[Federal Register Volume 70, Number 68 (Monday, April 11, 2005)]
[Notices]
[Pages 18413-18415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-7247]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

National Institutes of Health


Best Practices for the Licensing of Genomic Inventions: Final 
Notice

AGENCY: National Institutes of Health, Public Health Service, 
Department of Health and Human Services (HHS).

ACTION: Notice.

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

SUMMARY: On November 19, 2004 the National Institutes of Health (NIH) 
published for public comment in the Federal Register proposed Best 
Practices for the Licensing of Genomic Inventions [69 FR 67747]. These 
Best Practices are recommendations to the intramural Public Health 
Service (PHS) technology transfer community as well as to PHS funding 
recipients. Comments on the proposed Best Practices were requested with 
a deadline of January 18, 2005. This Notice presents the NIH's final 
Best Practices for the Licensing of Genomic Inventions together with 
NIH's response to the public comments received.

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

SUPPLEMENTARY INFORMATION:

Background

    NIH recognizes the importance of public involvement in the 
development of best practices and sought comment and participation by 
the biomedical research and development communities regarding the 
proposed Best Practices for the Licensing of Genomic Inventions (Best 
Practices). To this end, NIH sought comments from the public as well as 
grantees and academic, not-for-profit, and private sector participants 
in the biomedical research and development communities. In order to 
solicit comments from as many interested parties as possible, the draft 
was presented in various venues. In addition to the publication on 
November 19, 2004 in the Federal Register, the proposed Best Practices 
were made available on the NIH Office of Technology Transfer Web site 
and were highlighted in a variety of publications.
    In response to the November 19, 2004 proposal, NIH received 12 
letters, each of which contained one or more comments. Comments were 
received from an academic institution, scientific foundations, a 
biotechnology company, industry trade associations, professional 
societies, individual researchers, and other individual respondents.

Comments and Agency Response

    The majority of comments generally supported the Best Practices and 
some expressly stated support for non-exclusively licensing of genomic 
inventions. Most requested further clarification about a variety of 
different issues. A general response to the comments is provided below.
    Respondents criticized the singling out of this area of technology 
for special treatment as poor policy precedent. NIH disagrees with this 
representation. Genomic inventions have evoked special attention in the 
legal community as evidenced by various U.S. Patent and Trademark 
(USPTO) guidelines and court decisions directed to the criteria 
required to meet the non-obviousness, utility, and written description 
patentability standards for genomic inventions and discoveries. 
Similarly, the availability of genomic inventions for diagnostic 
testing and research purposes has been an area of active debate and 
controversy. As a major source of funding and research leading to the 
discovery of genomic inventions, NIH has an obligation to address these 
special issues to promote and advance the best possible balance between 
research availability and commercial development of these important 
technologies. In this regard, NIH considers the fundamental principles 
and concepts addressed by these Best Practices to be consistent with 
our grant recipients' responsibilities under the Bayh-Dole Act as well 
as our prior publications, including our Principles and Guidelines for 
Recipients of NIH Research Grants and Contracts on Obtaining and 
Disseminating Biomedical Research Resources.
    Respondents commented on the identification of these 
recommendations as ``best'' practices as opposed to ``good'' practices. 
The respondents reasoned that use of the term ``best practices'' would 
imply these recommendations would be viewed as mandates and auditable 
prescriptive regulation. One respondent indicated that these Best 
Practices would lead to an added burden for university technology 
transfer licensing offices, as grantees would feel compelled to 
document and justify reasons for any departures from them in individual 
licensing situations. In response, it is noted that the Best Practices 
document clearly and specifically articulates that the recommendations 
are not intended to constitute additional regulations, guidelines, or 
conditions of award for any contract or grant. These Best Practices 
create no new auditable regulation. While not imposing regulations or 
requirements on any licensing situation, it is generally the object of 
best practices to inform practicing professionals to a set of 
principles against which they should test their judgments in any 
particular fact situation. As such, best practices serve as an industry 
benchmark for the most current, innovative, and advanced practices. In 
this regard, as in all others, our grantees should expect no less than 
the best guidance possible from NIH.
    A respondent criticized the proposed Best Practices document for 
not clearly defining genomic inventions. According to this respondent, 
the Best Practices document does not distinguish compositions of matter 
and diagnostic technologies from basic research tools. Consequently, 
this broad definition of basic genomic inventions undermines a 
company's ability to obtain an exclusive license to a composition of 
matter or a commercially viable diagnostic test. In response, it is 
noted that NIH intends the Best Practices to apply broadly to all 
genetic inventions. Contrary to respondent's conclusion, the proposed 
Best Practices document contemplates intellectual property and 
exclusive licensing to be appropriate for certain genomic inventions. 
The determination of when patent protection and exclusive licensing is 
necessary derives from the specific fact situation attendant the nature 
of the invention and its market;

[[Page 18414]]

not its inclusion within any particular definition of genomic 
inventions.
    A respondent indicated concern that it is difficult to know whether 
a discovery will be commercially viable as genomic research tends to be 
very early stage and its commercial significance may not be immediately 
apparent. NIH agrees with this interpretation and wished to highlight 
the need for flexibility on the part of technology transfer 
professionals in applying these Best Practices. Responsible exercise of 
this flexibility will help to realize the benefits of the patent system 
in commercializing products as well as maximizing the availability of 
important research materials.
    A number of respondents suggested that using patent protection and 
exclusive licensing can be the optimal means to ensure a research 
material or tool is made widely available to the research community. 
NIH considers this scenario to be consistent with both these Best 
Practices and our earlier research tool guidelines. Indeed, such 
scenarios emphasize the need for the proposed flexibility by technology 
transfer professionals in implementing these general principles and 
best practices, and militate against suggestions for focusing the 
practitioner on specific examples and fact situations that may be 
addressed by alternative licensing approaches within the scope of these 
Best Practices recommendations.
    A respondent commented on the recommendation that funding 
recipients reserve in their licenses the right to use licensed 
technologies for their own research and educational uses, and to allow 
other non-profit institutions to do the same. The comment questioned if 
this recommendation was more restrictive than our Principles and 
Guidelines for Sharing of Biomedical Research Resources, which states 
this right should apply to internal use of research tools by for-profit 
institutions. In response it is not the intent to be more limiting and, 
therefore, the recommendation will be adopted in the final version.
    A respondent requested further clarification and examples of when a 
genomic invention does and does not require further research and 
development investment. This respondent questioned whether genes, 
proteins, and DNA are themselves research materials, and whether the 
designation of these compositions as research materials is dependent on 
the setting in which they are used. In this context, the respondent 
asked NIH to provide some classes or uses as examples to flesh out this 
distinction. The most appropriate application of the principles set 
forth in our recommendations is fact and setting dependent. As such, 
our object is to set forth general principles and leave it to the 
licensing professional to decide how the general principles can best be 
applied.
    A number of respondents recommended that NIH promote changes in 
various laws and regulations, such as asking the U.S. Patent and Trade 
Office (USPTO) to determine before patent protection is awarded what 
type of patents covering genetic material would best be disseminated 
non-exclusively in the marketplace and then excluding such genomic 
material from patent protection. Another suggestion was that NIH should 
remind the USPTO that a better way than licensing benchmarks to address 
product development is to incorporate a requirement into U.S. patent 
law that the actual patent holder must use or develop the invention, as 
exemplified by European patent law. The requested remedies are outside 
the authority of NIH.
    After a careful review of the issues raised by the respondents, NIH 
has approved these Best Practices with a single change related to the 
comment about reserving internal research use for for-profit 
institutions.

Best Practices for the Licensing of Genomic Inventions

Introduction

    The Public Health Service's (PHS) primary mission is to acquire new 
knowledge through the conduct and support of biomedical research to 
improve the health of the American people. This mission is advanced by 
the intramural research efforts of government-owned and -operated 
laboratories and by the extramural research efforts funded through 
grants and contracts. PHS seeks to maximize the public benefit whenever 
PHS owned or funded technologies are transferred to the commercial 
sector. Motivated by this goal, we offer the following best practices 
for the licensing of government-funded genomic inventions.
    Genomic inventions include a wide array of technologies and 
materials such as cDNAs; expressed sequence tags (ESTs); haplotypes; 
antisense molecules; small interfering RNAs (siRNAs); full-length genes 
and their expression products; as well as methods and instrumentation 
for the sequencing of genomes, quantification of nucleic acid 
molecules, detection of single nucleotide polymorphisms (SNPs), and 
genetic modifications. Much of the value associated with the commercial 
use of these technologies involves nucleic acid-based diagnostics, 
potential gene therapy applications, and the development of new DNA and 
RNA-based therapeutics.

Background

    Among the benefits derived from PHS conducted and supported 
biomedical research are effective and accessible new healthcare 
treatments and services. Practical realization of these benefits 
depends on the ability and willingness of private sector partners to 
develop and commercialize new technologies arising from PHS conducted 
and funded research. For potential preventive, diagnostic, and 
therapeutic products, the interest of the private sector in 
commercializing new technologies often depends on the existence of 
patent protection on the technology in the United States and foreign 
countries.
    The Bayh-Dole Act of 1980 allows PHS grantees and contractors to 
seek patent protection on subject inventions made using Government 
funds and to license those inventions with the goal of promoting their 
utilization, commercialization, and public availability. Recipients of 
PHS grants and contracts have a role in implementing the requirements 
of the Bayh-Dole Act (https://s-edison.info.nih.gov/iEdison). In 1986, 
Federal laboratories, including PHS research laboratories at the 
National Institutes of Health (NIH), the Food and Drug Administration 
(FDA), and the Centers for Disease Control and Prevention (CDC), were 
given a statutory mandate under the Federal Technology Transfer Act 
(P.L. 99-502) and Executive Order 12591 to ensure that new technologies 
developed in those laboratories were transferred to the private sector 
and commercialized.
    PHS recognizes that patenting and licensing genomic inventions 
presents formidable challenges for academic and government technology 
transfer programs because of the complexities in bringing these 
technologies to the marketplace in a way that balances the expansion of 
knowledge and direct public health benefit with the commercial needs of 
private interests.
    The following represents best practices recommendations to the 
intramural PHS technology transfer community as well as to 
universities, hospitals and other non-profit PHS funding recipients. 
These recommendations are not intended to constitute additional 
regulations, guidelines or conditions of award for any contract or 
grant, although they are consistent with existing policies set out

[[Page 18415]]

in Sharing Biomedical Research Resources (http://ott.od.nih.gov/NewPages/RTguide_final.html) and Developing Sponsored Research 
Agreements (http://ott.od.nih.gov/spons_research.html).

Patent Protection

    Like other emerging technology areas, patents directed to genomic 
inventions tend to issue with claims that are broad in scope. Public 
health-oriented technology transfer must balance the rewards of broad 
intellectual property protection afforded to founders of enabling 
genomic inventions with the benefits of fostering opportunities for 
those striving to improve upon those innovations.
    Therefore, in considering whether to seek patent protection on 
genomic inventions, institutional officials should consider whether 
significant further research and development by the private sector is 
required to bring the invention to practical and commercial 
application. Intellectual property protection should be sought when it 
is clear that private sector investment will be necessary to develop 
and make the invention widely available. By contrast, when significant 
further research and development investment is not required, such as 
with many research material and research tool technologies, best 
practices dictate that patent protection rarely should be sought.

Best Licensing Practices

    The optimal strategy to transfer and commercialize many genomic 
inventions is not always apparent at early stages of technology 
development. As an initial step in these instances, it may be prudent 
to protect the intellectual property rights to the invention. As 
definitive commercial pathways unfold, those embodiments of an 
invention requiring exclusive licensing as an incentive for commercial 
development of products or services can be distinguished from those 
that would best be disseminated non-exclusively in the marketplace.
    Whenever possible, non-exclusive licensing should be pursued as a 
best practice. A non-exclusive licensing approach favors and 
facilitates making broad enabling technologies and research uses of 
inventions widely available and accessible to the scientific community. 
When a genomic invention represents a component part or background to a 
commercial development, non-exclusive freedom-to-operate licensing may 
provide an appropriate and sufficient complement to existing exclusive 
intellectual property rights.
    In those cases where exclusive licensing is necessary to encourage 
research and development by private partners, best practices dictate 
that exclusive licenses should be appropriately tailored to ensure 
expeditious development of as many aspects of the technology as 
possible. Specific indications, fields of use, and territories should 
be limited to be commensurate with the abilities and commitment of 
licensees to bring the technology to market expeditiously.
    For example, patent claims to gene sequences could be licensed 
exclusively in a limited field of use drawn to development of antisense 
molecules in therapeutic protocols. Independent of such exclusive 
consideration, the same intellectual property rights could be licensed 
non-exclusively for diagnostic testing or as a research probe to study 
gene expression under varying physiological conditions.
    License agreements should be written with developmental milestones 
and benchmarks to ensure that the technology is fully developed by the 
licensee. The timely completion of milestones and benchmarks should be 
monitored and enforced. Best practices provide for modification or 
termination of licenses when progress toward commercialization is 
inadequate. Negotiated sublicensing terms and provisions optimally 
permit fair and appropriate participation of additional parties in the 
technology development process.
    Funding recipients and the intramural technology transfer community 
may find these recommendations helpful in achieving the universal goal 
of ensuring that public health consequences are considered when 
negotiating licenses for genomic technologies.
    PHS encourages licensing policies and strategies that maximize 
access, as well as commercial and research utilization of the 
technology to benefit the public health. For this reason, PHS believes 
that it is important for funding recipients and the intramural 
technology transfer community to reserve in their license agreements 
the right to use the licensed technologies for their own research and 
educational uses, and to allow other institutions to do the same, 
consistent with the Research Tools Guidelines.

Conclusion

    PHS recognizes that these recommendations generally reflect 
practices that may already be followed by most funding recipients and 
the intramural technology transfer community with regard to licensing 
of genomic and other technologies. PHS also acknowledges the need for 
flexibility in the licensing negotiation process as the requirements of 
individual license negotiations may vary and may not always be 
adaptable to these best practices.

    Dated: April 5, 2005.
Mark L. Rohrbaugh,
Director, Office of Technology Transfer, National Institutes of Health.
[FR Doc. 05-7247 Filed 4-8-05; 8:45 am]
BILLING CODE 4140-01-P