Exclusive technology licenses go against the ethic of openness that has helped build U.S. universities into research powerhouses. The terms of most of these arrangements are tightly guarded secrets. No doubt the practice is driven by the fact that exclusive licensing deals boost the up-front payments industry partners are willing to make. But considering that U.S. taxpayers fund nearly two-thirds of Big Ivory’s research, we need to think about more than just the short-term payoff. Even IBM recognizes that exclusive licenses can block innovation. And that’s an outcome that runs counter to the public interest.Perhaps the most powerful example of such untoward results is the notorious CellPro case. The case was resolved back in 1998, but it is brilliantly reexamined and analyzed in all its sorry detail in the latest issue of the Milbank Quarterly, a health policy journal. Authors Avital Bar-Shalom and Robert Cook-Deegan-the first, a fellow at the American Association for the Advancement of Science; the second, the director of the Center for Genome Ethics, Law, and Policy at Duke University-detail the potential pitfalls of exclusive university licensing.
The CellPro case centered on a bitter fight over a technology for isolating stem cells from bone marrow; the technology can be used in cancer treatment. Cell separation technology developed at Johns Hopkins University-with funding from the National Institutes of Health-was exclusively licensed to Chicago-based biomedical giant Baxter International. Around the same time, CellPro, an innovative Seattle-based startup, developed a related technology and beat Baxter to the market by two and a half years with a government-approved technology for treating advanced cancers.
In the late 1990s, brandishing its exclusive license from Johns Hopkins, Baxter went to court. By that time, CellPro’s device was in widespread use: the treatment of some 5,000 dying patients at 300 hospitals was hanging in the balance. But Baxter’s exclusive license from Big Ivory forced CellPro into bankruptcy when it lost the patent lawsuits. “It’s disturbing that an exclusive license from a publicly funded research institution could effectively block innovation, but the CellPro case illustrates this quite starkly,” Cook-Deegan says. “In this case,” he adds, “the laggard innovators won.”
Cook-Deegan cautions against drawing sweeping conclusions from one case study. But there can be no doubt that the pervasiveness of exclusive licensing is stymieing innovation, and it is just a matter of time before the next CellPro debacle arises.
What’s the answer? The first step is to let in some sunshine. The Bayh-Dole Act of 1980 allows universities to license their patents without publicly disclosing the deals they make. Disclosure can arm policymakers with the information they need to foster wide dissemination of publicly funded emerging technology. As Cook-Deegan puts it, taxpayers “should know what’s happening with the intellectual property they pay to create.” It’s not often you’ll catch me saying this, but here it’s true: what’s good for IBM is good for the country.