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THE BLACK HOLE

Patenting at academic institutes

By JONATHAN THON | MAR 18 2013

I thought I would take the opportunity this week to share with you a personal story regarding a recent academic milestone. My research focuses on platelet production, and earlier this year I filed a provisional patent, through Brigham and Women’s Hospital and Harvard Medical School on a platelet bioreactor I developed that recapitulates human bone marrow physiology.

This project was funded primarily through my supervisors R01 (basic research grant from the National Institute of Health), my American Society of Hematology research fellowship, and to a lesser extent a joint Brigham and Women’s Hospital Translational Technologies Innovation grant. Development of this technology will *hopefully* be supported by a K99/R00 (career transition grant also from the National Institute of Health), for which a final decision is still being awaited due to the United States government’s decision to enact the sequestration, and will constitute the basis of a patent application at the end of 2013.

The funding sources are relevant because the filing of a patent requires policy decisions on the distribution of annual income resulting from the patented invention. Different institutions will have different intellectual property policies, and the following reflect those of hospitals affiliated with Partners HealthCare System – a non-profit organization that owns several hospitals, including Brigham and Women’s Hospital. For the sake of brevity, these are summarized below:

  • Institutions contributing to the intellectual property will determine the initial split of profits resulting from the invention (after payment of patent expenses) based upon the relative amount of research that was performed by the primary investigators at the contributing institutions. In our case this was an 80/20 split between Brigham and Women’s Hospital where I hold my primary appointment, and Harvard University.
  • Each institution will then split its institutional share according to its own institutional intellectual property policy. For Brigham and Women’s Hospital, the policy stipulates a 25% share accorded to the institute, a 25% share accorded to the department, a 25% share accorded to the creator’s laboratory, and a 25% share accorded to the creators.
  • Indirect costs will be taken out of the laboratory and creators’ share at the institutional rate. In the United States this rate is negotiated with the National Institute of Health, and presently sits at 76% for Brigham and Women’s Hospital. This laboratory share must be held within the hosting institute and cannot follow a departing investigator outside of a Partners affiliated hospital. The creators’ share can follow the investigator and is subject to the new institutional rate if/when the investigator moves.
  • Investigators become subject to the intellectual property policy as soon as their employment begins at a Partners affiliated hospital. This clause is common to most research institutions.

I highlight these points because research programs, such as mine, deriving primarily from government grants (that are themselves funded entirely by taxpayer dollars), are already subject to the annually agreed-upon indirect cost rate, which presently sits at 76% for Brigham and Women’s Hospital. In my case, development of our platelet bioreactor was supported almost entirely from the remaining 24% from which the institution and department claim another 50% collectively after patenting expenses. The remaining 50% set aside for the lab and creators is then taxed at a further 76%, leaving 12% of profits resulting from the invention to be distributed amongst the inventors. Half of that cannot leave the research institution.

In the case where I elect to continue on at Brigham and Women’s Hospital, I am left with a 2.4% share of my own invention (~1.2% if I decide to leave). Considering that fringe, infrastructure, and administrative costs are already collected from the indirect rate before commencement of the research program, and that patenting expenses are recovered before profit sharing, I cannot help but feel this number is disproportionately low. More important is the observation that federal programs, such as the National Institute of Health that is primarily funding this work with taxpayer dollars, is not a shareholder in the product. Given that the National Institute of Health’s inflation-adjusted budget is presently ~20% lower than in 2003 and has been unable to keep pace with the growing demand for research in this country, perhaps it is time we reassess the Bayh-Dole Act of 1980 and consider new funding structures that would see federal agencies such as the National Institute of Health become self-reliant – perhaps by allowing funding agencies to retain a share of resulting patents proportional to their investment.

Thoughts?

ABOUT JONATHAN THON
Jonathan Thon

Dr. Thon is an assistant professor in the hematology division at Brigham and Women’s Hospital, and Harvard Medical School in Boston.

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  1. Kron3007 / March 20, 2013 at 10:31 am

    I can’t help but think that making federal funding agencies “self-reliant” by collecting patent royalties would drive the focus of funding from basic research more towards applied projects with large potential payouts. While I am in a very applied field myself, I see great value in basic research which is most often funded through federal agencies.

  2. BP / March 27, 2013 at 12:31 am

    Wow Jonathan, that is crazy low. Any idea if the ROI s also that low for patents filed through Canadian institutes as well? Anyonw know?

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