The “Anticommons” Effect: What is the Evidence?

• Definitions: commons/anticommons• Examples • Evidence?• Responses of stakeholders to Real or

Perceived Anticommons Effect• Summary

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.

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 overuseThe “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

Genomics R&D Expenditures ($)(JIEE: Bjornstad & Dummer http://www.jiee.org/pdf/2002_05_patent.pdf)

Year Celera, HGS, Incyte, Millenium

U.S. Government

1994 49,457,000 190,300,000

1996 116,139,000 243,200,000

1998 268,667,000 303,800,000

2000 720,583,000 360,600,000

“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

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)

• 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

Patents with "Tuberculosis" in claims

0

10

20

30

40

50

60

70

80

1993-1997 1998-2002 2003-2007 2008-2012 post-2013

Date of Expiration

Num

ber o

f Iss

ued

Pate

nts

Vaccines and Antigens

Assays

rDNA compositions

Chemical Therapeutics

Other

"Plasmodium"/"Malaria" Patents

0

20

40

60

80

100

120

140

160

before1993

1993-1997

1997-2002

2003-2007

2008-2012

after2013

Patent Expiration Date

Num

ber o

f Pat

ents

Therapeutic Compounds

Vaccines

Assays

rDNA Compositions

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

   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)

 (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

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?

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 ofplaying a broad role in gene regulation

1. A method for inhibiting expression, in a eukaryotic cell, of a gene whosetranscription is regulated by NF-kappa B, the method comprising reducing NF-kappa B activity in the cell such that expression of said gene isinhibited.

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.

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.

What’s 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

• 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

Responses of Stakeholders

• Put the ‘invention’ into the public domain

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 SitesSanger 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

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)

0

500

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1500

2000

2500

3000

3500

4000

4500

ISSUED PATENTS

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

435 (chemistry, molecular biology)524(therapeutic drugs)536 (organic compounds including DNA, RNA)

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 don’t divulge your methods to IP owner…ever

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

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

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

– 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?

– 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/berkeleyagbioworkshop.pdf

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.