelopments LLC (International Consultant)PO Box 26Interlaken NY 14847, USA

Phone +1-607-532 4413Fax +1-212-504 8287Skype Anatole35anatole@bioDevelopments.com or afk3@cornell.edu