UC Relishes Power of the Patent
About an hour after the UCLA professor taped a plastic bandage--laced with a powerful drug--to the arm of his research assistant, the man became sick to his stomach. And in that brief, bilious moment, a popular anti-smoking remedy--the nicotine patch--was born.
Another pair of scientists spent decades at UC Davis creating varieties of strawberries--checking them for taste, size and productivity--and patenting new breeds that today account for more than half of the world’s production.
At UC San Francisco, microbiologists created a hepatitis B vaccine that is now routinely given to most newborns in America.
The variety of patented discoveries at the University of California is as remarkable as the riches they have generated. There are skin creams and new kinds of walnuts; cat vaccines and growth hormones, medical tests and X-ray devices. And, in recent years, a revved-up UC patenting machine has increased income fivefold as it transforms the breakthrough ideas of professors into moneymakers.
Fueled by the revolution in biotechnology and the state’s budgetary problems, the nine-campus UC system collected a record $57 million in royalty and license fees last year. And in each of the past four years, the university has ranked first among U.S. research institutions in number of patented discoveries--126 in 1995--and total patent dollars.
The big winner: UC San Francisco, where the hepatitis vaccine brought in $23 million in 1995, including $5 million to the scientists.
“It’s really a reflection of the general excellence of the faculty of the University of California,” said Terrence A. Feuerborn, UC’s chief patent officer. “And the university continues to invest more and more resources into this as well.”
But while UC’s patent income has been growing rapidly, some critics worry that the lure of the marketplace threatens to undermine the university’s traditional, scholarly role and turn thoughtful scientists into ambitious entrepreneurs.
They cite a proposal three years ago by then-UC President Jack Peltason to set up a commercial company to develop and market inventions and generate patent income even faster.
But an internal committee objected, concluding that the primary purpose of the UC patent office should be “serving society, not merely to generate income,” and the plan was killed.
Today, university scientists and patent officials talk more about finding uses for discoveries that might benefit the public than about generating revenue. But there is extra income for a growing number of scientists who can rightfully call themselves “inventors.” And thanks to the patent royalties they share with the university, some can call themselves “millionaires” as well.
The purpose of patenting university research, Feuerborn says, is to propel a new discovery “out into the commercial marketplace so it will benefit the public and produce new jobs.”
A patent gives inventors exclusive control over their inventions for a fixed time--17 years from the date of issue under the old law, 20 years from the date of application under current rules. The patent system is enshrined in the U.S. Constitution because, in Thomas Jefferson’s words, “Ingenuity should receive a liberal encouragement.”
In general, a university obtains the patent on a professor’s work, then offers it to businesses for commercial use. In exchange, a company often pays the university an upfront fee and a share of profits. The university shares the money with the professor based on agreed-upon formulas. At UC, faculty members can get 20% to 50%.
But patents are easier to obtain than profits, and it is impossible to predict which research will pay off. In fact, the big dollars that UC is reaping today are in many cases the result of discoveries a decade ago. “It is like winning the lottery,” said a scientist, who has earned more than $1 million for his share of a UC patent.
Several of UC’s most successful inventors say that patents were an afterthought, that they had no thought of profit when they made their discoveries. Indeed, a few of these scientists say that they lost foreign patent rights because they published their findings before the university applied for overseas patent protection. (Unlike the United States, most countries refuse patents for discoveries that are published before an application is filed.)
Most of these scientists say that their greatest satisfaction is seeing their discoveries put to use.
“We don’t object to the money,” said Dr. John Baxter, a professor of medicine and chief of endocrinology at UC San Francisco. Baxter was part of a team that in 1978 employed genetic engineering to trick bacteria into growing a chemical identical to human growth hormone, now marketed to treat dwarfism.
Until the product became available, young patients were given a hormone extracted from cadaver pituitary glands, which carried the risk of leading to debilitating mental disorders similar to Alzheimer’s disease.
“The thrill is being a scientist who walks through the halls and knows that now people can grow up,” Baxter said.
The patent has brought $19.6 million to the university. As for Baxter, his income last year from three separate patents, including the growth hormone, was $154,042.
Not all the scientists who have reaped rewards for their laboratory work are “inventors.”
Dr. Jeffrey Edman, a UC San Francisco researcher, was a young lab technician who worked on the development of the hepatitis B vaccine in early 1980s. He is not listed on the patent. However, the scientists who are, including UC professors William J. Rutter and Howard M. Goodman, agreed to give Edman a share of royalties.
All have profited from what Edman calls “one of the great advances of the 20th century”--a vaccine that last year reaped $750 million in sales. Thus far, it has brought the university $66 million in royalties and fees, making it the top-earning UC invention. Edman’s share over the last two years was $1,085,305.
Near the top in profitability are three patents that UC shares with Stanford University for the basic tools of genetic engineering--the process that has allowed biotech companies to turn bacteria and yeast into chemical factories for the production of proteins like the growth hormone and the hepatitis vaccine. These patents, due to expire in December 1997, have already brought the two universities $124 million in royalties.
Emeritus professor Herbert W. Boyer of UC San Francisco was paid $4.4 million last year as a co-inventor.
Most inventions produce far less income. Last year, university figures show, 486 inventors divided almost $18 million in royalty income--an average of $36,500 per scientist.
Neither Boyer nor Stanford’s Stanley N. Cohen had patents in mind when they first discussed their idea at a delicatessen across from Waikiki Beach in 1972 while attending a U.S.-Japan scientific conference, according to Cohen. Within months, the pair had made one of the most important breakthroughs in biotechnology.
Cohen said he initially hesitated to patent the discoveries and at first refused to accept royalties from Stanford.
Today he has no qualms about patenting laboratory research. “One reason I agreed to pursue a patent was that it facilitates the flow of information,” he said. “Patents are disseminated. They are an incentive for eliminating secrecy.”
Many scientists--especially those in basic research--say they do not think of themselves as inventors.
But that is not the case for Dr. Murray E. Jarvik, an emeritus professor of psychiatry and psychopharmacology at UCLA. Jarvik, who with brothers Jed and Karce Rose developed the nicotine patch, describes himself as a gadgeteer, who years ago patented a clever, but impractical “portable escalator.” (His nephew, Dr. Robert Jarvik, designed the Jarvik artificial heart.)
The elder Jarvik, who studies smoking behavior, was dissatisfied with the nicotine gum used to curb the craving for cigarettes. To work correctly, a patient must repeatedly tuck it between the cheek and gums after brief periods of slow chewing--and some people never get the hang of it.
When Jed Rose got sick after wearing the first prototype patch a decade ago, Jarvik said, “We knew then that it was actually having an effect, that the nicotine goes in very nicely.”
In the years that followed, an improved and patented patch, marketed as Habitrol, has brought the University of California $16.1 million in royalties and fees. Jarvik’s share of profits last year was $385,000.
UC Davis geneticist Royce Bringhurst recalled that at first he had reservations about patenting the strawberry varieties that he and colleague Victor Voth were breeding at university test stations. For years, the plants could not be patented at all, but that changed in 1972 under a revised federal law.
“We were literally instructed to prepare the papers,” said Bringhurst. “I can’t say I favored patenting.’
The new varieties permitted a year-round strawberry harvest in California and established the state as the world’s leading producer. The six most popular varieties have brought the university more than $14 million in fees and royalties, according to university figures. Bringhurst and Voth, both now retired, have profited as well, each receiving $512,276 last year.
UC Davis veterinarian and immunologist Niels C. Pedersen specializes in cat diseases and his research led to a number of patented discoveries in the 1980s, including a cat leukemia vaccine, a method for identifying the feline AIDS virus, and lab tests for these and other pet diseases. Companies that manufacture veterinary diagnostic tests have paid the university more than $5 million for Pedersen’s patents. The scientist’s share totaled $229,809 last year.
“We never pursue work with the idea of making money for the university or for ourselves,” Pedersen said. “But it does say in our contracts, if we feel we have made discoveries that have commercial applications we will disclose those to the university and the university will make a decision whether they are worth pursuing or not.”
The ownership of an invention can be the subject of fierce debate as Pedersen has discovered. Marlo Brown, an animal health technician who maintains a shelter for abandoned cats at her Petaluma home, argued in federal court that she deserves a share of the feline AIDS patents. She contended that when she brought several sick cats to the Davis veterinary school she told Pedersen that the animals had a “virus similar to AIDS,” according to court records. However, the court ruled she was not a co-inventor because she had no part in the laboratory work that isolated the virus and developed the test.
In fact, lawsuits are common in the world of patented discoveries, where the stakes can be very high. Two former UC San Francisco scientists--John Kucharczyk, now at the University of Minnesota, and Michael Moseley, now at Stanford--have sued UC, arguing that the university’s patent office failed to protect their interests.
They contend that the university sold their patents rights too cheaply--for a flat $25,000 without insisting on a share of the profits for UC and the two scientists. In their suit, they say that their safe, high-speed method for detecting heart attacks and strokes could bring $100 million to UC, including $25 million for each inventor.
Other patent disputes pit professor against graduate student, scientist against scientist--prompting concern that the academic tradition of sharing knowledge has been subverted. Several of the scientists interviewed said that they held up publication of findings until UC could file for foreign patents.
“Information doesn’t flow freely anymore, because people are too concerned about the money value of information,” said Leonard Minsky, executive director of the National Coalition for Universities in the Public Interest, which was founded by Ralph Nader.
Professor Sheldon Krimsky of Tufts University, who studies the impact of financial interests on science, said: “The ethos has changed from, ‘Let’s expand the frontiers of knowledge’ to ‘Let’s expand the frontiers of knowledge and patent that knowledge.’ ”
University officials and scientists counter that companies will not often risk sizable sums to bring new products to market without an exclusive license.
And without vigorous policing through legal action, patents give little protection. UC and Genentech continue to be in litigation over the university’s patent on human growth hormone, more than 18 years after the discovery. UC’s patent on Jarvik’s nicotine patch is still being tested in the courts.
Jarvik points out that even Thomas Edison, who had 1,093 patents, became fed up at times with the patent system: “Edison said, ‘A patent is simply a license for a lawsuit.’ I think that’s true.”
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Campus Inventions
Patent Income by Campus
While every campus in the University of California system produces patents, most of the $57.3 million in royalties and fees in 1995 were generated by just five. The health and medical sciences campus in San Francisco produces far more than any of the others.
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Fees and royalties % of Campus (millions) total UC San Francisco $42.5 74.4% UC Davis $5.2 9.1% UCLA $4.2 7.4% UC San Diego $2.2 3.9% UC Berkeley $1.4 2.5% Other campuses $1.6 2.8%
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Hitting It Big: The Top Inventions
The University of California’s top five income-producing inventions accounted for 73% of all university patent income last year. Here is the list of the active patents that have hit it big, along with the total royalties and licensing fees they have brought the university, in millions:
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Invention Total income (campus) 1994-95 income (over life of patent) Hepatitis B vaccine $23.1 $66.2 (UC San Francisco) Gene splicing/genetic engineering $10.2 $46.0 (UC San Francisco) Human growth hormone $4.5 $19.6 (UC San Francisco) Nicotine patch $2.7 $16.1 (UCLA) Lung surfactant $1.0 $9.7 (UC San Francisco)
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Source: University of California, Office of Technology Transfer
