The Hindu Business Line : Public-funded R&D Bill — Creating the ecosystem for innovation

The draft Bill needs a public debate to create the right environment for innovation protection and to ensure access to critical products developed through Government-funded research, says P. T. JYOTHI DATTA.

The Bill hopes to commercialise research from public-funded institutions, but there are fears that dice loaded heavily in favour of the person patenting research could inhibit innovation.

Immersed in laboratory work, scientists are not quite the people you’d expect to have money on their mind. That stereo-typical image of the absent-minded professor is set to change, with the Public Funded R&D (Protection, Utilisation and Regulation of Intellectual Property) Bill, 2007 drafted by the Central Government and apparently being circulated among the ministries.

The Bill hopes to commercialise research from public-funded institutions. To that extent, it is an important landmark for Government institutions that have been largely insulated from the challenges of the competitive environment in which private-funded research operates. Companies typically clamour to get their research patented (a move that gives them 20 years of exclusive protection), following which they try to leverage the research into a viable commercial product.

The public-funded research Bill seeks to gear up Government institutes to work in a similar environment that fosters research towards a patent that protects original work done by the individual or institution, and ensures exclusivity on the research for 20 years.

Concerns abound

Well-intentioned as the Bill is to ensure a fair share of the reward to the original researcher, its strangely restricted circulation among ministries has not prevented experts from expressing concerns after parts of the Bill appeared in the media and on blogs or IP-related networks. Normally their views should have been part of the public debates on an issue that impacts both innovation and public access to the fruits of publicly-funded research.

Could the proposed law be laying grounds for over-negotiation? Are institutes equipped to identify patented technology or research that is viable once commercialised? Will the legislation bring institutions and corporations too close to each other for public comfort? Is there a way to get the best research on board and not just that of a high profile researcher or scientist? And, most important, what happens to national interest, in terms of pricing and access to a medicine developed through public-funded research and commericalised?

There is broad agreement that scientists need the step up to put their protected work in the public domain. But the dice loaded heavily in favour of the person patenting research could inhibit innovation, cautions IP expert, Mr Shamnad Basheer.

Innovation and IP need not always go hand in hand; there are other ways of incentivising research, he says, referring to “advance purchase contracts” that are being debated in research circles.

Model’s grey areas

Since the draft Bill is similar to the United States’ Bayh-Dole Act that sought to IP-empower universities in the 1980’s, experts are aware of the grey areas. To be sure, there were success stories of products emerging from university research, like blood-thinner warfarin. But in time, some universities began losing money — for every dollar invested in patents and licensing, some universities earned only $0.30, points out US patent attorney Mr Mark Phol, citing data from an economic analysis by the US government.

What the Bill gives….

The draft Bill seeks to give back to the scientist or inventor, 30 per cent of the revenue from commercialisation of his or her research. About 10 per cent is marked to the public-funded institute’s IP Management Cell and the rest of the revenue is ploughed back into the institute. The IPM Cell will help the researcher patent innovative work, besides negotiating with commercial institutions when it is ready to strike.

As in the past, the rights on the research will be with the institute, though the rights to assign will be jointly held by researcher, institute and Government, which largely plays the role of an observer, explains an architect of the Bill.

All research funded by Government comes under the ambit of this Bill that would also cover the several institutes under the Council of Scientific and Industrial Research (CSIR), the Indian Council of Medical Research (ICMR), the Defence Research and Development Organisation (DRDO), the Department of Science and Technology, the Department of Biotechnology, National Institute of Pharmaceutical Education and Research (NIPER), Central and State Universities, Deemed Universities, etc. Significantly, it would cover research in science, drugs, biotechnology, engineering, culture and so on.

Parameters have also been outlined on the royalty that would be paid to the scientist/institute when the patented research gets commercialised, says the Bill’s architect. But IP expert Dr Prabuddha Ganguli, who was recently on an international expert team to help draft a similar legislation for South Africa, is uncomfortable with attempts to outline parameters on issues such as royalty payment. The legislation should be a broad guiding framework and specifics should be left to the rules that are made later taking into account in the changing environment. Though he has not seen the draft of the proposed Indian legislation, he points out that there are several texts and sub-texts to the issue — like whether the research has been fully or partially funded by the government; definition of national interest and if the government exercises its “march-in” rights on a critical product, does it pay for it, and so on.

The draft Bill in South Africa has seen four amendments in five days and it has been circulated among stake-holders, universities, research institutions and industry. The S.A Bill will be drafted in legal parlance and opened to public debate, Mr Ganguli explains. This is in striking contrast to the non-transparent manner of the Indian draft Bill.

Fallacy of great expectations

Stressing the need to keep the proposed legislation flexible and realistic, Dr Gopakumar Nair, another seasoned hand on IP, observes that over-negotiation could kill the goose that lays golden eggs. “Great expectations” from scientists often derail realistic evaluation of their work, he says. For research to move out of the laboratory into the market, the company involved with the commercialisation process needs to invest further to make it a final finished product. In fact, it is this entity and not the researcher that carries the risk of the product.

A complex issue that the draft Bill does not tackle is technology evaluation, which is a minefield in itself. Details may be outlined in the rules that will get published when the Bill eventually becomes an Act. Here again, interested parties could go for the jugular, as technology evaluation is crucial. Some US institutes made a loss on their investment in research because they were unable to evaluate their research with the appropriate commercial yardstick.

Innovation with public access

Some other experts disagree about evaluating an institute’s innovative work on commercial terms. Scientists and institutes need to be spurred to do more innovative and break-through research. Auditing the performance of an institute through the number of patented research and their subsequent commercialisation is short-sighted. After all, only about five per cent of globally patented research actually gets converted into a commercial product, they point out. Whatever the caveats, and despite the draft Bill’s secret journeys, it is an attempt to create an ecosystem of innovation, with the right attitude to commercialising good work and maintaining the ideals of scientific endeavour.

Overseas, some critical drugs have been spawned by universities. Cancer drug Taxol from Florida State University, Recombinant DNA Technology from Stanford University, Hepatitis B Vaccine from the University of California, HIV drug Zerit from Yale university, glaucoma drug Xalantan from Columbia University and cancer drugs Cisplatin, Carboplatin from Michigan State University are just some examples.

In fact, blood-cancer drug Glivec, now mired in litigation, too came from a university, before it was successfully picked up and promoted by Novartis. But at the end of the day, the efforts to compensate the scientist will have to temper the gold-rush to patent and commercialise research with the needs of the medicine-consuming patient at the end of the chain.

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