Originally published September 1996
At a time when companies are looking for any help they can get to cut expenses, the National Institutes of Health (NIH) is making an offer few can--or at least should--refuse. Through its Office of Technology Transfer (OTT), NIH is awarding licenses to private firms to develop and sell technologies invented by scientists and engineers working in laboratories affiliated with the more than 20 institutes on the Bethesda, MD, campus, as well as at FDA. Each of the institutes also offers cooperative research and development agreements (CRADAs) that enable private and government researchers to work together on specific projects that might produce commercial products.
The idea behind the NIH technology transfer program is to promote public health by making available to private companies both ideas that have commercial potential and the expertise to bring good ideas to fruition. "The government cannot be a manufacturer of many types of inventions, particularly ones that require regulatory approval," notes Jack Spiegel, director of the division of technology development and transfer at OTT (Rockville, MD). Consequently, without some technology transfer mechanism, ideas arising from research done on the NIH campus or at FDA--ideas that might evolve into profitable and beneficial health products--would be wasted.
In other NIH programs, technologies developed with public funding but at extramural laboratories--for example, medical centers and universities--are controlled by those institutions. "The extramural program is by far the largest part of the NIH budget, but federal law calls for the institutions that receive those grants to have the first option to commercialize their inventions," says Steve Ferguson, a senior specialist at OTT.
By contrast, the technology transfer program awards licenses only on technologies invented at federal laboratories. There is no typical company that takes advantage of these licensing opportunities. Rather, a company obtains a license to develop a specific invention on the basis of its ability to turn it into a commercial product. "We have licensees representing all sizes of companies," Ferguson says. "We do not begin with a presumption that only big companies or only small companies can develop a technology. We look more at the specifics of a particular technology--what is needed and whether the company has the resources and interest to take it all the way through product development and commercialization."
Participating companies discover the OTT program through many routes. Individual companies may learn about inventions developed at NIH or FDA laboratories from the scientists who came up with them, for example, or from presentations at scientific conferences. "And NIH is a great facility for training people, so a lot of people come in and work on technologies and then leave to work in private industry or start their own companies--so word gets out about various developments that way," Ferguson says. OTT also disseminates information about inventions available for licensing through its web site (http://www.nih.gov/od/ott/) as well as through various on-line and specialized publications, such as Knowledge Express, the National Technology Transfer Center, and the Biotechnology Information Institute.
The hundreds of new inventions that come out of NIH and FDA each year run the gamut from diagnostic reagents to ventilators, from nuclear medicine scanners to hand protectors. Among those now available for licensing is a ventilator that not only encourages patient-initiated breathing but decreases the chances of sickness and death while increasing the level of patient comfort. The device features an intratracheal pulmonary ventilation device and a low- resistance, flexible endotracheal tube, both developed by scientists at the National Heart, Lung, and Blood Institute. Other devices available for licensing include a handguard to protect against accidental needle sticks and a method for creating a barrier on latex products such as gloves and condoms that is impenetrable by even the smallest viral particle.
Inventions developed in government laboratories are first evaluated by OTT for patentability and commercial potential. The office submits many, but not all, commercially viable technologies for patenting. "We seek patent protection for technologies that require it as an incentive for the private sector to adopt them," Spiegel says. "But there are other inventions and technologies developed here for which private sector partners don't necessarily require intellectual property protection in order to motivate them to use or to develop the technology." When patents are sought, the office usually tries to obtain international coverage, because many companies desire worldwide patent protection before they enter foreign markets.
OTT can award any in a range of licenses, including those that allow the company to evaluate a technology for its commercial potential, to use an invention only for internal applications, or to commercialize a technology on a nonexclusive or exclusive basis. "There is an inherent preference in governmental licensing for nonexclusive agreements that promote competition and encourage the widest possible use of a particular technology," Ferguson says. "There is also a preference for field-of-use licensing, where two companies license the same basic technology but for different applications. That allows us to grant each company a separate license for the field of use it's interested in."
Once the licenses are granted, NIH wants to see the company progress toward developing the invention. Licensing agreements typically call for very specific actions by the company. Nonuse or failure to develop the invention are each grounds for revoking the license. Also, because the early R&D was accomplished with taxpayers' money, licensing agreements usually require that the products resulting from the invention be manufactured in the United States.
But licensing is only one way companies can leverage the expertise of researchers working for the federal government. Another involves joint research projects developed under the Federal Technology Transfer Act of 1986, which created CRADAs. "Sometimes a company's staff is working on an idea and it needs some expertise or resources that it doesn't have, but we do; sometimes it's the other way around," explains Ferguson. "Basically, CRADAs work because there is mutual interest and mutual benefit."
These R&D agreements make available to private companies not only government research staff but laboratory facilities, materials, equipment, and supplies. They also provide the private company in advance with an option to negotiate exclusive licenses on inventions made under the research agreement.
Regardless of the path chosen--either CRADAs or licensing of an existing invention--private companies have much to gain by taking advantage of research done at government laboratories. "To the extent that companies can use our basic discoveries to match up with their developmental programs, they can exert a considerable amount of leverage in terms of new product development," Ferguson says.--Greg Freiherr