1. The Anticommons Effect: What is the Evidence? Definitions: commons/anticommons Examples Evidence? Responses of stakeholders to Real or Perceived Anticommons Effect Summary

2. Take Home Messages There are many examples freedom to operate/access issues that lead to underutilization of biotech IP resources Little evidence to date that this effect has actually stopped new R&D Stakeholders have evolved different kinds of transactions to deal with the issue New and creative solutions are needed to reduce IPR transaction costs under anticommons conditions.

3. Definitions Tragedy of the commons - Hardin: Science, 162:1243 (1968) -Too many owners of a common resource, each having the right to use … leads to overuse The anticommons -Heller & Eisenberg: Science, 280: 698 (l998) - Multiple owners, each having the right to exclude others from a resource, leads to underuse since no one person can use the whole

4. Genomics R&D Expenditures ($) ( JIEE: Bjornstad & Dummer http://www.jiee.org/pdf/2002_05_patent.pdf) YearCelera, HGS, Incyte, Millenium U.S. Government 199449,457,000190,300,000 1996116,139,000243,200,000 1998268,667,000303,800,000 2000720,583,000360,600,000

5. Cost of doing business disrupts efficient patent practices -Upstream IP owners can be public entities with limited IP licensing resources - Many IP stakeholders drives up the cost of establishing value for the IP - Incompatible ownerships require individual negotiations - R&D costs increase and incentives decrease if licensing is required before research undertaken

6. The Anticommons: Sources of under-utilization (I) Multiple/conflicting IP ownership leads to multiple access requirements –Ag biotechnology (vitamin A Golden rice) –Assays/diagnostics (TB, malaria) –Fixed dose combinations (ARVs)

8. Between zero and 44 patents apply. USA and most EU countries: (40) In the 10 top rice producing countries: China (11); India (5), Indonesia (6), Bangladesh (0), Vietnam (9), Thailand (0), Myanmar (0), Japan (21), the Philippines (1) and Brazil (10). In the top ten rice importing countries: Iran (0), Brazil (10), Nigeria (0), Philippines (1), Iraq (0), Saudi Arabia (0), Malaysia (0), South Africa (5), and Côte d'Ivoire (10). ISAAA Briefs: 20 – 2000: Kryder, Kowalski, Krattiger

11. Fixed Dose Combination Drugs Components of FDCs may be patented separately and owned by different parties All components may be owned by the same party –Requiring a license to even one component of an FDC is enough to block access to the whole

12. TRIZIVIR ® TRIMUNE lamivudine + zidovudine + abacavir stavudine + lamivudine + nevirapine Adults and children Botswana + + (n,l) 330,000 Zimbabwe + +( n,l) 2,300,000 Swaziland + + (n,l) 170,000 Lesotho + + (n,l) 360,000 Zambia + + (n,l) 1,200,000 South Africa ** + Aspen license?** 5,000,000 Source: UNAIDS (2000) Attaran (JAMA: 2001)

13. (Source UNAIDS 200; Attaran, (JAMA: 2001) TRIZIVIR ® TRIMUNE lamivudine + zidovudine + abacavir Stavudine + lamivudine + nevirapine HIV + Adults and children Cote d'Ivoire + ( l)+ (n,l)770,000 Rwanda + (combivir ) 500,000 Burundi + ( z) 390,000 United Rep. of Tanzania + +(n, l)1,500,000 Congo + (l)+ (n, l)110,000 Sierra Leone + (a) 170,000

14. The Anticommons: Sources of under-utilization (II) Presence of broad, dominating IP –MIT/Harvard/Ariad: modulating NF- kappa B transcription factor activity –Housey patent: drug screening technology- reach through to screened drug?

15. MIT/Harvard 6,410,516 (June 2002) Transcription factor NF-kB is present in many, if not all, cell types Acts as an intracellular messenger capable of playing a broad role in gene regulation 1. A method for inhibiting expression, in a eukaryotic cell, of a gene whose transcription is regulated by NF-kappa B, the method comprising reducing NF-kappa B activity in the cell such that expression of said gene is inhibited.

16. Housey Patent: 5,688,655 (exp. 2017) A screening method to determine if substance X modulates the activity of any protein: provide cell which overproduces the protein relative to a control cell make sure the protein is readable in some type of assay treat the test cell containing the overproduced selected protein with substance X, and check the test cell to determine whether it exhibits a change in the assay in response to substance X.

17. CAIP Patent: 6,423,824 (exp. 2016) A purified preparation of a polypetide, the sequence of which comprises the sequence of a CD2 associated intracellular polypeptide (CAIP), wherein said polypeptide (i) has at least 80% sequence identity with at least 20 contiguous residues of the amino acid sequence of SEQ ID NO: 2; (ii) is at least 20 amino acids in length; and (iii) is capable of binding to the intracellular domain of CD2.

18. Whats the Evidence that the Anticommons Problem is Real Historical Precedent: Airplane patents Anecdotal Theoretical models Empirical Studies –Walsh et al. (interviews w/pharma, academe, biotech) –Herz et al. (clinical researchers using patented tests) Behavior/perception by relevant stakeholders –Consistent with a perception of a real anticommons effect

19. Walsh: Is the anticommons severe enough so that R&D/commercial progress is literally stopped? PROBABLY NOT –Vast majority of respondents (over 90%) say: Never happens Walsh: Does the anticommons encourage sufficient IPR access costs such that R&D/commercial progress is slowed down? YES –Increased IP due diligence –Litigation costs –Increased transactional costs for licensing

20. Responses of Stakeholders Put the invention into the public domain

21. The genomes of major parasites are being sequenced and the data released into the public domain. Blackwell and Melville, Parasitology 1999; 118 (Suppl): S11-4. Degrave et al. Int J Parasitol, 2001; 31 (5-6): 532-6. (trypanosomes) http:// www.tigr.org/tdb/parasites/ http://www.sanger.ac.uk/Projects/Protozoa/ Gardner, M.J., et al. 2002. Nature 419(Oct. 3):498. (Plasmodium) Hall, N., et al. 2002. Nature 419(Oct. 3):527-531. (Plasmodium) Genome Web Sites Sanger Center: http://www.sanger.ac.uk/ TIGR Center: http://www.tigr.org/ Washington University, St. Louis: http://genome.wustl.edu/est/leishmania_esthmpg.html Leishmania Genome Network: http://www.ebi.ac.uk/parasites/leish.html Monsanto rice genome: http://www.rice-research.org

22. Responses of Stakeholders Rely on existing IP law and courts: –Housey: written description/enablement of downstream products Design around –Do users (NGOs, developing countries) have the means? Make patents harder to get –utility requirements Kaplan and Krimsky (J. Biolaw & Busines, Supp. 2001)

24. Responses of Stakeholders Ignore IP entirely –Universities (research exemption?) or those very sure of victory in lawsuit –For those not so sure: Wait until research is further along, then license Make sure you dont divulge your methods to IP owner…ever

25. Responses of Stakeholders (II) Create a common cause –Cre-lox Dupont/NIH Infringement exceptions –Bolar safe harbor –Research exemption: Universities are special –Compulsory licenses Manage risk by licensing –Cross licensing –set off language

26. Third Party Patent Offsets (Anti-stacking language) For licensees benefit: – If I need any patent from a third party that is not part of this license package, I will pay the rent but decrease my rent to you (licensor) by: Fully creditable Same as above but no more than X % as a floor Some fixed % (Y) regardless of how much the third parties get

27. New directions? –Carve out infringement/licensing exceptions for those who may not have the IP expertise to perform FTO due diligence: an IP means test –Create a dedicated group of IP specialists who provide advice on FTO issues to NGOs, developing countries CAMBIA (ag biotech) : non-exclusive, fees determined by ability to pay. –http://www.cambia.org.au/main

28. –Contractually or legislatively require non-exclusive licenses for critically needed IP Golden rice: non-exclusive licenses to developing world/NGOs –Create voluntary or compulsory patent pools – Move offshore so the products are made where they are not patented Bayer v. Housey (selling a drug identified by screening method is NOT the same as infringement of a manufacturing process) LEGAL RESPONSE: include manufacturing steps in screening patents to create a starting material?

29. –Create an IP clearinghouse to reduce costs of transacting for IP rights, stimulate private sector incentives, education in practical policy/legal IP issues, conduct objective due diligence, coordinate IP policies February 2001: IP Clearinghouse Mechanisms for Agriculture http://www.farmfoundation.org/pubs2/berkeleyagbioworksh op.pdf

30. SUMMARY Anticommons is a problem of ACCESS Perceptions of the IPR stakeholders have lead to the evolution of different kinds of transactions For developing countries, IP- resource poor inventors, NGOs, end users: creative ways are needed to reduce IPR transaction costs.