LawBytes Podcast – Episode 20 was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best way to convert your audio to text in 2019.

Michael Geist:

This is Law Bytes, a podcast with Michael Geist.

AUTM:

Universities hospitals and research centers conduct a lot of research that generates groundbreaking inventions that not only save lives but improve the way we live. Work and play on a daily basis. Technology transfer plays a central role in bringing these ideas from the lab to the market.

Michael Geist:

Technology transfer in the university context has emerged as a significant policy issue with governments seeking to maximize the benefits of public investment in research at Canadian universities. For example, the Ford government in Ontario recently launched an expert panel on intellectual property that squarely focused on the issue. A government release stated that the panel quote will deliver a report on how Ontario can maximize commercialization opportunities for the post-secondary sector and its partners included in the expert panel report will be an action plan for a provincial intellectual property framework. But what if maximizing commercialization opportunities does not mean prioritizing patents. This week’s guest on the podcast, Professor Richard Gold from McGill University’s Faculty of Law, argues that universities should get out of the patenting game. He joins me to discuss the failure of patent first strategies within universities and why open science may offer a better path for commercialization success.

Michael Geist:

Richard thanks so much for joining me on the podcast.

Richard Gold:

Well thank you Michael for inviting me.

Michael Geist:

I’m really glad you’ve come on. The question of commercialization of intellectual property within the university environment has been a big policy issue for a long time and as you know better than just about anybody, many have advocated for increased commercialization more intellectual property especially on the patent side and universities are increasingly pressured to justify public investments in research through metrics like spin offs patents and other intellectual property. And this issue is getting even renewed focus in Ontario with the creation of an expert panel on IP and a lot of talk about maximizing commercialization. So that’s where much of the discussion seems to be at least in the media and amongst some of the politicians and policymakers. But you’ve written that universities should consider getting out of the patent business. And so I wanted to start there. Let’s talk about universities patents and the approach that we’ve seen for a long time. You think the focus on patents and commercialization has been the wrong approach. Why is that?

Richard Gold:

Well I think it was a really good idea forty years ago. We said look we’re producing a lot of knowledge at the universities. The government is putting a lot of money into research. We want to translate this in to economic growth. We want to have companies come out of Canada and become world leaders. We’re now 40 years later and I challenge you to name a Canadian company that has a large scale market that came out of a university. We’ve had a few they’ve all either been sold or gone under. When we think about BlackBerry it was not a spin off out of the university. So we’ve had 40 years of failure. It was a good idea. It just doesn’t work. And it’s time now to think about why it doesn’t work. What’s missing and we can look to the United States where this idea originated and we see you know it’s not working even particularly well there in the US about 84 percent of universities lose money on tech transfer and there are about 15, 16 universities that have generated real companies. It’s not like this idea hasn’t done anything, but it hasn’t done really well. And so we should be looking at alternatives that will do better. And I think today with our communication systems are deep deep interlinking both through technology through networks that university professors have created. I mean look at scientific publications there are often many many people on the team from different institutions. It’s time to look at a different model and that model in my view at least one part of that model means getting out of the patent business. We’ve done a poor job at it. Let’s try something different.

Michael Geist:

Okay. I want to get to what some of those alternatives could be in a moment but you mentioned that the data at least in the United States suggests that the vast majority of universities that have pursued this approach and as you note this has been something that universities both in Canada and the United States and elsewhere have faced as a real pressure point have lost money on this. So what’s the cost associated with pursuing the essentially patent first commercialization model from a Canadian university perspective.

Richard Gold:

So there is a direct cost which is actually running these offices. And what we’ve seen over the last 20 years or so is increasing expenditures going into professionals hired by the university frankly often with very little private sector experience because they can make a lot more money in the private sector so it’s hard to attract people. We’ve seen an increase in expenditures going to these individuals and their output hasn’t gone up. What we see is redundant patent applications. So in the first part of the 2000s the number of patent applications went up but the actual patents granted did not. So we were wasting a lot of direct expenditure on these individuals plus playing the patent game. There’s also been a significant increase in litigation particularly United States. So I don’t know if you’ve been following the debates over patents over the CRISPR technology this breakthrough technology to edit DNA.

TechCrunch:

Judges at the United States Patent and Trademark Office in Alexandria Virginia ruled today that the technology belongs to the Broad Institute and Harvard. Not the University of California Berkeley. CRISPR promise is huge. The technology could potentially change genetic code as well as produce new types of treatments and even cure diseases. And because it’s such a huge breakthrough it’s estimated to be worth billions even trillions of dollars.

Richard Gold:

That has pitted two universities against each other fighting over who gets the patent it’s going to cost you know one hundred million dollars plus to settle this. In the meantime nobody knows who has the right patents who doesn’t. So there’s a cost to industry about the uncertainty. There’s the cost of defending these patents but that doesn’t include what I think is the major cost which is the cost that we don’t account for. And that is the time of the researchers spent on filing patent applications because they must be involved. And that takes up time and nobody knows what that’s like. But even more significantly it gets in the way of setting up agreements with the private sector because as soon as the university says look if I’m taking an IP position here I want IP then of course the firm that they’re dealing with is going to say well hold on we’re putting money in, we want our IP. And so we see extended contract negotiations even on very simple agreements like material transfer agreements where the university transfers a cell or a DNA sample or molecule to the private sector and it can take six months. We’ve often seen it go much longer. And so if you take into account all those costs of just slowing down the research and the person power it takes to negotiate those agreements it’s extreme. But even beyond that it means a delay in research. It means that a research project can’t start as soon as it ought to. So the science is there the scientists are ready to go but they have to wait for the agreement to be signed. And so we have a delay of six months a year sometimes more to even get one partner involved. And imagine as we see today more and more often multiple partners need at each person bringing each person each firm bringing their own skills whether it be AI, whether it be a molecule whether it be some other type of knowledge each one needs to negotiate with the university so we may be pushing research back by a year or two years. That means people are suffering because we’re not even starting the research that may result in a drug and other people aren’t benefiting from that knowledge because we know once I publish someone else’s going to use it. So we’re delaying the initial start of the research which has a follow on effect and we have no idea how much that costs.

Michael Geist:

So I there’s a lot to unpack there. By the sounds of it you’ve got on the one hand the costs that the universities themselves incur because the commercialization strategy and and invariably involves the creation of tech what are called tech transfer offices within the universities these individuals who are supposed to specialize in taking the research finding private sector partners negotiating those deals and in a sense pursuing that commercialization strategy. Your data suggests that isn’t working very well it’s expensive to do. They’re not great necessarily at what they do with many more patent applications but not necessarily more patents actually granted. And then that process itself leads to the litigation that you described, leads to delays on the research side and it takes researchers out of doing what they do best which is conducting research.

Richard Gold:

That’s exactly right. So the initial instinct I think was right: let’s help the private sector and there’s always been historically links between universities and the private sector in fact a hundred some years ago most of the research was funded by the private sector. But since the 1950s the government has taken over the major role of funding and we’ve been trying to figure out how do we breach this gap especially since technology is becoming more complicated and we need bigger team. So it’s a good instinct. But it simply doesn’t work. The costs are way too high.

Michael Geist:

It’s interesting. I know that this goes back now decades. You mentioned that this really got started in the United States with the Bayh-Dole Act I believe back in 1980 which was sort of that first real attempt did we have something or do we have something similar in Canada at least that either a legislative or even a policy level that was designed to pursue this kind of commercialization approach.

Richard Gold:

Yes. And going back to 1980 the Bayh-Dole Act was trying to solve two problems. One is this commercialization gap. The other was in the U.S. there was a rule that if the government funded your research they had a veto over anything you did with it. So at a university that had an industry partner could not transfer the knowledge to the university without going through a byzantine process of getting permission from the federal government Bayh-Dole got rid of that and and rest and put control over these decisions the university in Canada we never had that situation. The granting councils never imposed an intellectual property policy. And so universities were always free to engage with firms as they want. So we never needed a Bayh-Dole. We don’t have the Bayh-Dole but what we have had is some policy. And one of those and I’ll just give one example is the Federal Government’s creation of the Canada research chair program. So this is a program to fund are our best researchers from across disciplines and the government demanded in return for funding these chairs that the universities triple their commercialization output. And so it was embedded into the agreement between the federal government and the universities that they would do more commercialization by which was understood at the time more patenting and more licensing. So we’ve had an embedded in pieces of policy like that. We also count patents when we’re assessing universities. Some governments on occasion have looked at patents as one of the things they look at in terms of making funding decisions. So it’s all been soft policy or through these arrangements with the university community. But it’s not in legislation. And so we don’t have to do it but we tend to follow the U.S. lead.

Michael Geist:

Right. Well I’m a fan needless to say of Canada Research Chair program but having held on for a long time but not necessarily thinking of that chair program as one that also sparked requirements on commercialization. Is there data on the kind of revenue that that post the creation of the CRC program that we saw you know did we get that tripling of commercialization revenue as the government was hoping for.

Richard Gold:

Well we have data from the 2000s until the government and until the government basically stopped collecting this data through Statistics Canada and around 2010. So the Harper government severely cut back on the types of data we have. But we have data from the early 2000s until 2009 and what we we see is that commercialization revenues increased. But the cost of generating those revenues rose even more. So in fact we went from twenty four million dollars in about 2001 of net benefit of net revenue to ten point seven million in 2009 because the costs way exceeded the extra little extra revenue we gained.

Michael Geist:

All right. So that comes back to your one of your very first points about the costs of pursuing a commercialization strategy. It’s not free and in fact I mean it’s striking to think that revenues net revenues go down rather than up at least in Canada in that first almost 10 years despite the increased emphasis on commercialization. That provides compelling data as to why the system hasn’t been working in Canada. And frankly you you’ve provided some references to why it doesn’t work for the vast majority of universities in the United States. So if not commercialization and as we know is where there continues to be an emphasis where we’re likely to see come out of Ontario as well if we’re not going to make commercialization the focus, what do you propose?

Richard Gold:

Well depends what you mean by commercialization. So this is a word that’s bandied around and often people interpret it thinking correctly as this notion of let’s patent everything we have and transfer it to a Canadian firm. As they said they were good instincts behind it but if we have a broader interpretation of commercialization as both about generating research and cutting edge research in the university and assisting our firms then I think we can take many different approaches. We can realize that universities are just terrible managers of intellectual property. We don’t know what to patent. We don’t know how to patent it. And we usually don’t know who to patent it too. Anecdotally I hear from people in tech transfer offices that the squeaky wheel that is the professor who complains gets his or her research patented not because it has a commercial value per se but because they want to patent and they’re not paying for it. So we we just don’t aren’t good at managing this. So the alternative is just simply say that the university is not about patenting. It’s about bringing people together. We’re really good at that. We can. We’re an honest broker so we can bring industry with community organizations with researchers and talk about what do we want here. What kind of knowledge do we need. A lot of this knowledge is high risk in the sense of we don’t know if it’s going to work. We don’t know how it’s going to work. We don’t know how much it’s going to cost. So there is a role for the university in doing the research. Adding to the world’s knowledge and the industry partners can then at being part of a consortium can see opportunities for themselves to develop their own products. So they become active partners and they will see opportunities you know some research that’s come out of the university they can say oh well with that knowledge I can now go off and develop my own molecule as a treatment for this disease or I can develop this product in the I.T. space. And that’s a different model of commercialization it still emphasizes the economic benefits of research but it doesn’t tie the hands of university researchers to immediately gaining an economic benefit from what they do.

Richard Gold:

And if you look historically we’ve just been terrible at guessing what’s going to work. If you look at when the television came out people were saying oh no one’s ever going to watch that the radio’s much better because you can do other things. Who could imagine that someone’s going to sit in front of a box and watch what’s happening. When they looked at when the computer came out the personal computer came out people thought wow no one’s going to use that even IBM didn’t think anybody was going to use it. So we’ve been really bad at guessing what is going to be a benefit. Why don’t we just let our researchers create knowledge and let others and firms in particular figure out where are the market opportunities are and they develop their own technology. Or a community organization can use the knowledge and say look there’s a better way of delivering services here we don’t need a new technology. We just need to figure out how to deliver this better. Maybe using I.T. maybe not. So the university should generate knowledge and bring people together and their interaction we know brings out new ideas and new opportunities.

Michael Geist:

I mean it’s an interesting point in suggesting that it isn’t an abandonment of commercialization, it’s a different road to commercialization one in which the university isn’t premising what it needs to do on based on the number of patents that it gets and locking down that information but rather taking a much more collaborative approach by trying to bring together other innovators other firms and using that research using that knowledge in innovative ways that may ultimately lead to more effective commercialization.

Richard Gold:

Yeah that’s exactly it. And yeah some places have experimented in fact Canada is the leader. In some ways in experimenting with it in Toronto there’s the structural genomics consortium headquartered in Toronto but has labs in at Oxford at the Karolinska in Stockholm at in Frankfurt.

SGC:

Welcome to the structural genomics Consortium at the University of Toronto. The SGC is a not for profit public private partnership supported by pharmaceutical companies charities and government agencies. We support drug development through relevant basic science. We enter our findings into the public domain without restrictions or patent protection. Our open access policy means we can share our results with the world immediately and freely.

Richard Gold:

Everything they do is out in the open. That is there are no patents all the data is freely available to all and a quarter of their funding comes from industry. And industry is really interested in becoming involved because this they’re interested in the knowledge that’s generated and we know that commercial partners that are part of these collaborations are better positioned than other firms to take advantage of it. So their turnaround time from working in this consortium and then developing their own product is much shorter and direct than it is for another company that just watches it from the outside.

Michael Geist:

All right so there is a there is that there’s still benefits from the private sector perspective in this kind of more open approach and I think you offer for as an open science type of approach, where the research takes place via collaboration without patents but with active participation of the private sector.

Richard Gold:

That’s right. We see it at the Montreal Neurological Institute which when open science in 2016 and they’ve been able to attract funding and partnerships from very large scale and smaller scale firms because they’re open because the firms realize that most of what we at universities patent is not the technology that they’re bringing to market. In fact it represents a cost to them they have to negotiate these agreements with us. They’re wasting time you know six months a year as I said before working with the university over something that’s likely not at all a commercially viable. They have to go through it because that’s the game that the universities have set up but they’re much happier engaging with universities where they don’t have to worry about all this stuff they enter into a simple agreement they contribute knowledge they get a lot more out of it than they put in because they they gain from the basic knowledge that’s coming out and then they go off and develop their own product and the SGC has success stories, the Montreal Neurological Institute is starting to gain those. This is a model that works.

Michael Geist:

I’d like to to focus for just one more moment on that as those SGC success stories because often times especially in the pharmaceutical industry sector we’ve been conditioned to believe that unless you’re focused on patents and patent protection that innovative new drugs simply don’t happen. Can you tell me a bit about some of the spin outs we’ve seen from SGC that seem to really run counter to that kind of narrative.

Richard Gold:

Sure. I should point out that the SGC was actually the idea of a private sector. GlaxoSmithKline took a leadership role in setting it up and were took a leadership role in ensuring that there were no patents there because they saw right from the beginning a benefit. But let me give you a more concrete example and this is this is just one of many types of agreements that the SGC has. The SGC started off looking at proteins and its three dimensional structure. And this is important because the way that drug discovery works is you try to find a drug that fits the three dimensional shape like a key into a lock. And so it’s really important to understand how these molecules fold up and then they moved on to developing what are called probes and these are molecules that will attach to various proteins. And if you can find a molecule that will lock onto the protein we know it’s drugable in the sense of we can find some molecule that will perhaps inhibit that model. That protein from acting or changed the way it acts. So SGC routinely enters into agreements with private sector or other institutions to develop these probes that they make freely available to the research world. One example is something called the W D repeat containing protein 5 or W D R 5. It had been an uninvestigated protein and as G C wanted to spur research on this protein so it entered into a partnership agreement with the Ontario Institute for Cancer Research which is a public institution in Ontario with a mandate to obviously do cancer research but also commercialization. And under this agreement the cancer the OICR the Ontario Institute for Cancer Research developed a probe for the W D.R. five gene protein. No one knew exactly what the protein did. The first try did not work very well because what the SGC did because it’s got this international network it said to other researchers can you just test out this probe and see if it’s really as effective as we think. Turned out it wasn’t. So that a leading researcher who was willing to participate because no one was getting patents this was helping academia, helping knowledge growth.

Richard Gold:

And so the OIC are redid their probe and came out with a very high performing probe. The SGC and the OICR made this probe freely available. There were researchers in Australia the US and Austria who took up the probe and discovered links between the protein and different types of cancer leukemia breast cancer and neuroblastoma and published the results so the researchers were interested in getting into a high impact factor journals. That’s the currency of researchers. And so by getting this free probe they were able to say look this was an unknown area. We can do this research rapidly and get a high impact journal. And each one of them did. Because the OICR had been involved with this open project they knew what was happening. They were you know they had not in-house knowledge about how this probe was built. They knew about the WDR5 protein. They already had staff trained on it and so they were quickly able to take this knowledge and develop a separate molecule that they then patented. So the OICR then took this public knowledge available to everyone in the world and developed a new new drug that they took through some preclinical trials and proved that it was effective in the leukemia field. So much so that Celgene a very large company approached them and agreed to pay 40 million up front for the right to use the drug. The patent stays with the OICR but Celgene has the commercialization rights and up to a billion dollars if the drug makes it all the way to approval in the meantime the research is being conducted in Ontario some more Ontario researchers are being funded. We’re developing more of this knowledge about how this protein works and so we’re leaving a legacy behind. So here’s an example of a commercialization route that did not involve the University taking a patent but making it open and converting it into a commercial success.

Richard Gold:

The SGC has other models though that don’t even involve patenting. They’ve set up a company called M4K Pharma which is medicines for kids and M4MD which is for for neurological diseases and here everything is done in the open. There are no patents but in the healthcare in the drug space there is an opportunity to get data exclusivity when you file an application to the FDA. United States Health Canada and in Canada for drug approval. The data that you submitted cannot be used to allow another company to get market approval. They would have to do the research themselves. And so M4K pharma is using this as a as a way to commercialize it. So they’ve got charities that are interested in the fundamental diseases they’re going after. And at the very least they’re going to get knowledge gain. And if there happens to be an opportunity that comes out of this then there’s a commercialization route. Again no one else is restricted from developing their own drugs. All the data is out there but we see that there’s a benefit to being part of the partnership you’re just more nimble and able to commercialize faster so is an advantage to participate. But we’re not blocking anybody else who isn’t interested in participating from following their own research and commercialization routes.

Michael Geist:

It’s really remarkable set of stories to to highlight how this has in fact worked. It’s not just a theory it’s in fact in practice we see an alternative route not dependent upon a patenting model that actually leads in many ways to more innovation and actually more commercialization opportunities. What’s it going to take do you think to see this proliferate more broadly especially at a time when governments look at the investments they make in research in universities and for so long their knee jerk reaction has been we need more we need more patents.

Richard Gold:

Well I’m somewhat hopeful that the commission in Ontario will acknowledge this conundrum and actually support experimentation because that’s what we really need. These are this one model I gave you of open science. There are other models of open science there probably other models and we need experimentation. I know some of the people on the on the commission are open to these ideas including Jim Balsillie who well understands that universities have done a poor job. I mean you know Jim and the government are upset that we’re commercializing or universities are commercializing knowledge for the benefit of foreign firms so if we’re going to get patents let’s not transfer order data exclusivity lets not just transfer them to the Facebook’s of the world. Let’s at least make it go to Canadians. But at the same time they recognize that universities are poor managers of patents. And so I think we’re going to see. I’m hopeful that we’ll see some experimentation. We’ve seen some signs from Canada’s chief scientist that open science is something that she’s interested in. In fact Environment Canada is the lead department in the government on the open government file which includes open science. What we’re hoping for is that the funding agencies such as Canadian Institutes for Health Research their equivalents in engineering and social science start to experiment with Open Science by having open science calls. That is research grants aimed at Open Science that meets a minimum criteria. Open data, open publication, no patents. We’ve seen an example of this from the Wellcome Trust, one of the largest international funders of health research. They’ve been experimenting with open science. CZI, Chan Zuckerberg Initiative, is also interested in open science. So what we’re hoping for is that the funders start putting their money into open science experimentation.

Richard Gold:

When the universities see that there’s money available to do open science they will do it doesn’t matter whether they believe in it or not. The way universities count whether they’re doing well is how much money they’re bringing in. So if they can bring money in by open science they will. I actually think universities are going to be the most difficult to change as as you’ve mentioned a long history of a belief in this failed system. It’s only by enticing them to try something different by publicizing the stories of the SGC and the MNI and other places that are interested that will start to see a change. And if Canada doesn’t do it other countries will. The UK in fact funded my research on open science. I have no Canadian funding it comes from, right now do but I didn’t at the time, because they think open science is a way for them to increase scientific productivity and commercialization in the UK. Brazilian institutions are approaching us and asking about how they can implement it. We know the Netherlands is interested in this. Your colleague Jeremy de Beer working in Africa is seeing a desire for openness and sharing and unfair terms. We’re talking to patient groups and they’re interested so we can increase trust in science if we all come together and say look this is a public service, creating knowledge but it’s not done at the expense of commercialization it actually assists those who are willing partners.

Michael Geist:

Right. And it’s amazing to hear that. Just the sheer number of organizations and countries that are now focusing on this issue is somewhat ironic that it feels as if we have to get the Canadian institutions kind of pull them along to come into that same space. Richard thanks so much for joining me on the podcast.

Richard Gold:

It’s been a great pleasure. Michael.

Michael Geist:

That’s the Law Bytes podcast for this week. If you have comments suggestions or other feedback, write to lawbytes.com. That’s lawbytes at pobox.com. Follow the podcast on Twitter at @lawbytespod or Michael Geist at @mgeist. You can download the latest episodes from my Web site at Michaelgeist.ca or subscribe via RSS, at Apple podcast, Google, or Spotify. The LawBytes Podcast is produced by Gerardo LeBron Laboy. Music by the Laboy brothers: Gerardo and Jose LeBron Laboy. Credit information for the clips featured in this podcast can be found in the show notes for this episode at Michaelgeist.ca. I’m Michael Geist. Thanks for listening and see you next time.

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