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 bio technology. The university's primary role in society is one of education and 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 o public service. Any net royalty income derived by the universities is applied to 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. And a cynical view of justice is liability litigation against corporate institutions such as companies or universities is the institution is presumed guilty unless they can prove they are innocent. Further, you lose even if the litigation is frivolous. And I would like to quote from a recent address by Paul Orefice, the president of Dow Chemical, in that regard. He discusses the law and the threat it poses to industry: One of the real tragedies is that it is usually cheaper, less time consuming, and less demanding on a company's human resources to settle a case even if there is no possible guilt. We have all done it. Contingency lawyers count on this heavily. Those institutions and individuals at the research end of the development spectrum are facing the considerable threat of the downside risk noted earlier, and if that threat is real, not imagined, universities and hospitals engaged in research have the decision to make of whether or not to continue those interactions with industry which have the potential of jeopardizing their primary functions of teaching, education, and in the case of hospitals, patient care. What message does society wish to give research institutions, and in the context of this committee's current deliberations, those institutions engaged in biotechnology research? Perhaps this committee I acting for society at large can let us know what society's message i really is. Thank you. [The prepared statement of Mr. Reimers follows:] 25 October 1985 Testimony Prepared For: 29 October 1985 Hearings of the Subcommittee on Investigations and Oversight 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 (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.) SUMMARY Sections 1 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 industry. 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). These 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 collaboration in biotechnology. *Sections 1 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. More 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 |