Peter Lee, Contracting to Preserve Open Science: Consideration-based Regulation in Patent Law

• Citation: Vol. 58 No. 4
• Publication year: 2009

CONTRACTING TO PRESERVE OPEN SCIENCE: CONSIDERATION-BASED REGULATION IN PATENT LAW

Peter Lee^*

ABSTRACT

Patents on biomedical research tools-technological inputs to experimentation-may inhibit scientific inquiry and the development of life- enhancing therapies. Various "public law" approaches to address this challenge, such as a common law experimental use exception to patent infringement, are limited in their effectiveness. In the wake of these shortcomings, this Article argues that institutions that fund and support biomedical research are resorting to an underappreciated model of private ordering to resolve research holdup. Increasingly, federal and state agencies, universities, nonprofits, and disease advocacy groups are conditioning vital research support on requirements that recipients of this support make resulting patented inventions widely available for noncommercial research purposes. In essence, these institutions are contractually constructing a biomedical research commons.

These efforts represent a significant shift toward "privatizing" patent regulation. Through a new model of "consideration-based patent regulation," public institutions are embedding policy objectives in contractual quid pro quos with individual recipients of research support. This model provides public institutions with considerable freedom to effectuate norms favoring wide dissemination of research technologies. This Article greets this development with cautious optimism, providing prescriptions for how public institutions may effectively manage the contractual construction of a biomedical research commons. It concludes by exploring the significant ramifications of this development for patent law, institutions, and theory.

INTRODUCTION .............................................................................................. 891

I. THE ROLE OF PATENTS IN INHIBITING BIOMEDICAL RESEARCH ........ 900

II. THE CHALLENGES OF REGULATING ACCESS TO BIOMEDICAL

RESEARCH TOOLS ............................................................................... 906

A. Open Access, Exclusion, and Governance ................................. 906

B. The Limitations of Public Law Mechanisms .............................. 908

1. The Common Law Experimental Use Exception .................. 908

2. The Statutory Experimental Use Exception .......................... 910

3. Modifications to Patentable Subject Matter ......................... 911

4. Additional Policy Levers for Limiting Patents on

Research Tools ..................................................................... 912

5. Summary ............................................................................... 914

III. PRIVATE ORDERING BY PUBLIC INSTITUTIONS ................................... 915

IV. THE CONTRACTUAL CREATION OF A BIOMEDICAL RESEARCH

COMMONS .......................................................................................... 918

A. The Federal Government ............................................................ 920

1. Federal Support for Basic Biomedical Research ................. 920

2. Normative and Policy Concerns in Federal Support for

Basic Biomedical Research .................................................. 922

3. Leveraging Support and Norms to Compel Access to

Patented Research Tools ...................................................... 924

4. Analysis ................................................................................ 930

B. State Governments ...................................................................... 932

1. California's Funding of Human Embryonic Stem Cell

Research ............................................................................... 932

2. Access Norms and Policy Objectives in California's

Funding of Human Embryonic Stem Cell Research ............. 933

3. Leveraging State Funds to Enhance Access to Patented

Research Tools ..................................................................... 934

4. Analysis ................................................................................ 936

C. Universities ................................................................................. 938

1. University Contributions to Basic Biomedical Research ..... 938

2. Challenges to University Norms and Enduring

Commitments to Open Science ............................................. 940

3. University Licensing Policies Favoring Access to Patented Research Tools ...................................................... 944 a. Reserved Research Exemptions for Licensed

Inventions ...................................................................... 945

b. Exclusive Versus Nonexclusive Licensing ..................... 947

4. Analysis ................................................................................ 948

D. Nonprofit Funding Organizations .............................................. 951

E. Disease Advocacy Groups .......................................................... 955

V. OPPORTUNITIES, CHALLENGES, AND PRESCRIPTIONS ........................ 963

A. Opportunities .............................................................................. 963

B. Challenges and Prescriptions ..................................................... 965

VI. IMPLICATIONS FOR PATENT LAW, INSTITUTIONS, AND THEORY ........ 970

CONCLUSION .................................................................................................. 974

INTRODUCTION

In an era of great concern that patents may inhibit biomedical research,¹the intellectual property policies of the California Institute for Regenerative Medicine (CIRM) reflect a significant new development.²CIRM, a state agency, will provide $3 billion over ten years for human embryonic stem cell research in California.³Under CIRM's regulations, grantees may patent inventions arising from state funds.⁴However, as a condition of receiving public money, nonprofit grantees must make patented inventions "readily accessible" to California institutions for noncommercial research purposes.⁵In essence, CIRM is contractually creating a research commons within the State of California. While CIRM's regulations are not ideal (from a national perspective) in that they only benefit research institutions of one state, they illustrate an important mechanism for mitigating the exclusionary effects of patents. Amidst great anxiety that patents may inhibit scientists from using critical technologies, public institutions are leveraging their significant support for biomedical research to "contract" for enhanced access to such technologies.

Patents, which are twenty-year grants of exclusive rights on inventions, embody an intrinsic tradeoff. While they provide incentives to invent and develop new technologies, they also constrain access to those technologies. These constraints can have several deleterious effects. In the research context, patents on "research tools"⁶-vital inputs to experimentation such as gene fragments and extracted, purified human embryonic stem cells-may inhibit scientific inquiry and the development of life-enhancing therapies. In other contexts, exclusive rights can substantially raise the price of essential medicines⁷and hinder commercialization of existing inventions.⁸

The standard retort to this critique is that access constraints are necessary to motivate investments in new technology. However, this retort does not hold in all contexts.⁹It is particularly questionable within the political economy of biomedical research, where government, academic, and nonprofit institutions provide enormous support for research leading to patented inventions.¹⁰Many patented research tools, for example, arise from taxpayer-funded investigations conducted at nonprofit universities. This support undermines the notion that patent exclusivity is necessary to provide incentives to invent.¹¹Of course, exclusivity may still be required to encourage private firms to develop existing inventions into commercial products.¹²The policy challenge is to strike an appropriate balance between access and exclusivity for publicly supported inventions.¹³Various "public law"¹⁴mechanisms that potentially address this challenge-such as a common law experimental use exception to patent infringement¹⁵-have only achieved partial success.

Looking beyond public law mechanisms, this Article argues that an underappreciated model of private ordering is actively enhancing access to patented research tools and that expanding this model promises significant gains.¹⁶Specifically, it argues that public institutions are increasingly conditioning their contributions to biomedical research on requirements that recipients of those contributions make resulting patented inventions widely available for noncommercial research purposes. In essence, these institutions are building, through contract-like quid pro quos, a research commons for biomedicine.

This exchange of valuable consideration for widespread access to patented technologies illustrates a general phenomenon that I call "consideration-based patent regulation." Exclusive rights on research tools are problematic because these assets are foundational inputs to a wide range of downstream uses. However, these inputs have inputs, too. By attaching conditions to assets even anterior to research tools-such as the money, patent rights, and materials necessary to develop them-public institutions can help ensure the widespread availability of these tools for scientific inquiry. This contractually driven practice offers a swifter, nimbler, and more precise mechanism for influencing the behavior of patentees than traditional patent regulation.¹⁷While this

Article focuses on consideration-based patent regulation as a means to enhance access to patented research tools, public institutions are also using this mechanism to advance other access-related policy objectives as well.¹⁸

This Article represents the first systematic analysis of the creation of a biomedical research commons by public...