Academic Entrepreneurialism: Originating, Commercializing and Sustaining Intellectual Property Development.

• Author: Fitzpatrick, William M.

INTRODUCTION

Between 2002 and 2015, Stanford University was granted 1503 patents by the United States Patent and Trademark Office [USPTO] and is currently ranked 11th among U.S. universities with respect to its research reputation (U.S.P.T.O, 2015; Best College Review, 2016). To facilitate its research productivity, Stanford has been able to successfully harness the efforts of its faculty, contractors and resources provided by the federal government in order to develop patentable research (Stanford University v Roche Molecular Systems, 2011). These multi-party research partnerships involving faculty, universities and external business organizations have often been referred to as academic entrepreneurialism (William Davidson Institute, 2008; Fish, Hassel, Sandner, & Block, 2015; Kwiek, 2008).

The complex stakeholder relationships characterizing this academic model of invention management can often set the stage for conflicts and litigation activities. These conflicts and legal disputes tend to emerge over ownership, commercial and financial rights associated with IPs developed in academic settings. For Stanford University, these conflicts were exemplified by a series of lawsuits with Hoffman-LaRoche between 2007 and 2011 (The Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 2011). The focus of these legal actions involved patents that originated from the research activities performed by two Stanford University employees--Dr. Thomas Merrigan and Mark Holodniy. Merrigan was a professor of medicine at the university and Holodniy a research fellow. The research activities of both these individuals involved investigating the use of PCR (Polymerase Chain Reaction) technologies as a vehicle for monitoring the effectiveness of diagnostic and treatment protocols for HIV/AIDS patients. In furtherance of these investigative efforts, both Merrigan and Holodniy had extensive research collaboration with Cetus Corporation.

During this time period, Merrigan served as both a consultant to Cetus and a member of its scientific advisory board. Dr. Merrigan's collaborative research activities relied on the contributions of three major stakeholders--Cetus Corporation, Stanford University and the U.S. Government. Cetus provided Merrigan with access to proprietary information/material systems to further extend and refine PCR technologies originally developed by the corporation. Stanford University provided laboratory resources, clinical access and a supportive collegial environment in which to conduct the research. The U.S. government provided grants to fund these university-based research efforts (The Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 2007). Holodniy had also arranged to gain access to proprietary information and laboratory resources at Cetus in order to support his research activities. In exchange for this research support from Cetus, both researchers agreed to become signatories of IP assignment agreements. The mutual transfer agreement (MTA) signed by Merrigan permitted this researcher to have access to Cetus resources and proprietary information in exchange for Cetus being awarded a nonexclusive/royalty-free license in any technologies/inventions created from these resources or information. As this collaboration continued, Stanford University also became a signatory to an additional MTA which provided Cetus with contractual guarantees that (a) its research role would be recognized when disclosing information to the university's patent agent and in subsequent patents; (b) it would have access to research results and be afforded free use of this data for any purpose; and (c) be entitled to an exclusive or nonexclusive license to IPs developed through this collaboration. In contrast, Holodniy executed a visitor confidentiality agreement with Cetus. Under this visitor confidentiality agreement, Holodniy was legally obligated to assign to Cetus Corporation the rights to any of the intellectual properties he created that might have relevance to the corporation's business activities.

During 1990, Holodniy began a series of experiments at Stanford University facilities based upon this prior work and discoveries at Cetus. He collaborated in this research with Merrigan and other Stanford University scientists. These investigative/inventive efforts were also supported by research grants from the federal government. While this research was in progress, Hoffman-LaRoche (Roche) acquired Cetus Corporation' s research assets/intellectual properties related to PCR technologies. In making this intellectual property (IP) acquisition, Roche believed that the MTAs and visitor confidentiality agreements respectively signed by Merrigan, Holodniy and Stanford University were still in effect.

Stanford University applied for patents associated with PCR research conducted at its facilities. Patent filings were initiated in 1992. These patents were subsequently granted and became available for license in 1997. Stanford University then sought to financially benefit from these patents through licensing activities. In response to these licensing activities, Hoffman-LaRoche (Roche) sought to claim ownership of these patents. Their legal claim for ownership of the Stanford patents was based upon contractual language in (a) Mutual Transfer Agreements signed respectively by the university and Merrigan; and (b) Holodniy's visitor confidentiality agreement. Stanford University defended its patent ownership based upon a variety of legal arguments including statutory provisions of the Bayh-Dole Act (1980).

In initial litigation concerning this issue, the U.S. District Court concluded that when inventions are created through federal funding, the Bayh-Dole Act (1980) invests title to the IP to the federal government. Should the federal government not exercise its ownership rights, then title or ownership of the invention reverts to the university and not the inventor. However, on appeal to the U.S. Supreme Court, this ownership transference of IPs to the university was reversed. The U.S. Supreme Court stated that the "Bayh-Dole Act did not displace the norm that rights in an invention belonged to the inventor. It did not automatically vest title of federally funded inventions to federal contractors [i.e., universities]... [Thus, Roche Corporation's]... ownership in the patent was not automatically extinguished by the Act" (The Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 2011, 776).

This inventive and litigation history of the Stanford University and Hoffman-LaRoche dispute demonstrates the complex collaborative relationships and critical legal issues associated with the development of IPs in academic environments. These collaborative relationships between researchers, universities, governmental entities and corporations are often typified by fundamental conflicts over the ownership, control and liability exposure associated with academically developed IPs. Resolution of these conflicts requires stakeholders in these inventive processes to effectively utilize elements of contract, employment and statutory law for purposes of protecting their legal/financial rights to these discoveries. The purpose of this paper is to (1) clarify the legal rights/remedies of these stakeholder groups with respect to academically developed IPs; and (2) review a variety of techniques which can be used to expand the financial and commercial benefits of this invention management model for its stakeholder participants.

ACADEMIC ENTREPRENEURIALISM

Academic entrepreneurialism represents a collaborative inventive process which seeks to harness the creative talents of multiple stakeholders for purposes of creating and commercializing intellectual properties (William Davidson Institute, 2008; Fish, Hassel, Sandner, & Block, 2015; Kwiek, 2008). As can be seen from figure 1, this model of invention management has three major types of stakeholder participants. These stakeholders include governmental entities, faculty, university technology transfer offices (TTOs) and commercial partners which seek to assist universities in creating revenue/market opportunities for their IPs (Thursby, Fuller, & Thursby, 2009).

In the United States, agencies of both federal and state governments have the capability to both facilitate as well as constrain the invention and commercialization of IPs developed within academic environments (Taub, 2006; Fitzpatrick & Dilullo, 2007; Kanarfogel, 2009; Knowledge Ecology International, 2016; Holstein, 2011). When enacting a facilitator role, government agencies can sometimes serve as a catalyst in (1) formulating commercial partnerships between universities and business organizations (Holstein, 2011; Fitzpatrick, 2015); (2) providing informational resources and small grants to support small business entry into export markets (Ohio Development Services Agency, 2016) and (3) providing major funding of university research activities (Kanarfogel, 2009). Faculty, university fellows and students constitute the inventive engine of academic entrepreneurialism (The Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 2007; Thursby, Fuller, & Thursby, 2009; Smith, 1997). Technology Transfer Offices (TTOs) serve as an important link between university and business communities. TTOs are instrumental in both (a) managing IP licensing activities and royalty streams for academically created IPs; and (b) may also attempt to commercialize these IPs by facilitating commercial startups/spinoffs initiated between university personnel and external business partners (Bigliardi, Galati, & Verbano, 2013; Council on Government Relations, 2007; Thursby, Fuller, & Thursby, 2009; Siegel, Veugelers, & Wright, 2007; Rosel & Agrawal, 2009; Nicholson, 2014).

As evident in figure 1, universities and other...