[Federal Register Volume 64, Number 246 (Thursday, December 23, 1999)]
[Notices]
[Pages 72090-72096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33292]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

National Institutes of Health


Principles and Guidelines for Recipients of NIH Research Grants 
and Contracts on Obtaining and Disseminating Biomedical Research 
Resources: Final Notice

AGENCY: National Institutes of Health (NIH), Public Health Service, 
DHHS.

SUMMARY: On May 25, 1999 the National Institutes of Health (NIH) 
published for public comment in the Federal Register a proposed policy 
entitled SHARING BIOMEDICAL RESEARCH RESOURCES: Principles and 
Guideline for Recipients of NIH Research Grants and Contracts [64 FR 
28205]. This policy is designed to provide recipients of NIH funding 
with guidance concerning appropriate terms for disseminating and 
acquiring unique research resources developed with federal funds and is 
intended to assist recipients in complying with their obligations under 
the Bayh-Dole Act and NIH funding policy. Comments on the Principles 
and Guidelines were requested by August 23, 1999. This Notice presents 
the final Principles and Guidelines together with NIH's response to the 
public comments received.

Background

    The Present policy represents part of the overall implementation of 
recommendations made by the Advisory Committee to the Director (ACD) to 
Dr. Harlod Varmus, Director, NIH. Dr. Varmus requested that a Working 
Group of the ACD look into problems encountered in the dissemination 
and use of proprietary research tools, the competing interests of 
intellectual property owners and research users underlying these 
problems, and possible NIH responses. One of the recommendations in the 
Report was that NIH issue guidance to the recipients of NIH funding.

Purpose

    The present policy is a two-part document, consisting of Principles 
setting forth the fundamental concepts and Guidelines providing 
specific information to patent and license professionals and sponsored 
research administrators for implementation. The purpose of these 
Principles and Guidelines is to assist NIH funding recipients in 
determining. (1) Reasonable terms and conditions for making NIH-funded 
research resources available to scientists in other institutions in the 
public and private sectors (disseminating research tools): and (2) 
restrictions to accept as a condition of receiving access to research 
tools for use in NIH-funded research (acquiring research tools). The 
intent is to help Recipients ensure that the conditions they impose and 
accept on the transfer of research tools will facilitate further 
biomedical research, consistent with the requirements of the Bayh-Dole 
Act and NIH funding agreements. It is also hoped that these Principles 
and Guidelines will be adopted by the wider research community so that 
all biomedical research and development can be synergistic and 
accelerated.

Comments and Agency Response

    The National Institutes of Health (NIH) recognizes the importance 
of public involvement in the development of policy and sought 
widespread comment and participation by the various stakeholders in the 
biomedical research and development communities regarding the proposed 
policy. To this end, NIH sought comment not only from NIH grantees, but 
also from academic, not-for-profit, government, and private sector 
participants in biomedical research and development. In order to 
involve as many stakeholders as possible in the comment process, the 
proposed policy was advertised and comments solicited in a wide variety 
of venues. In addition to its publication on May 25, 1999, in the 
Federal Register, the proposed policy was made available on several 
different websites including the Federal Register Online, numerous NIH 
websites (Edison, NIH Office of Technology Transfer, NIH Office of 
Extramural Research and the NIH Director's Policy Forum), the 
Association of University Technology Managers (AUTM) website and 
Recombinant Capital's Signals Magazine. The proposed policy was also 
advertised on a variety of e-mail lists (including Techno-L) as well as 
in direct letters and e-mail to various stakeholders. In addition, the 
proposed policy was profiled in articles appearing in a variety of 
journals and magazines, including Science, Nature and Nature 
Biotechnology.
    In response to the May 25 proposal, NIH received 45 letters, each 
of which contained one or more comments. Comments were received from 
academic institutions, scientific foundations, pharmaceutical 
companies, biotechnology companies (including providers of research 
instruments, biological reagents and genomic data), an industry trade 
association, professional societies, individual researchers and other 
individual commenters. Below is NIH's response to comments offered, 
organized by the section of the proposed policy to which they pertain.

Introduction

    Several commenters suggested that sponsored research administrators 
be included within the target audience to which this policy is 
addressed. This suggestion has been adopted in the final policy.
    Several commenters suggested that the policy is a de facto 
regulation and should either be promulgated in accordance with 
regulatory process or withdrawn. Several other commenters suggested 
that as a policy the Principles/Guidelines are not enforceable as law 
and that NIH should issue them as a regulation to ensure compliance. 
The NIH does not believe that a regulation, enforceable as law, is 
required at this time to facilitate sharing and access to research 
tools for its Recipients. Although the final policy is issued as a 
grants policy, to be incorporated into the NIH Grants Policy Statement, 
the NIH has not precluded the possibility of engaging in the regulatory 
process if widespread problems continue in access to NIH-funded 
research tools by NIH Recipients. In addition, on a case-by-case basis, 
the expectations set forth in the Principles and Guidelines may be 
imposed as specific requirements of NIH funding awards where the 
Recipient has failed to demonstrate sufficient progress in implementing 
the Principles and Guidelines.
    Some commenters suggested that the policy should not be applicable 
to all projects that include NIH grant funds, but that NIH should set a 
minimum level of NIH funding that would trigger application of the 
policy. NIH has determined that the establishment of such a threshold 
would not be consistent with NIH's objective of ensuring that broad 
availability of research tools.
    One commenter expressed concern that the proposed policy, if 
applied to recipients of Small Business Innovation Research (SBIR) 
grants, would place SBIR recipients under conflicting directives. The 
commenter suggests that because SBIR recipients are required, as a 
condition of their grant, to focus on the commercialization of 
technology, they would be unable to disseminate

[[Page 72091]]

research tools with the minimal intellectual property encumbrances 
advocated by the proposed policy. SBIR Recipients, like other NIH 
grantees, are subject to the dual obligations of disseminating unique 
research resources while promoting utilization, commercialization and 
public availability of their inventions. The NIH does not see a 
conflict between these obligations. The NIH invites its SBIR grantees 
to consult with their project officer in the event they encounter 
difficulty in the interpretation or implementation of this policy, 
either in general or with respect to particular unique research 
resources developed under their grant.

Principles

1. Ensure Academic Freedom and Publication
    Several commenters suggested that language be added to the 
guidelines to prohibit recipients from making coauthorship a condition 
of providing research tools. There appears to be general consensus 
within the research community that authorship is properly based upon 
significant intellectual contribution to the published paper. In most 
cases, simply making available research materials will not, in the 
absence of other contributions, justify coauthorship. (See e.g., 
Responsible Science, Volume I: Ensuring the Integrity of the Research 
Process, Panel on Scientific Responsibility and the Conduct of 
Research, National Academy Press, 1992, p. 52). The final policy has 
been amended to reflect this view.
    Several commenters expressed concern that the definition of 
``Recipient'' in the proposed policy might not include individuals or 
entities receiving NIH funds through ``cooperative agreements.'' The 
policy is applicable to cooperative agreements and this has been 
clarified in the Principles and Guidelines.
2. Ensure Appropriate Implementation of the Bayh-Dole Act
    Virtually all commenters requested clarification on how this policy 
would preserve incentives for the development and production of 
research tools that are ultimately sold as products to the research 
community. The policy has been clarified to ensure that where patent 
protection is necessary for development of a research tool as a 
potential product for sale and distribution to the research community. 
Recipients are not discouraged from seeking such protection, but should 
license the intellectual property in a manner that maximizes the 
potential for broad distribution of the research tool. The policy is 
not intended to require Recipient scientists to develop of maintain 
tools for widespread distribution, to discourage development of 
research tool products, nor to set or influence the price for research 
tools that are commercial products.
3. Minimize Administrative Impediments to Academic Research
    One commenter suggested that reach-through rights should not be 
discouraged because they are sometimes helpful to Recipients by 
allowing them to obtain materials and equipment at reduced or nominal 
upfront cost. NIH is aware of this rationale for a Recipient agreeing 
to reach-through but finds that such practices contribute not only to 
specific restriction of access to subsequent tools arising out of the 
NIH-funded work, but also to the general proliferation of multiple ties 
and competing interests that is the source of the current access 
problems. NIH does not support the coupling of procurement with 
intellectual property rights and restrictions and expects Recipients to 
ensure that NIH-funded tools are not restricted as a result of such 
agreements. Therefore, Recipients should engage in such interactions on 
an infrequent, case-by-case, and highly controlled and monitored basis.
4. Ensure Dissemination of Research Resources Developed with NIH Funds
    Numerous comments were received concerning the conditions under 
which research tools developed by recipients of NIH funds are to be 
transferred to for-profit entities. The comments received reflected the 
wide range of opinions present within the life sciences community on 
this point. On the one hand, some commenters urged that transfer of 
research tools to for-profit entities be carried out under the same 
terms as transfers to nonprofits/academic institutions. These 
commenters argue that because of the increasingly important role 
research tools play in the discovery and development of new therapeutic 
compounds, it is critical that these tools be made available to for-
profit entities free of onerous contractual provisions. They argue that 
by adopting a transfer policy similar to that proposed for transfers to 
academic laboratories, NIH will ensure that the public will reap the 
benefit of its investment in government research in the form of new and 
improved pharmaceuticals. Other commenters opposed the general idea 
that the terms for transferring tools to for-profit entities should be 
identical to those for transfers of tools to academic and non-profit 
organizations. They argue that the fundamental differences in mission 
between for-profit entities and academic institutions justify different 
treatment with respect to the terms under which each obtains and uses 
tools.
    In the final policy, the NIH has left considerable discretion to 
Recipients in determining how to achieve the principle of ensuring 
appropriate distribution of NIH-funded tools. As articulated by the 
policy, imposing reach-through royalty terms as a condition of use of a 
research tool is inconsistent with this principle. When transferring an 
NIH-funded research tool to a for-profit entity that intends to use the 
tool for its own internal purposes, Recipients are entitled to capture 
the value of their invention. Arrangements such as execution or annual 
fees are an appropriate way for Recipients to do so. Royalties on the 
sale of a final product that does not embody the tool, or other reach-
through rights directed to a final product that does not embody the 
tool, discourage use of tools and are not appropriate in these 
circumstances. Royalties on the sale of final products are more 
appropriate to situations where a for-profit entity seeks to 
commercialize the tool, e.g., by developing a marketable product or 
service, or incorporating the tool into a marketable product or 
service.

Appendix A  Guidelines for Implementation

    The final policy has been clarified with regard to NIH intent in 
attaching the more specific Guidelines to the general Principles. The 
Principles set forth the policy that NIH is issuing to its funding 
Recipients to assist them in fulfilling the dual obligations imposed by 
NIH grants policy with respect to the dissemination of unique research 
resources, and the Bayh-Dole Act with respect to utilization, 
commercialization and public availability of government funded 
inventions. These dual obligations must be thoughtfully managed. The 
Guidelines provide further information, model language, and suggested 
strategies for implementing the principles. The model language and 
strategies provided by the Guidelines are not intended as the sole 
means by which Recipients may implement the articulated Principles. It 
is the nature of advancing science and technology to present unique 
factual circumstances, and NIH expects that Recipients will determine 
the most appropriate means to achieve the Principles for unique 
technologies when the Guidelines do not provide a workable strategy.

[[Page 72092]]

    Several commenters suggested that research tools be better defined 
and that more examples be used to assist in determining whether the 
policy should be applied and if so, what licensing strategy is 
appropriate. For example, one commenter suggested that the policy draw 
a distinction between ``broad platform technologies'' and ``product-
specific technologies'' when determining whether an exclusive license 
is appropriate. The final policy provides clarification of the criteria 
that Recipients might apply in determining how to handle a particular 
technology.
    One commenter requested that the definition of research tools be 
expanded to include diagnostic genetic tests performed with ``home-
brew'' reagents. The commenter suggested that the patenting and 
exclusive licensing of such tests is having a deleterious effect on 
clinical education, clinical research, and patient care. NIH declines 
to expand the definition of research tools to include diagnostic 
genetic tests. Where such tests are patented and licensed to for-profit 
entities, academic medical centers wishing to use such licensed tests 
in their clinical programs should negotiate terms of use with the 
commercial licensee.
    Many commenters were of the opinion that the thirty-day time limit 
for disclosure of research findings was too short. The final policy has 
been amended to state that a delay of 30-60 days is generally viewed as 
reasonable. This amendment is in accord with previous NIH guidance on 
sponsored research agreements, Developing Sponsored Research 
Agreements: Considerations for Recipients of NIH Research Grants and 
Contracts, 59 FR 55674.
    Comments were received in favor of adopting the Simple Letter 
Agreement as a free-standing, one page, uniform material transfer 
agreement. If used by the NIH intramural program and NIH grantees, 
commenters believe that the majority of transfers among and between 
not-for-profits and government laboratories would be greatly 
simplified. In response to specific comments, the Simple Letter 
Agreement has been significantly edited and updated. Recipients are 
encouraged to adopt the Simple Letter Agreement as their institution's 
model Material Transfer Agreement (MTA), and are expected to use the 
terms of the Simple Letter Agreement, or no more restrictive terms, for 
transfers of unpatented materials developed with NIH funding to other 
NIH grantees.

FOR FURTHER INFORMATION CONTACT: Ms. Barbara McGarey, J.D., NIH Office 
of Technology Transfer, 6011 Executive Boulevard, Suite 325, Rockville, 
MD 20852-3804; Fax: (301) 402-3257; E-mail: [email protected].

    Dated: December 14, 1999.
Maria C. Freire,
Director, Office of Technology Transfer, National Institutes of Health.

Sharing Biomedical Research Resources: Principles and Guidelines 
for Recipients of NIH Research Grants and Contracts

Introduction

    The National Institutes of Health is dedicated to the advancement 
of health through science. As a public sponsor of biomedical research, 
NIH has a dual interest in accelerating scientific discovery and 
facilitating product development. In 1997, Dr. Harold Varmus, Director, 
NIH requested that a Working Group of the Advisory Committee to the 
Director look into problems encountered in the dissemination and use of 
unique research resources, the competing interests of intellectual 
property owners and research tool users, and possible NIH responses.\1\ 
The Working Group found that intellectual property restrictions can 
stifle the broad dissemination of new discoveries and limit future 
avenues of research and product development. At the same time, 
reasonable restrictions on the dissemination of research tools are 
sometimes necessary to protect legitimate proprietary interests and to 
preserve incentives for commercial development. One of the 
recommendations of the Working Group was that NIH issue guidance to its 
funding recipients to help them achieve the appropriate balance. That 
guidance is provided in this two-part document, consisting of 
Principles setting forth the fundamental concepts and Guidelines that 
provide specific information to patent and license professionals and 
sponsored research administrators for implementation. A copy of the 
full Report of the Working Group, with more detailed background 
information, is available at the NIH web site, www.nih.gov/welcome/
forum, or from the NIH Office of the Director.
---------------------------------------------------------------------------

    \1\ The term ``unique research resource'' is used in its 
broadest sense to embrace the full range of tools that scientists 
use in the laboratory, including cell lines, monoclonal antibodies, 
reagents, animal models, growth factors, combinatorial chemistry and 
DNA libraries, clones and cloning tools (such as PCR), methods, 
laboratory equipment and machines. The terms ``research tools'' and 
``materials'' are used throughout this document interchangeably with 
``unique research resources.'' Databases and materials subject to 
copyright, such as software, are also research tools in many 
contexts. Although the information provided here may be applicable 
to such resources, the NIH recognizes that databases and software 
present unique questions which cannot be fully explored in this 
document.
---------------------------------------------------------------------------

Principles

1. Ensure Academic Freedom and Publication

    Academic research freedom based upon collaboration, and the 
scrutiny of research findings within the scientific community, are at 
the heart of the scientific enterprise. Institutions that receive NIH 
research funding through grants, cooperative agreements or contracts 
(``Recipients'') have an obligation to preserve research freedom, 
safeguard appropriate authorship, and ensure timely disclosure of their 
scientists' research findings through, for example, publications and 
presentations at scientific meetings. Recipients are expected to avoid 
signing agreements that unduly limit the freedom of investigators to 
collaborate and publish, or that automatically grant co-authorship or 
copyright to the provider of a material.
    Reasonable restrictions on collaboration by academic researchers 
involved in sponsored research agreements with an industrial partner 
that avoid conflicting obligations to other industrial partners, are 
understood and accepted. Similarly, brief delays in publication may be 
appropriate to permit the filing of patent applications and to ensure 
that confidential information obtained from a sponsor or the provider 
of a research tool is not inadvertently disclosed. However, excessive 
publication delays or requirements for editorial control, approval of 
publications, or withholding of data all undermine the credibility of 
research results and are unacceptable.

2. Ensure Appropriate Implementation of the Bayh-Dole Act

    When a Recipient's research work is funded by NIH, the activity is 
subject to various laws and regulations, including the Bayh-Dole Act 
(35 U.S.C. 200 et seq.). Generally, Recipients are expected to maximize 
the use of their research findings by making them available to the 
research community and the public, and through their timely transfer to 
industry for commercialization.
    The right of Recipients to retain title to inventions made with NIH 
funds comes with the corresponding obligations to promote utilization, 
commercialization, and public availability of these inventions. The 
Bayh-Dole Act encourages Recipients to patent and license subject 
inventions as one means of fulfilling these obligations.

[[Page 72093]]

However, the use of patents and exclusive licenses is not the only, nor 
in some cases the most appropriate, means of implementing the Act. 
Where the subject invention is useful primarily as a research tool, 
inappropriate licensing practices are likely to thwart rather than 
promote utilization, commercialization and public availability of the 
invention.
    In determining an intellectual property strategy for an NIH-funded 
invention useful primarily as a research tool, Recipients should 
analyze whether further research, development and private investment 
are needed to realize this primary usefulness. If it is not, the goals 
of the Act can be met through publication, deposit in an appropriate 
databank or repository, widespread non-exclusive licensing or any other 
number of dissemination techniques. Restrictive licensing of such an 
invention, such as to a for-profit sponsor for exclusive internal use, 
is antithetical to the goals of the Bayh-Dole Act.
    Where private sector involvement is desirable to assist with 
maintenance, reproduction, and/or distribution of the tool, or because 
further research and development are needed to realize the invention's 
usefulness as a research tool, licenses should be crafted to fit the 
circumstances, with the goal of ensuring widespread and appropriate 
distribution of the final tool product. Exclusive licensing of such an 
invention, such as to a distributor that will sell the tool or to a 
company that will invest in the development of a tool from the nascent 
invention, can be consistent with the goals of the Bayh-Dole Act.

3. Minimize Administrative Impediments to Academic Research

    Each iteration in a negotiation over the terms of a license 
agreement or materials transfer agreement delays the moment when a 
research tool may be put to use in the laboratory. Recipients should 
take every reasonable step to streamline the process of transferring 
their own research tools freely to other academic research institutions 
using either no formal agreement, a cover letter, the Simple Letter 
Agreement of the Uniform Biological Materials Transfer Agreement 
(UBMTA), or the UBMTA itself. The Appendix contains an updated free-
standing version of the Simple Letter Agreement that is strongly 
encouraged for transfers of unpatented research materials among 
Recipients.
    Where they have not already done so, Recipients should develop and 
implement clear policies which articulate acceptable conditions for 
acquiring resources, and refuse to yield on unacceptable conditions. 
NIH acknowledges the concern of some for-profit organizations that the 
concept of purely academic research may be diluted by the close ties of 
some not-for-profit organizations with for-profit entities, such as 
research sponsors and spin-off companies in which such organizations 
take equity. Of concern to would-be providers is the loss of control 
over a proprietary research tool that, once shared with a not-for-
profit Recipient for academic research, results in commercialization 
gains to the providers' for-profit competitors. Recipients must be 
sensitive to this legitimate concern if for-profit organizations are 
expected to share tools freely.
    For-profit organizations, in turn, must minimize the encumbrances 
they seek to impose upon not-for-profit organizations for the academic 
use of their tools. Reach-through royalty or product rights, 
unreasonable restraints on publication and academic freedom, and 
improper valuation of tools impede the scientific process whether 
imposed by a not-for-profit or for-profit provider of research tools. 
While these Principles are directly applicable only to recipients of 
NIH funding, it is hoped that other not-for-profit and for-profit 
organizations will adopt similar policies and refrain from seeking 
unreasonable restrictions or conditions when sharing materials.

4. Ensure Dissemination of Research Resources Developed With NIH Funds

    Progress in science depends upon prompt access to the unique 
research resources that arise from biomedical research laboratories 
throughout government, academia, and industry. Ideally, these new 
resources flow to others who advance science by conducting further 
research. Prompt access can be accomplished in a number of ways, 
depending on the type of resource that has been developed, whether it 
has broad or specific uses, and whether it is immediately useful or 
private sector investment is needed to realize its usefulness. The goal 
is widespread, timely distribution of tools for further discovery. When 
research tools are used only within one or a small number of 
institutions, there is a great risk that fruitful avenues of research 
will be neglected.
    Unique research resources arising from NIH-funded research are to 
be made available to the scientific research community. Recipients are 
expected to manage interactions with third parties that have the 
potential to restrict Recipients' ability to disseminate research tools 
developed with NIH funds.\2\ For example, a Recipient might use NIH 
funds with funds from one or more third party sponsors, or acquire a 
research tool from a third party provider for use in an NIH-funded 
research project. Either situation may result in a Recipient incurring 
obligations to a third party that conflict with Recipient's obligations 
to the NIH. To avoid inconsistent obligations, Recipients are 
encouraged to share these Principles with potential co-sponsors of 
research projects and third party providers of materials.
---------------------------------------------------------------------------

    \2\ Research tools obtained or derived from human tissues 
constitute a special case. Certain restrictions on the use and 
further dissemination of such tools may be appropriate to ensure 
consistency with donor consent and human subjects protection. See 45 
CFR Part 46.
---------------------------------------------------------------------------

    Recipients should also examine and, where appropriate, simplify the 
transfer of materials developed with NIH funds to for-profit 
institutions for internal use by those institutions. NIH endorses 
distinguishing internal use by for-profit institutions from the right 
to commercial development and sale or provision of services. In 
instances where the for-profit institution is seeking access for 
internal use purposes, Recipients are encouraged to transfer research 
tools developed with NIH funding to such institutions without seeking 
option rights or royalties on the final product.

Summary

    Access to research tools is a prerequisite to continuing scientific 
advancement. Ensuring broad access while preserving opportunities for 
product development requires thoughtful, strategic implementation of 
the Bayh-Dole act. The NIH urges Recipients to develop patent, license, 
and material sharing policies with this goal in mind, realizing both 
product development as well as the continuing availability of new 
research tools to the scientific community.

Appendix--Guidelines for Implementation

    The following Guidelines provide specific information, strategies, 
and model language for patent and license professionals and sponsored 
research administrators at Recipient institutions to assist in 
implementing the Principles on Obtaining and Disseminating Biomedical 
Resources. Recipients are encouraged to use the strategies below, other 
strategies developed at their own institutions, or any other 
appropriate means of achieving the Principles.

[[Page 72094]]

Guidelines for Disseminating Research Resources Arising Out of NIH-
Funded Research

Definition of Research Tools

    The definition of research tools is necessarily broad, and it is 
acknowledged that the same material can have different uses, being a 
research tool in some contexts and a product in others. In determining 
how an NIH-funded resource that falls within the definition should be 
handled, Recipients should determine whether: (1) The Primary 
usefulness of the resource is as a tool for discovery rather than an 
FDA-approved product or integral component of such a product; (2) the 
resource is a broad, enabling invention that will be useful to many 
scientists (or multiple companies in developing multiple products), 
rather than a project or product-specific resource; and (3) the 
resource is readily useable or distributable as a tool rather than the 
situation where private sector involvement is necessary or the most 
expedient means for developing or distributing the resource. Recipients 
should ensure that their intellectual property strategy for resources 
fitting one or more of the above criteria enhances rather than 
restricts the ultimate availability of the resource. If Recipient 
believes private sector involvement is desirable to achieve this goal, 
Recipient should strategically license the invention under terms 
commensurate with the goal.

Use of Simple Letter Agreement

    Recipients are expected to ensure that unique research resources 
arising from NIH-funded research are made available to the scientific 
research community. The majority of transfers to not-for-profit 
entities should be implemented under terms no more restrictive than the 
UBMTA. In particular, Recipients are expected to use the Simple Letter 
Agreement provided below, or another document with no more restrictive 
terms, to readily transfer unpatented tools developed with NIH funds to 
other Recipients for use in NIH-funded projects. If the materials are 
patented or licensed to an exclusive provider, other arrangements may 
be used, but commercialization option rights, royalty reach-through, or 
product reach-through rights back to the provider are inappropriate.
    Similarly, when for-profit entities are seeking access to NIH-
funded tools for internal use purposes, Recipients should ensure that 
the tools are transferred with the fewest encumbrances possible. The 
Simple Letter Agreement may be expanded for use in transferring tools 
to for-profit entities, or simple internal use license agreements with 
execution or annual use fees may be appropriate.
Simple Letter Agreement for the Transfer of Materials
    In response to RECIPIENT's request for the MATERIAL [insert 
description] __________ the PROVIDER asks that the RECIPIENT and the 
RECIPIENT SCIENTIST agree to the following before the RECIPIENT 
receives the MATERIAL:
    1. The above MATERIAL is the property of the PROVIDER and is made 
available as a service to the research community.
    2. THIS MATERIAL IS NOT FOR USE IN HUMAN SUBJECTS.
    3. The MATERIAL will be used for teaching or not-for-profit 
research purposes only.
    4. The MATERIAL will not be further distributed to others without 
the PROVIDER's written consent. The RECIPIENT shall refer any request 
for the MATERIAL to the PROVIDER. To the extent supplies are available, 
the PROVIDER or the PROVIDER SCIENTIST agree to make the MATERIAL 
available, under a separate Simple Letter Agreement to other scientists 
for teaching or not-for-profit research purposes only.
    5. The RECIPIENT agrees to acknowledge the source of the MATERIAL 
in any publications reporting use of it.
    6. Any MATERIAL delivered pursuant to this Agreement is understood 
to be experimental in nature and may have hazardous properties. THE 
PROVIDER MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY 
KIND, EITHER EXPRESSED OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED 
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR 
THAT THE USE OF THE MATERIAL WILL NOT INFRINGE ANY PATENT, COPYRIGHT, 
TRADEMARK, OR OTHER PROPRIETARY RIGHTS. Unless prohibited by law, 
Recipient assumes all liability for claims for damages against it by 
third parties which may arise from the use, storage or disposal of the 
Material except that, to the extent permitted by law, the Provider 
shall be liable to the Recipient when the damage is caused by the gross 
negligence or willful misconduct of the Provider.
    7. The RECIPIENT agrees to use the MATERIAL in compliance with all 
applicable statutes and regulations.
    8. The MATERIAL is provided at no cost, or with an optional 
transmittal fee solely to reimburse the PROVIDER for its preparation 
and distribution costs. If a fee is requested, the amount will be 
indicated here: __________
    The PROVIDER, RECIPIENT and RECIPIENT SCIENTIST must sign both 
copies of this letter and return one signed copy to the PROVIDER. The 
PROVIDER will then send the MATERIAL.
Provider Information and Authorized Signature
Provider Scientist:----------------------------------------------------
Provider Organization:-------------------------------------------------
Address:---------------------------------------------------------------
Name of Authorized Official:-------------------------------------------
Title of Authorized Official:------------------------------------------
Certification of Authorized Official: This Simple Letter Agreement 
____ has ____ has not [check one] been modified. If modified, the 
modification are attached.
----------------------------------------------------------------------
(Signature of Authorized Official) (Date)

Recipient Information and Authorized Signature

Recipient Scientist: --------------------------------------------------
Recipient Organization: -----------------------------------------------
Address: --------------------------------------------------------------
Name of Authorized Official: ------------------------------------------
Title of Authorized Official: -----------------------------------------
Signature of Authorized Official:--------------------------------------
Date:------------------------------------------------------------------
Certification of Recipient Scientist: I have read and understood the 
conditions outlined in this Agreement and I agree to abide by them 
in the receipt and use of the MATERIAL.
----------------------------------------------------------------------
(Recipient Scientist) (Date)

Ensuring Consistent Obligations

    Recipients must ensure that obligations to other sources of funding 
of projects in which NIH funds are used are consistent with the Bayh-
Dole Act and NIH funding requirements. Unique research resources 
generated under such projects are expected to be made available to the 
research community. Recipients are encouraged to share these Guidelines 
with potential co-sponsors. Any agreements covering projects in which 
NIH funds will be used along with other funds are expected to contain 
language to address the issue of dissemination of unique research 
resources. Examples of possible language follow. The paragraphs are 
presented in a ``mix and match'' format:

    ``The project covered by this agreement is supported with 
funding from the National Institutes of Health. Provider agrees that 
upon publication, unpatented unique research resources arising out 
of this project may be freely distributed.''
    ``In the event an invention is primarily useful as a research 
tool, any option granted shall either be limited to a non-exclusive 
license or the terms of any resulting exclusive license shall 
include provisions that ensure that the research tool will be

[[Page 72095]]

available to the academic research community on reasonable terms.''
    ``Provider agrees that Recipient shall have the right to make 
any materials and inventions developed by Recipient in the course of 
the collaboration (including materials and inventions developed 
jointly with Provider, but not including any Provider materials (or 
parts thereof) or Provider sole inventions available to other 
scientists at not-for-profit organizations for use in research, 
subject to Provider's independent intellectual property rights.''
    ``Subject to Recipient's obligations to the U.S. government, 
including 37 CFR Part 401, the NIH Grants Policy Statement, and the 
NIH Guidelines for Obtaining and Disseminating Biomedical Research 
Resources, Recipient grants to Sponsor the following rights: * * *''

Limiting Exclusive Licenses to Appropriate Field of Use

    Exclusive licenses for research tools (where no further research 
and development is needed to realize the invention's usefulness as a 
tool) should generally be avoided except in cases where the licensee 
undertakes to make the research tool widely available to researchers 
through unrestricted sale, or the licensor retains rights to make the 
research tool widely available. When an exclusive license is necessary 
to promote investment in commercial applications of a subject invention 
that is also a research tool, the Recipient should ordinarily limit the 
exclusive license to the commercial field of use, retaining rights 
regarding use and distribution as a research tool. Examples of possible 
language include:

    ``Research License'' means a nontransferable, nonexclusive 
license to make and to use the Licensed Products or Licensed 
Processes as defined by the Licensed Patent Rights for purposes of 
research and not for purposes of commercial manufacture, 
distribution, or provision of services, or in lieu of purchase, or 
for developing a directly related secondary product that can be 
sold. Licensor reserves the right to grant such nonexclusive 
Research Licenses directly or to require Licenses on reasonable 
terms. The purpose of this Research License is to encourage basic 
research, whether conducted at an academic or corporate facility. In 
order to safeguard the Licensed Patent Rights, however, Licensor 
shall consult with Licensee before granting to commercial entities a 
Research License or providing to them research samples of the 
materials.''

    ``Licensor reserves the right to provide the Biological 
Materials and to grant licenses under Patent Rights to not-for-
profit and governmental institutions for their internal research and 
scholarly use.''
    ``Notwithstanding anything to the contrary in this agreement, 
Licensor shall retain a paid-up, nonexclusive, irrevocable license 
to practice, and to sublicense other not-for-profit research 
organizations to practice, the Patent Rights for internal research 
use.''
    ``The grant of rights provided herein is subject to the rights 
of the United States government pursuant to the Bayh-Dole Act and is 
limited by the right of the Licensor to use Patent Rights for its 
own research and educational purposes and to freely distribute 
Materials to not-for-profit entities for internal research 
purposes.''
    ``Licensor reserves the right to supply any or all of the 
Biological materials to academic research scientists, subject to 
limitation of use by such scientists for research purposes and 
restriction from further distribution.''
    ``Licensor reserves the right to practice under the Patent 
Rights and to use and distribute to third parties the Tangible 
Property for Licensor's own internal research purposes.''

Guidelines for Acquiring Research Resources for Use in NIH-Funded 
Research

Prompt Publication

    Agreements to acquire materials for use in NIH-funded research are 
expected to address the timely dissemination of research results. 
Recipients should not agree to significant publication delays, any 
interference with the full disclosure of research findings, or any 
undue influence on the objective reporting of research results. A delay 
of 30-60 days to allow for patent filing or review for confidential 
proprietary information is generally viewed as reasonable.

Definition of Materials

    Under the Bayh-Dole Act and its implementing regulations, 
agreements to acquire materials for use in NIH-funded projects cannot 
require that title to resulting inventions be assigned to the provider. 
For this reason, definitions of ``materials'' that include all 
derivatives or modifications are unacceptable. Other unacceptable 
variations include definitions of ``materials'' that include any 
improvements, or any other materials that could not have been made 
without the provided material. Conversely, it is important for 
providers of materials to be aware that a Recipient does not gain any 
ownership or interest in a provider's material by virtue of the 
Recipient using the material in an NIH-funded activity. Examples of 
acceptable definitions for ``materials'' include:

    `` `Materials' means the materials provided as specified in this 
document.''
    `` `Materials' means the materials provided as specified in this 
document. Materials may also include Unmodified Derivatives of the 
materials provided, defined as substances created by the Recipient 
which constitute an unmodified functional subunit or product 
expressed by the original material, such as subclones of unmodified 
cell lines, purified or fractionated subsets of the original 
materials, proteins expressed by DNA/RNA supplied by the Provider, 
or monoclonal antibodies secreted by a hybridoma cell line.''
    `` `Materials' means the materials provided as specified in this 
document. Materials may also include Progeny and Unmodified 
Derivatives of the materials provided. Progeny is an unmodified 
descendant from the original material, such as virus from virus, 
cell from cell, or organism from organism. Unmodified Derivatives 
are substances created by the Recipient which constitute an 
unmodified functional subunit or product expressed by the original 
material, such as subclones of unmodified cell lines, purified or 
fractionated subsets of the original material, proteins expressed by 
DNA/RNA supplied by the Provider, or monoclonal antibodies secreted 
by a hybridoma cell line.''
    `` `Materials' means the materials being transferred as 
specified in this document. Materials shall not include: (a) 
Modifications, or (b) other substances created by the recipient 
through the use of the Material which are not Modifications, 
Progeny, or Unmodified Derivatives. Progeny is an unmodified 
descendant from the Material, such as virus from virus, cell from 
cell, or organism from organism. Unmodified Derivatives are 
substances created by the Recipient which constitute an unmodified 
functional subunit or product expressed by the original Material, 
such as subclones of unmodified cell lines, purified or fractionated 
subsets of the original Material, proteins expressed by DNA/RNA 
supplied by the Provider, or monoclonal antibodies secreted by a 
hybridoma cell line.'' [Source: Uniform Biological Materials 
Transfer Agreement; terms defined therein]

Ensuring Consistent Obligations

    Recipients are expected to avoid signing agreements to acquire 
research tools that are likely to restrict Recipients' ability to 
promote broad dissemination of additional tools that may arise from the 
research. This might occur when an agreement gives a provider an 
exclusive license option to any new intellectual property arising out 
of the project. A new transgenic mouse developed during the project 
could fall under this license option and become unavailable to third 
party scientists as a result. Examples of agreements to examine include 
material transfer agreements (MTAs), memoranda of understanding (MOU), 
research or collaboration agreements, and sponsored research 
agreements. Recipients should consider adopting standard language to 
place in such agreements to address this issue. The following are 
examples of possible language to include in MTAs, sponsored research 
agreements, and other agreements that either acquire materials from or 
co-mingle funds with non-government sources. The paragraphs are 
presented in a ``mix and match'' format:


[[Page 72096]]


    ``The project covered by this agreement is supported with 
funding from the National Institutes of Health. Provider agrees that 
after publication, unpatented unique research resources arising out 
of this project may be freely distributed.''
    ``In the event an invention is primarily useful as a research 
tool, any option granted shall either be limited to a non-exclusive 
license or the terms of any resulting exclusive license shall 
include provisions which insure that the research tool will be 
available to the academic research community on reasonable terms.''
    ``Provider agrees that Recipient shall have the right to make 
any materials and inventions developed by Recipient in the course of 
the collaboration (including materials and inventions developed 
jointly with Provider, but not including any Provider materials (or 
parts thereof) or Provider sole inventions available to other 
scientists at not-for-profit organizations for use in research, 
subject to Provider's independent intellectual property rights.''
    ``Subject to Recipient's obligations to the U.S. government, 
including 37 CFR Part 401, the NIH Grants Policy Statement, and the 
NIH Guidelines for Obtaining and Disseminating Biomedical Research 
Resources, Recipient grants to Sponsor the following rights: * * *''

Grantbacks and Option Rights

     Agreements to acquire materials from for-profit entities 
for use in NIH-funded research may provide a grant back of non-
exclusive, royalty-free rights to the provider to use improvements and 
new uses of the material that, if patented, would infringe any patent 
claims held by the provider. They may also provide an option for an 
exclusive or non-exclusive commercialization license to new inventions 
arising directly from use of the material. These should be limited to 
circumstances where the material sought to be acquired is unique, such 
as a patented proprietary material, and not reasonably available from 
any other source. A non-exclusive ``grant-back'' might be used, for 
example, to protect a for-profit entity that provides a proprietary 
compound from being blocked from using new uses or improvements of that 
compound discovered during the NIH-funded project. In providing license 
options, Recipients must ensure that licenses granted to providers 
under such options are consistent with Bayh-Dole requirements, 
including the preference for U.S. industry requirements and reservation 
of government rights under 47 CFR part 401.
     In determining the scope of license or option rights that 
are granted in advance to a provider of materials, Recipient should 
balance the relative value of the provider's contributions against the 
value of the rights granted, cost of the research, and importance of 
the research results. The rights granted to providers should be limited 
to inventions that have been made directly through the use of the 
materials provided. In addition, Recipients should reserve the right to 
negotiate license terms that will ensure: (1) continuing availability 
to the research community if the new invention is a unique research 
resource; (2) that the provider has the technical and financial 
capability and commitment to bring all potential applications to the 
marketplace in a timely manner; and (3) that if an exclusive license is 
granted, the provider will provide a commercial development plan and 
agree to benchmarks and milestones for any fields of use granted.
     It is expected that agreements to acquire NIH-funded 
materials from not-for-profit entities for use in NIH-funded research 
will not include commercialization option rights, royalty reach-
through, or product reach-through rights back to the provider. Such 
materials should be acquired under the Simple Letter Agreement or 
UBMTA, or, if the materials are patented,a simple license agreement 
that does not request reach-through to either future products or 
royalties. If the providing not-for-profit organization is constrained 
in sharing the material due to a pre-existing sponsored research 
agreement or license, NIH expects that not-for-profit provider to 
negotiate a suitable resolution with the private research sponsor or 
licensee. The co-mingling of NIH and sponsored research funds is 
allowed, however, Recipient is responsible for ensuring that conditions 
on the use of the sponsored funds do not interfere with the open 
dissemination of research tools.

[FR Doc. 99-33292 Filed12-22-99; 8:45 am]
BILLING CODE 4140-01-M