involve use at earlier or later points on the product developmen path of biological materials from humans.

The last portion discusses the question of ownership of biologica materials and threats to university-industry collaboration in bic technology.

The university's primary role in society is one of education an research. Industry's role in society is delivering the fruits of re search to the public. A third role of universities, in addition to edu cation and research, is public service. Taking a positive role an seeing that a university's research results are made available t the public through industry certainly falls into that category public service.

Any net royalty income derived by the universities is applied t educational and research functions which, in a self-regenerative way, may produce yet other discoveries for public use and benefit

A university, in carrying out this third role of public service re sponsibility, cannot undertake downside risk. The university is no a manufacturer and does not factor in product liability risks in the cost of student tuition or research. If the university's direct interac tion with industry produces severe financial risks of loss, a univer sity should properly jettison that activity to protect its primary so cietal functions of education and research.

There are interesting issues to be considered by society at large in connection with the increased climate of litigiousness and its effect on the fruits of biotechnology. Who owns a disease? Is it the patient; is it the doctor? Is it the hospital or the university? Or is it perhaps really those future patients who might either get the dis ease and/or who might be saved from ravages of the disease be cause of the “information” derived from the patient's disease?

If neither university nor industry can proceed because of the threat of the cost of litigation, the loser is that future patient.

That products liability or attorneys of other legal specialties will seek to involve doctors, scientists, and universities in litigation because of the threat, however tenuous, from their research to a therapeutic product or process is clear. The threat of litigation to universities for therapies that emerge from biotechnology appears to be much higher than therapies that emerge from past medical research. This is because the transfer of technology may involve, in addition to patent rights, genetic information embodied in tangible form such as a plasmid vector or a hybridoma.

It may seem improbable that liability may reach back to a licensor involved in a discovery, but not in the end-manufacture or selling or servicing the products enabled by the discovery. But I think few would bet on that.

And consider the deeper pocket method of who pays for damages won in a liability judgment. If the plaintiff can establish even the slightest connection to the injury by a party with deep pockets and the party who actually caused the injury has no funds, the deeppockets party pays. And university endowments will be attractive targets.

This situation already means that a university, if dealing with a small company, must require that the company attain higher and higher levels of expensive insurance and to name the university as coinsured.

relopme And a cynical view of justice is liability litigation against corpo

rate institutions such as companies or universities is the institution biologic is presumed guilty unless they can prove they are innocent. n in bi Further, you lose even if the litigation is frivolous. And I would

like to quote from a recent address by Paul Orefice, the president ition an of Dow Chemical, in that regard. He discusses the law and the its of threat it poses to industry: n to ed

One of the real tragedies is that it is usually cheaper, less time consuming, and role an less demanding on a company's human resources to settle a case even if there is no ilable t possible guilt. We have all done it. Contingency lawyers count on this heavily. egory

Those institutions and individuals at the research end of the devplied t

velopment spectrum are facing the considerable threat of the neratin

downside risk noted earlier, and if that threat is real, not imagbenefii ined, universities and hospitals engaged in research have the deci'vice re

sion to make of whether or not to continue those interactions with y is no

industry which have the potential of jeopardizing their primary s in the functions of teaching, education, and in the case of hospitals, painteractient care. univer What message does society wish to give research institutions, and nary so in the context of this committee's current deliberations, those insti

tutions engaged in biotechnology research? Perhaps this committee t large acting for society at large can let us know what society's message ind it really is.

it the Or is it [The prepared statement of Mr. Reimers follows:)

Thank you.

he dis se bel

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the and eeptive

ch a and 1 as

25 October 1985

Testimony Prepared For:

29 October 1985 Hearings

of the

Subcommittee on Investigations and Oversight

of the

Committee on Science and Technology

U.S. House of Representatives

"Development of products and processes for human therapy that derived in some part from human bodily material: comments on the role of universities, researchers, patients and industry in that development."

By Niels Reimers

Boston, Massachusetts

(Mr. Reimers is Director of the Office of Technology Licensing at Stanford University and is currently on leave from Stanford as Consultant to M.I.T. in technology licensing.)

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Sections i through 5 of this paper deal with a short history

of modern university-industry relationships in the United States,

perception of the role of this partnership in innovation and

national competitiveness, the role of government in enabling this partnership, and examples of linkages between universities and


The most prominent and important linkage is the

graduated student. *

Section 6 gives examples of therapies using the biotechnology techniques of recombinant DNA (termed genetic engineering)

and hybridomas (which produce monoclonal antibodies).


examples involve use, at earlier or later points on the product

development path, of biological materials from humans.

Section 7 through 10 discusses the question of ownership of biological materials and threats to university-industry collab

oration in biotechnology.

*Sections i through 5 were derived from Chapter 5 of Technological Innovation In The '80s, Prentice-Hall, Inc., 1984





In the United States, university based research developed

toward the end of the nineteenth century, which is about the same

time the modern industrial corporation was emerging. Industrial research laboratories became a feature of prominent U.S. corporations after 1910, reaching a peak in the early 1930s. In 1927,

it was estimated that total national research and development

expenditures were $212 million.

Over 90 percent of these funds

was estimated to represent work by industrial concerns in their

own research laboratories.

A 1982 National Science Board (NSB)

report on university-industry research relationships considers

the importance of these industrial research laboratories to be

that of "having created a locale for advanced research and

development, and required staffing by scientists and engineers

with advanced training and degrees."

In the early part of the century, very wealthy individuals

and large, general purpose foundations, such as The Rockefeller

Foundation and the Carnegie Institution of Washington, were

sources in aiding research in American universities.


important for the support of research in the basic sciences were

the smaller, specialized foundations, such as the Dreyfus

Foundation, the Petroleum Research Fund, Research Corporation,

and the Alfred P. Sloan, Jr., Foundation.

Through the land-grant system, agriculture related research

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