Pacts Between Universities and Companies Worry Federal Officials

By PAULETTE WALKER CAMPBELL

Investigators use a wide range of tools, software, biological substances, and animals to carry out biomedical research. In the past, scientists would give each other genetically altered mice or laboratory equipment with no formal agreement and little or no thought to commercial rights or their own potential financial gain.

Recently, as more and more scientists patent such tools as intellectual property, the exchanges are done under "material-transfer agreements." Those contracts, commonly known as M.T.A.'s, set forth the conditions under which the research tools can be used by others.

When universities establish their own such agreements for research tools created by their professors, sharing with other universities tends to go smoothly, says Lita Nelsen, the director of the technology-licensing office at the Massachusetts Institute of Technology.

But when a scientist seeks access to a research tool that is owned by a pharmaceutical or biotechnology company, the conditions can often be "onerous," Ms. Nelson says. Some companies set conditions that give them the right to preview and comment on an article before it is sent to a publisher, or require researchers to surrender ownership of discoveries made with the aid of the material provided.

"Private industry, quite appropriately, believes that these tools are assets of the company, for which they can require value back," says Ms. Nelsen. "But some companies are making demands that we simply can't agree to."

Robert R. Gruetzmacher, the senior licensing business manager for DuPont, believes that university officials who balk at some demands are not being realistic.

"If everyone had equal access to patented inventions, there would be no incentive to take a given invention and put in upwards of $100-million to a $1-billion to commercialize it," Mr. Gruetzmacher says. "Scientists can come up with all kinds of discoveries, but humanity will not benefit from them unless someone puts up the cash to reduce those inventions to a pill or a therapy.

He adds: "I can understand where they are coming from. But the world is changing, and they are trying to fight change."

A panel of scientists convened by the National Institutes of Health has been sifting through competing arguments on the subject since last fall. Next month, the committee is expected to release a report on the extent of the problem, and on possible remedies.

In the past 20 years, several legal and commercial developments have converged to make the issue of ownership of intellectual property particularly relevant in biomedical research.

In a 1980 ruling, the U.S. Supreme Court held that "anything under the sun that is made by man" is eligible for patent protection. Accordingly, the U.S. Patent and Trademark Office added plants and animals to the categories of living subject matter that it considered eligible for patent protection.

At about that same time, new commercial biotechnology companies began to proliferate, increasing the need for protecting intellectual property in the field of biomedical science.

Perhaps the most important development was the passage of several pieces of legislation in the 1980s that encouraged research institutions to patent discoveries made in the course of government-sponsored research and to offer licenses to the private sector.

Those developments resulted in an environment in which scientific discoveries were much more likely to be patented at an early stage, and research laboratories were increasingly likely to need access to patented discoveries, says Rebecca S. Eisenberg, a law professor at the University of Michigan and the chairwoman of the N.I.H. panel studying the issue.

License agreements have emerged as the primary method of overseeing such arrangements.

In theory, observers say, protecting intellectual property through patents and transfer agreements makes sense. The contracts often allow for patented and unpatented biological materials to be made broadly available to scientists under reasonable terms.

But scientists and technology-transfer officers at universities bemoan the increasing complexity of the agreements and the work required to complete them.

"We are talking months and months of negotiating back and forth with these companies," says Ms. Nelsen of M.I.T. "Meanwhile, the investigator is banging on our door wondering where the heck his research materials are."

More troubling to academic officials are provisions included in some agreements that undermine an academic scientist's ability to carry out future research freely, or that place investigators and their universities at unnecessary risk.

Ting-Kai Li, the associate dean for research at Indiana University's School of Medicine, asked a major pharmaceutical company for permission to use a radioactive compound it had invented.

The company said Yes, Dr. Li says, but only if he would agree to keep the results of his research confidential until the company gave its permission; to let the company use, free, any discovery that Dr. Li made using its compound; and to allow the company to decide if and when to file a patent for the discovery.

"The first time I read the proposed agreement I couldn't believe it," says Julie M. Watson, the vice-president of technology transfer for the university's Advanced Research and Technology Institute. It was "inconsistent," she says, "with the nature of universities, which is to create knowledge to share with people.

"Under these terms, could we continue to serve the public interest? Would scientists be able to share the results of their work and the materials that might result? Could that scientist enter into collaborative research agreements with other companies or universities under those terms? The answer is No, and that's why this issue has raised a fair amount of distress within the academic research community."

David B. Schmickel, a patent lawyer for the Biotechnology Industry Organization -- a non-profit group representing most major biotechnology companies -- attributes much of the angst to unrealistic expectations.

University researchers do not seem to understand the financial and competitive pressures faced by biotechnology companies, Mr. Schmickel says. Whenever a company gives another scientist access to a research tool, it risks missing an opportunity to develop another product that it didn't foresee.

"Their survival depends upon their ability to disseminate research tools on a more restricted basis," Mr. Schmickel says.

Many observers say that setting uniform guidelines for negotiating such transfers might solve the problem. But efforts to create such a standard agreement have failed so far.

In 1995, the N.I.H. tried to create a boilerplate agreement for the sharing of research materials, but representatives of the biotechnology industry did not endorse it, saying that there were too many different circumstances for a uniform agreement to cover.

That same year, a panel convened by the N.I.H. created a standard agreement for exchanges between academic institutions. More than 100 universities use the Uniform Biological Material Transfer Agreement, but it cannot be used when the material to be transferred stems from an academic project supported by industry.

Mr. Gruetzmacher of DuPont thinks that creating a standard agreement is the wrong approach.

"At first blush, it sounds like a great idea," he says. "The problem is that the value of research tools varies. The owners of one tool might be willing to hand it over freely, with few restrictions. Other tools may merit more restrictive conditions of use. These agreements need to be done on a case-by-case basis." He says that each party needs to better understand the motives and needs of the others.

"Scientists -- starting at the graduate student and post-doc level -- need to be taught the nature of patents and the goals of industry, which are very different from the goals of government agencies and academia," he says.

"Likewise, private companies need to be aware of the limitations of universities. Oftentimes, some of the provisions in these agreements clash with state or federal regulations, which universities are bound by."

Parties on both sides are looking to the N.I.H. panel to clarify those issues and come up with solutions. Ms. Eisenberg says that satisfying both sides will not be easy and that her committee has yet to come up with solutions.

"These problems defy facile solutions because the players involved value intellectual property in different ways," she says.