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					 Intellectual Property Basics
   for Research Contract
Negotiators & Administrators


  BethLynn Maxwell, Ph.D., J.D.
  The University of Texas System
     Office of General Counsel
     NCURA 2006 Region V Meeting
      Austin, TX ~ May 10, 2006
                  Discussion Points
   Patent Law Primer
   Four Major Areas in Research Contracts
       Intellectual Property
           Troublesome Clauses in Research Contracts
       Confidentiality
       Publication
       Indemnification



                      NCURA 2006 Region V Meeting -
                        May 10, 2006 - Austin, TX       2
Patent Law Primer




    NCURA 2006 Region V Meeting -
      May 10, 2006 - Austin, TX     3
              Types of
        Intellectual Property
   Trademarks ~ identifies source of
    goods or services
   Copyrights ~ protect works fixed in
    a medium
   Trade Secrets ~ best where the
    subject matter can‟t be easily
    “reverse engineered”
   Patents ~ 3 kinds: design, plant and
    utility
                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     4
         The United States
          Patent System
   Government sponsored “monopoly”;
    limited by time and geography
   Does not convey affirmative right –
    only the right to exclude others
   Article I of the Constitution
    provides the legal foundation
   Administered by the Commerce
    Department through the U.S. PTO
               NCURA 2006 Region V Meeting -
                 May 10, 2006 - Austin, TX     5
         Requirements for
      Securing a Patent in U.S.
   Statutory Subject Matter ~ category
   Novelty ~ new, first to invent
   Utility ~ specific, substantial, credible use
   Not obvious ~ person of ordinary skill in the
    art
   Written Description ~ clear and concise
    terms
   Enablement ~ enable others to make and use
   Best Mode ~ to carry out invention
                    NCURA 2006 Region V Meeting -
                    May 10, 2006 - Austin, TX       7
What is Patentable Subject
  Matter ? 35 U.S.C. § 101
   Novel Subject Matter – new, not
    made or done before
      What is the invention? A
       process, machine, manufacture,
       composition or improvement?
   Cannot claim products of nature,
    physical & chemical principles
               NCURA 2006 Region V Meeting -
                 May 10, 2006 - Austin, TX     8
            Utility ~
    Usefulness of an Invention
   Specific utility
        Is the utility specific for the claimed
         invention?
   Credible utility
        Is that specific utility credible?
   Substantial utility
        Does the utility have real world value?

                  NCURA 2006 Region V Meeting -
                    May 10, 2006 - Austin, TX      9
            Specific Utility
   The utility has to be specific to the
    subject matter claimed.

   Contrast this to a general utility that
    would apply to the general class of
    invention.

               NCURA 2006 Region V Meeting -
                 May 10, 2006 - Austin, TX     10
            Credible Utility
   Standard is whether a person of
    ordinary skill in the art would accept
    that the disclosed invention is
    currently available for such use
       Perpetual motion machines
       But, some nucleic acids might be used
        as probes, chromosome markers, or
        forensic or diagnostic markers
                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     11
           Substantial Utility
   “Real world” use

   Must not require further research to
    identify or confirm a real world context

   Throw away utilities are not substantial
    uses unless nature of invention is
    specifically directed to such uses
                 NCURA 2006 Region V Meeting -
                   May 10, 2006 - Austin, TX     12
 Invention Can Not Be
Anticipated (35 U.S.C. § 102)
   Not anticipated by the prior art
       Applicant shall be entitled to a patent unless 1 of the 6
        conditions creates a time bar or if the applicant is not
        an inventor.
       Each and every element of the claimed invention must
        not be disclosed in a prior art reference.

   Objective standard of someone
    skilled in the art of the invention

                    NCURA 2006 Region V Meeting -
                      May 10, 2006 - Austin, TX                     13
    Invention Can Not
 Be Obvious ~ 35 U.S.C. § 103

An invention is not patentable if the
subject matter of the patent claims, as
a whole, would have been obvious at the
time the invention was made to a
person having ordinary skill in the art
to which the claimed subject matter
pertains.
             NCURA 2006 Region V Meeting -
               May 10, 2006 - Austin, TX     14
    Factors to Consider For
       Non-Obviousness
   1 – Educational level of the inventor; and
   2 - Type of problems encountered in the
    art; and
   3 - Any prior art solutions to those
    problems; and
   4 - Rapidity with which innovations are
    made; and
   5 - Sophistication of the technology; and
   6 - Educational level of the workers active
    in the field NCURA 10, 2006 - Austin, TX -
                   May
                       2006 Region V Meeting
                                                15
Enablement Requirements~
Teach How to Make and Use
   Written Description ~ full, clear, concise
    and exact terms

   Enablement ~ Must enable others to make
    and use the invention without undue
    experimentation

   Best Mode ~ Must present best way to
    carry out the invention
                 NCURA 2006 Region V Meeting -
                   May 10, 2006 - Austin, TX     16
         Non-Infringement
          Patent Disputes
   Inventorship disputes – defining
    inventorship is difficult
   Interferences – who was the first to
    invent
   Ownership – research agreements,
    MTA‟s
   Most turn on who did what and when
                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     17
          One Final Point ~
        Patenting Strategies
   Develop a Patent Claim Drafting Strategy
   Select Type(s) of Claims
   Prioritize Goals for Maximum Protection
   Include Licensing Safeguards
   Analyze Potential Revenue Flow ~ Carefully Define
    Field of Use
   Analyze Target Infringers
   Address all Statutory Hurdles

                    NCURA 2006 Region V Meeting -
                      May 10, 2006 - Austin, TX         18
             The Big Picture
Synergies exist and great value can be created

       Hypothesis           Discovery &          Late Dev. &
        & Theory             Early Dev.        Commercialization


     Research Inst.

                             Biotech

                                                    Big Pharma


                    NCURA 2006 Region V Meeting -
                      May 10, 2006 - Austin, TX                    19
                               The Big Picture
                                Perspectives

                 Research
                 Institution               Biotech                 Pharma

 Stake-       Taxpayers            Early Investors/VC  Institutional Investors
 holders      Government           Founders            Board of Directors

Concerns      Prestige             Newsworthiness         Sustainable Growth

  Goals       Top Faculty       Survival                  Meet Projections
              National Ranking  Validate the Study        Strengthen Pipeline

Objectives    Endowment        IPO/Market Cap             Increase R&D
              Research Grants  Rapid Growth               Productivity


                           NCURA 2006 Region V Meeting -
                             May 10, 2006 - Austin, TX                        20
                           The Big Picture
                              Cultures

                  Research
                  Institution              Biotech               Pharma

  Real Life    Ivory towers       Hype                    Blockbusters
               Tenure             Heroic founders         Bureaucracy
               Publish or perish  IPO                     Slave to the street
  Values       Expansion of         Expansion of          Expansion of
                knowledge             market cap             profits

Assumptions  Risk is removed        Risk is embraced  Risk is mitigated
             Speed is               Speed is life     Speed is important
              subordinate


                           NCURA 2006 Region V Meeting -
                             May 10, 2006 - Austin, TX                             21
                 Understanding Who You Are
                      Negotiating With
                                      Critical Deal Topics
Importance




             Publication Rights   Confidentiality           IP              Indemnification
                                          NCURA 2006 Region V Meeting -
                                    Research Institution    Biotech
                                            May 10, 2006 - Austin, TX
                                                                          Pharma
                                                                                              22
    Typical Points of Contention –
         Critical Deal Topics
   Intellectual Property
   Publication
   Confidentiality
   Indemnification

            NCURA 2006 Region V Meeting -
              May 10, 2006 - Austin, TX     23
       Intellectual Property
              Concerns
   IP Ownership and Inventorship
      All 3 Entities Agree:

        Inventorship follows U.S. Patent
         Law
        Rule: Creator owns data/IP
           Exception: Clinical Trial
           Agreement
        Ownership follows inventorship
                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     24
    Intellectual Property
   Should be Treated Same for All
    Agreements
       Sponsored Research Agreement
       Clinical Trial Agreement
       Material Transfer Agreement

                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     25
         Ideal IP Clause
       for All Agreements
   What you invent is yours
   What I invent is mine
   What we jointly invent is jointly owned
   Inventorship follows US patent law
   Ownership follows inventorship
   $$$ does NOT equal ownership
                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     26
       Troublesome IP Clauses
   Non-Exclusive Royalty-Free License
     Internal research only - Good
     To make, use, and sell, and
       sublicensable - Bad
   Sponsor Wants to Own Our IP
     Not just a license
   Background Intellectual Property
   Right of First Refusal
               NCURA 2006 Region V Meeting -
                 May 10, 2006 - Austin, TX     27
    Non-Exclusive, Royalty-Free,
          License in SRAs
   Internal, Research Purposes Only
       Acceptable; AOK; conforming
       Non-transferable
       Make sure NERF comes with option to nego
        royalty-bearing, sublicensable exclusive
        license to make, use and sell
       Try to limit all NERF licenses to internal use
        only – avoid any language that gives Sponsor
        right to commercialize our inventions for
        free         NCURA 2006 Region V Meeting -
                       May 10, 2006 - Austin, TX     28
     Non-Exclusive, Royalty-Free,
            License in SRAs
   Sublicensable & Right to Make,
    Use, & Sell
       Non-conforming; LOUSY
       Try to negotiate this clause out
       Or, reduce to NERF license for internal
        purposes only and link to royalty-bearing
        exclusive license
       Non-exclusive means no exclusive licenses
        are offered to anyone else – only non-excl
       What if Sponsor won‟t Meeting -
                     NCURA 2006 Region V
                                         budge? Admin. App.
                        May 10, 2006 - Austin, TX             29
Sublicensable NERFs in SRAs
    This agreement allows Sponsor a
     world-wide, perpetual, royalty-free,
     fully paid-up, non-exclusive license,
     sublicensable to anyone, to make,
     use and sell any Invention created
     under the agreement.


                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     30
What if Sponsor Wants to Own
           Our IP?
   Not Okay in Sponsored Research Ag
       $$ does not equal ownership
       We should own what we invent
       Grant royalty-bearing license, make, use, or
        sell
       Grant NERF license for internal purposes only
   Okay in Sponsor Initiated Clinical Trial
    Agreement
       WHY???
               NCURA 2006 Region V CTAs.
    Not Okay in PI initiatedMeeting - Why?
                     May 10, 2006 - Austin, TX          31
    Clinical Trial Agreements
   Sponsor Initiated CTA
       Okay for Sponsor to own IP – Why?
   Principal Investigator Initiated CTA
       Institution should own IP
       Sponsor will usually insist on owning our IP
   Jointly Initiated CTA
       Both Institution and Sponsor should own IP
                   NCURA 2006 Region V Meeting -
                     May 10, 2006 - Austin, TX     32
                 Background IP
   What is it?
       Stuff you own going into an Agreement
       Why would Sponsor want it?
       What should you do?
            Don‟t agree to BIP
            OR – narrowly define it to one piece of IP
   Problems with Background IP
       Scope
       Identify it
       Limit it to one PI
       Control it
   Compare to Foreground IP
                  NCURA 2006 Region V Meeting -
                            May 10, 2006 - Austin, TX     33
           Right of First Refusal
   What is it?
       Gives the holder the right to meet any other
        offer before the proposed contract is accepted.
       When Sponsor has a NERF license and does not
        exercise its option to negotiate an exclusive,
        royalty-bearing license
       AND, reserves a right of first refusal
   What Does it Mean?
       If you negotiate an exclusive, royalty-bearing
        license with another company, before you sign
        contract, you have to offer that deal to Sponsor.
                     NCURA 2006 Region V Meeting -
                       May 10, 2006 - Austin, TX            34
    Summary ~ Avoid Pitfalls

   When negotiating IP, avoid
    troublesome clauses
       NERF licenses to make, use and sell
       Ownership of IP
       Background IP
       Right of First Refusal

                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     35
        Publication Concerns
   When Can We Publish?
   What Can We Publish?
   Pre-Publication Review Process
   What is a Reasonable Delay?
   How to Monitor Faculty‟s Enthusiasm
   Real World Remedies & Deal Breakers
               NCURA 2006 Region V Meeting -
                 May 10, 2006 - Austin, TX     36
    When/How Can We Publish?
    Research Institutions – Non-Negotiable
    Preserve Institution/Principal
     Investigator‟s absolute right to publish
    Sponsor cannot “control” our publication
     rights or “approve” contents of
     publication
    Cross reference right to publish in
     confidentiality and ownership of data
     §§
    Principal Investigator owns the
     copyright in his/her publications
                   NCURA 2006 Region V Meeting -
                     May 10, 2006 - Austin, TX     37
             When Can We Publish?
        Research Institutions - Negotiable
   Review periods
       Must be reasonable
       Balance publish or perish
       Length of review period
            30 - 60 days for manuscripts and 15 for abstracts – longer
            times discussed with and initialed by PI
       Delay publication to protect intellectual property
             Must be reasonable delay and must be specified
             Average ~ 60 – 90 additional days for filing

           Multi-site/center clinical trial studies
             Preserve Institution/PI‟s right to publish separate from
              multi-site joint publication after reasonable delay
             Reasonable delays permitted until joint publication is
              published OR 12 – 18 months after our study is over
              (whichever is shorter)
                            NCURA 2006 Region V Meeting -
                              May 10, 2006 - Austin, TX                   39
        What Can We Publish?
              Research Institutions
   We must have an unrestricted right to publish
   We want to publish everything
       Publish or perish – educate faculty
       Balance between publishing all versus publishing enough
        data to support conclusions
   If data and results are made confidential:
       Delete section that makes data/results confidential
       Preserve absolute right to publish info that supports
        conclusions
   Problems with young data (not raw data)
       Company/Sponsor wants to delay publishing until data is
        matured (or is it now stale?). Data is not like fine wine.
                        NCURA 2006 Region V Meeting -
                          May 10, 2006 - Austin, TX                  40
       How to Monitor
     Faculty’s Enthusiasm
        Research Institutions
   Once it is out of the bag …
   Educate, educate, educate
   Stress importance of “no headlines”
   Emphasize their reputation is at stake
   Administrative oversight
               NCURA 2006 Region V Meeting -
                 May 10, 2006 - Austin, TX     41
Real World Deal Breakers ~
        Publication
   Company/Sponsor cannot restrict or control our
    right to publish
   Deal will go “south” if Sponsor:
       Demands to “approve” manuscript/abstract
       Insists on unreasonable delay for review before
        publishing
       Insists on unreasonable delay for filing patent
        application
       Refuses to cross reference our publication rights in
        confidentiality § and § where Sponsor “owns” data
   Rarely a deal breaker – but they do exist
       Our needs are statutorily driven and are fair
                       NCURA 2006 Region V Meeting -
                         May 10, 2006 - Austin, TX             42
     Ideal Publication Clause ~
       Research Institution’s
            Perspective
   “Institution shall have the right to
    publish or disclose all results of the
    research. To the extent that Company
    /Sponsor confidential information is
    needed to support the publication,
    Institution shall have the right to
    include such confidential information in
                  NCURA disclosure.”
    the publication or2006 Region V Meeting -
                    May 10, 2006 - Austin, TX   43
Ideal Publication Clause ~
  Industry’s Perspective

   “Institution shall not publish or
    disclose any results of the research.”




                NCURA 2006 Region V Meeting -
                  May 10, 2006 - Austin, TX     44
    Publication Clause ~ Reality
    1.1         Review by COMPANY of Publications Related to Program Technology. Subject to the rights granted to Company under this Agreement,
     Principal Investigator will have the right to publish or publicly disclose all technical reports, Program Materials, Program Technology. Subject to the
     terms set forth in Sections 8.2 and 8.3 below, in order to avoid loss of Program Patent Rights as a result of premature public disclosure of patentable
     information, Principal Investigator and Institution will provide to Company, at least sixty (60) days prior to submission for publication or public
     disclosure, any and all presentations, manuscripts and abstracts intended for publication or public disclosure containing any technical reports
     submitted to Company pursuant to Section 5.2, Program Materials or Program Technology (in each instance, “Institution Disclosure” or “Institution
     Disclosures”). Company will have the right, but not the obligation, to waive all or any portion of the review period described above. Company will
     review portions of the proposed Institution Disclosure which Principal Investigator intends as a final draft to be submitted for publication or public
     disclosure, as the Principal Investigator makes such portions available, in a manner comparable to its review of a final version for public disclosure;
     provided, however, the experiments and results described therein are not materially or substantially modified in the final version of Institution
     Disclosure. Any such portions which are materially or substantially modified will be submitted to Company for review in accordance with this Section
     8.1. Principal Investigator agrees to include in any publication or public disclosure of the results of the Research Program an appropriate
     acknowledgement of Company‟s sponsorship of the Research Program. Authorship of any publication disclosing such results shall be determined in
     accordance with scientific custom.
    1.2.       Protection of Information to be Disclosed in Publications. During the course of the sixty (60) day review period set forth above, Company
     will notify Principal Investigator and Institution whether Company desires to file a patent application pursuant to Section 9.3(b) or desires
     Institution to file a patent application pursuant to Section 9.3(a) on any Invention disclosed in the Institution Disclosure. Subject to the terms set
     forth in Section 8.3, in the event Company desires that such a patent application be filed, Principal Investigator and Institution will delay publication
     or disclosure of such Institution Disclosure until the occurrence of the first of the following: (a) filing of a patent application covering such
     Invention, (b) agreement by Company and Principal Investigator and Institution that no Invention is disclosed in such materials, or (c) ninety (90)
     days after the date that such Institution Disclosure was received by Company from Principal Investigator and Institution. Further, subject to the
     terms of Section 8.3, if Company reports to Institution or Principal Investigator that such Institution Disclosure contains Company Confidential
     Information, Principal Investigator and Institution will remove such Company Confidential Information from such Institution Disclosure, except for
     Company Confidential Information which (i) the Principal Investigator deems is reasonably necessary to support the results which are described in
     such Institution Disclosure and (ii) is either sequence information of a transporter molecule provided by Company to the Principal Investigator for
     use in the Research Program for which an Identified Key exists or tissue distribution information disclosed by Company to the Principal Investigator
     under this Agreement
    1.3.       Institution Disclosure Including Identified Key. In addition to the rights and processes set forth in Sections 8.1 and 8.2 concerning
     Company‟s right to review any proposed Institution Disclosures, and Principal Investigator‟s and the Institution‟s agreement to delay publication or
     disclosure of such Institution Disclosures in accordance with the time lines set forth in this Section 8.3, the Principal Investigator and Institution
     agree not to publicly disclose or permit the public disclosure of any Institution Disclosure which discloses any Identified Key until twelve (12) months
     following the date that Company and the Institution mutually agree in writing that the Key reported by the Institution to Company is deemed an
     Identified Key, all in accordance with the terms set forth in Section 5.3. The parties agree that the first public disclosure for each Identified Key
     shall be in a written manuscript to be published in a peer-reviewed
     scientific journal. During the twelve (12) month period described in this Section 8.3, the Principal Investigator shall be permitted to submit to a
     scientific journal for publication, any abstract or manuscript which discloses an Identified Key, provided that, the Principal Investigator and the
     Institution notify the Company Principal Investigator of their desire to do so prior to any such submission and each provides Company with reasonable
     assurance that publication of such manuscript or abstract shall not occur prior to the twelve (12) month period described above. For clarity, the
     terms set forth in this Section 8.3 shall not in any manner limit Company‟s right to review any Institution Disclosure which discloses an Identified
     Key in accordance with the time lines set forth in Sections 8.1 and 8.2.



                                                NCURA 2006 Region V Meeting -
                                                  May 10, 2006 - Austin, TX                                                                                      45
     Confidentiality Concerns
    Research Institutions vs. Biotech Company vs. Big
                        Pharma

   Length of Confidentiality Obligations
      Balancing Reasonable with Realistic

   How to Prevent Leakage



                   NCURA 2006 Region V Meeting -
                     May 10, 2006 - Austin, TX          46
           Confidentiality ~ Length
   Research Institutions
       Length must be reasonable and must be a date certain
        (statutory retention)
       3 years after agreement ends –not from disclosure
        date
       Rare exceptions – Principal Investigator must agree
        and initial confidentiality provision
          Huge burden on PI and Institution
   Biotech Company
       5 years from each disclosure date
   Big Pharma
       Follow statutory limits, normal time frame of 5-10
        years
       End date must be explicitly defined
                        NCURA 2006 Region V Meeting -
                          May 10, 2006 - Austin, TX          47
How To Prevent Confidentiality Leaks
   We Agree . . .
     Education, communication and good
      contract management are critical
   We Disagree . . .
     Starting length of obligations from “end
      of agreement” vs. “date of disclosure”
     Explicitly naming all persons bound by
      agreement – should be PI‟s responsibility
        Unrealistic in Research Institution


                  NCURA 2006 Region V Meeting -
                    May 10, 2006 - Austin, TX     48
Indemnification Concerns

   Needs

   Allocation of Risk in Clinical
    Setting

   Real World Deal Breakers
              NCURA 2006 Region V Meeting -
                May 10, 2006 - Austin, TX     49
Our Indemnification Needs
   Seek broadest indemnification possible
   Full indemnity – Sponsor‟s drug/Sponsor‟s protocol – Institution
    does what Sponsor says (“arising out of the activities…”)
   Product liability
       Defects in design or manufacture of drug
   Sponsor‟s negligence
   Use of Institution‟s results - least amount of coverage
       Institution‟s protocol; and
       Sponsor has little or no control over what Institution does;
       Then Sponsor must indemnify Institution for Sponsor‟s use of
        Institution‟s results
   Institution can only indemnify Sponsor for Institution‟s
    negligence (to the extent authorized by Constitution and laws
    of State of Texas
                        NCURA 2006 Region V Meeting -
                          May 10, 2006 - Austin, TX                    50
    Our Indemnification Needs
   Must include proper parties
        System, Regents, Institution, officers, employees, agents
   Should cover all kinds of claims
        Claims, demands, costs, liabilities, or judgments
   Should broadly cover us if we do exactly what
    Sponsor directs us to do – “Full Indemnity”
        “Arising out of the activities to be carried out under this
         Ag”
   Should also include Sponsor‟s use of our results
   Carve-outs
        Our negligence voids Sponsor‟s indemnification
   If Sponsor wants to control the defense – “subject to
    the statutory duties of the Texas Attorney General”
                      NCURA 2006 Region V Meeting -
                        May 10, 2006 - Austin, TX        51
            Indemnification ~
            Allocation of Risk
   Sponsor‟s Protocol and Sponsor‟s Drug
       We receive no $ from Sponsor after Study is done
       Sponsor stands to gain a lot of money from the study
       Sponsor must broadly indemnify us if we do exactly what
        Sponsor directs us to do (“Full Indemnity”)
   Institution‟s Protocol and Sponsor‟s Drug
      Sponsor should bear all risk b/c it stands to gain a
        lot financially
      Sponsor must also indemnify us for its use of our
        results
   Sponsor can control defense and settlement only …
      “subject to the statutory duties of the Texas
        Attorney General” 10, 2006 - Austin, TX
                        NCURA 2006 Region V Meeting -
                          May                               52
          Indemnification ~
      Real World Deal Breakers
   Sponsor won‟t broadly indemnify us for
    following their protocol and using their
    drug
   Sponsor wants a mirror indemnity - not
    only „as to our negligence‟
   Sponsor won‟t indemnify us for its use
    of our results (standard CTA and
    principal investigator initiated protocol)
   Sponsor won‟t agree to include language
    that allows them10,to -control defense
                  NCURA 2006 Region V Meeting -
                    May    2006 Austin, TX      53
             SUMMARY
   Critical Deal Concepts That May
    Profoundly Impact Your
    Negotiations:
      Intellectual Property
      Publication
      Confidentiality
      Indemnification

              NCURA 2006 Region V Meeting -
                May 10, 2006 - Austin, TX     54

				
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