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STIFLING OR STIMULATING—THE ROLE OF GENE

PATENTS IN RESEARCH AND GENETIC TESTING

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

OCTOBER 30, 2007

Serial No. 110–66

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

HOWARD L. BERMAN, California, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ROBERT WEXLER, Florida 

MELVIN L. WATT, North Carolina 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BRAD SHERMAN, California 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ZOE LOFGREN, California 

BETTY SUTTON, Ohio 

HOWARD COBLE, North Carolina 

TOM FEENEY, Florida 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

SHANNA WINTERS, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III)

C O N T E N T S 

OCTOBER 30, 2007

Page 

OPENING STATEMENTS 

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Chairman, Subcommittee on Courts, the Internet, 

and Intellectual Property .................................................................................... 1

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 4

WITNESSES 

Mr. Lawrence M. Sung, J.D., Ph.D., Law School Professor and Intellectual 

Property Law Program Director, University of Maryland, School of Law, 

Baltimore, MD 

Oral Testimony ..................................................................................................... 7

Prepared Statement ............................................................................................. 10

Mr. E. Jonathan Soderstrom, Managing Director, Office of Cooperative Research, Yale University, New Haven, CT 

Oral Testimony ..................................................................................................... 24

Prepared Statement ............................................................................................. 26

Dr. Marc Grodman, Chair of the Board and CEO, Bio-Reference Laboratories, 

Elmwood Park, NJ 

Oral Testimony ..................................................................................................... 34

Prepared Statement ............................................................................................. 37

Mr. Jeffrey Kushan, Partner, Sidley Austin, LLP, on behalf of Biotechnology 

Industry Organzation (BIO), Washington, DC 

Oral Testimony ..................................................................................................... 57

Prepared Statement ............................................................................................. 59

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Howard L. Berman, a Representative 

in Congress from the State of California, and Chairman, Subcommittee 

on Courts, the Internet, and Intellectual Property ........................................... 3

Prepared Statement of the Honorable Howard Coble, a Representative in 

Congress from the State of North Carolina, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property ......................... 5

Page

IV

APPENDIX 

Material Submitted for the Printed Hearing Record ............................................ 117

OFFICIAL HEARING RECORD 

MATERIAL SUBMITTED FOR THE HEARING RECORD BUT NOT REPRINTED

A publication of the National Research Council of the National Academies entitled 

‘‘Reaping the Benefits of Genomic and Proteomic Research, Intellectual Property 

Rights, Innovation, and Public Health.’’ This publication is available at the Subcommittee and can also be accessed at:

http://www.nap.edu/catalog.php?recordlid=11487#toc

A report entitled ‘‘The Better World Report Part One, Building a Stronger Economy: 

Profiles of 25 Companies Rooted in Academic Research, 2007 Edition.’’ This report 

is available at the Subcommittee and can also be accessed at:

http://www.betterworldproject.net/documents/AUTMBWR1.pdf

A report entitled ‘‘Technology Transfer Stories: 25 Innovations That Changed the 

World, The Better World Report, 2006 Edition.’’ This report is available at the 

Subcommittee and can also be accessed at:

http://www.betterworldproject.net/documents/AUTMlBWR.pdf

(1)

STIFLING OR STIMULATING—THE ROLE OF 

GENE PATENTS IN RESEARCH AND GENETIC TESTING 

TUESDAY, OCTOBER 30, 2007

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:14 p.m., in Room 

2237, Rayburn House Office Building, the Honorable Howard L. 

Berman (Chairman of the Subcommittee) presiding. 

Present: Representatives Berman, Watt, Lofgren, Coble, and 

Issa. 

Staff present: Shanna Winters, Subcommittee Majority Chief 

Counsel; Eric Garduno, Majority Counsel; Blaine Merritt, Minority 

Counsel; and Rosalind Jackson, Professional Staff Member. 

Mr. BERMAN. Good afternoon. The hearing of the Subcommittee 

on Courts, the Internet, and Intellectual Property will come to 

order. 

I would like to begin by welcoming everyone to this hearing, ‘‘Stifling or Stimulating—The Role of Gene Patents in Research and 

Genetic Testing.’’

I noticed a couple of days ago that George Bush, when he was 

talking about President Putin and some of the problems in Russia, 

he said that in terms of whether or not it is possible to reprogram 

the kind of basic Russian DNA, which is used to centralized authority, that is hard to do, and so I would first like to know if there 

is a patent for an authoritarian gene, and how does it express 

itself, and can it be licensed? [Laughter.] 

Scientific knowledge concerning genes has expanded considerably 

in the last half-century since James Watson and Francis Crick put 

forth their discovery of DNA. 

We know now that genes are the blueprints of all living things. 

I am told that genes are chemical instructions stored in our cells 

that tell our bodies to grow bones, make blood, repair damaged 

skin, and perform tens of thousands of other functions. 

Efforts to map the human genome, like the Human Genome 

Project headed by NIH, have allowed us to identify specific genes, 

determine their function, and harness their usefulness. As a result, 

we have been able to produce therapies to alleviate human suffering, such as insulin, develop tests to determine susceptibility to 

2

diseases, like Alzheimer’s and breast cancer, and create wholly new 

organisms, like cancer mice and pesticide-resistant plants. 

Many attribute this success to the incentives provided by the patent system. Given the robust nature of the commercialization of 

biotechnology research, it is fair to say that patents have done 

their job in promoting new inventions in this field. However, there 

are those that have raised concerns about the impact of providing 

exclusivity for patents on genes. 

For some, genes are thought of as products of nature and, thus, 

should not be patentable subject matter. However, the courts have 

long held that compositions of matter isolated and purified from 

their natural state are worthy of patent protection. This principle 

was made clearly applicable to living matter like genes in the Supreme Court’s Diamond v. Chakrabarty decision. 

For some, gene patents should require a more rigorous review. 

The USPTO revised their examination guidelines for gene patenting in 2001, which strengthened utility requirements so that a 

gene could no longer be patented based on uses like being good for 

landfill. 

But while the 2001 guidelines tightened patentability requirements, some continue to argue that many gene patents are still 

issued for uses that are speculative and unproven. 

If the quality of gene patents remain a problem, stricter utility 

standards requiring more concrete uses may be called for. However, 

any lingering quality issues surrounding how gene inventions are 

examined could very well be impacted by the recent KSR v. Teleflex

decision. 

I know at least one of our witnesses will be speaking to that 

issue. 

Still, others fear that gene patents will be used to hinder research. They argue that if patent thickets were to form, it would 

become too costly or too troublesome for researchers to license the 

patented inventions they need, forcing them to abandon their research. There is anecdotal information that supports this notion 

that researchers have discontinued research pursuits because of 

the threat of lawsuits by gene patent holders. However, there is 

also data that suggests just the opposite, that gene patents have 

had little impact on basic research. 

A recent survey by the National Academy of Sciences found that 

in biomedical research, ‘‘There is a lack of substantial evidence for 

a patent thicket or a patent blocking problem,’’ primarily because 

researchers are not very concerned about patents being enforced 

against them. However, the report went on to say that this nonchalant attitude was based on the assumption by many researchers 

that they qualify for a robust research use exception, which many 

believe was eliminated by the 2002 Madey v. Duke decision. 

Regardless, it might only take one major victory against a university to create a real and substantial chilling effect. As such, we 

may need to examine the effects or necessity of a clear research use 

exception. 

Finally, for some, opposition to gene patents is a matter of principle. They point out that patents on genetic tests is harming patient access to and stunting improvement of these tests. It is reasoned that since most insurance providers do not provide coverage 

3

for genetic tests, the patent markup can price tests out of reach for 

many patients. 

In addition, some claim that gene patents have been asserted in 

order to prevent others from improving possibly inaccurate genetic 

tests and identifying whether these are even applicable to certain 

population subgroups. 

While I firmly support a patent holder’s right to charge what the 

market will bear for his invention, using a patent to block efforts 

that check the efficacy of such tests borders on the realm of patent 

misuse and may constitute anti-competitive practices. 

Patents are meant to encourage technological progress. Thus, it 

is antithetical to the patent system for companies to use their patents to freeze a technology at a particular stage of development. 

But is that what is happening? Are the practices of a few unfairly coloring all gene patents in a negative light? Are complaints 

related to gene patents based more on how they are being used instead of what is being patented? 

We need to examine the role gene patents play in stimulating or 

stifling research in genetic testing. It is my hope that this hearing 

will help us answer these and many other underlying questions. 

It is now my pleasure to recognize my friend and colleague, the 

distinguished Ranking minority Member of the Subcommittee, 

Howard Coble, for his opening statement. 

[The prepared statement of Mr. Berman follows:]

PREPARED STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRMAN, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

Scientific knowledge concerning genes has expanded considerably in the last half 

century since James Watson and Francis Crick put forth their discovery of DNA. 

We now know that genes are the blueprints of all living things. Efforts to map the 

human genome like the Human Genome Project headed by NIH has allowed us to 

identify specific genes, determine their function, and harness their usefulness. As 

a result we have been able to produce therapies to alleviate human suffering such 

as insulin, develop tests to determine susceptibility to diseases like Alzheimer’s and 

breast cancer, and create wholly new organisms like ‘‘cancer mice’’ and pesticide resistant plants. 

Many attribute this success to the incentives provided by the patent system. 

Given the robust nature of the commercialization of biotechnology research, it’s fair 

to say that patents have done their job in promoting new inventions in this field. 

However, there are those that have raised concerns about the impact of providing 

exclusivity for patents on genes. 

For some, genes are thought of as products of nature and thus should not be patentable subject matter. However, the courts have long held that compositions of 

matter isolated and purified from their natural state are worthy of patent protection. This principle was made clearly applicable to living matter like genes thanks 

to the Supreme Court’s Diamond v. Chakrabarty decision. 

For some, gene patents should require a more rigorous review. The USPTO revised their examination guidelines for gene patenting in 2001, which strengthened 

utility requirements so that a gene could no longer be patented based on uses like 

being ‘‘good for landfill.’’ But, while the 2001 guidelines tightened patentability requirements, some continue to argue that many gene patents are still issued for uses 

that are speculative and unproven. If the quality of gene patents remains a problem, 

stricter utility standards requiring more concrete uses may be called for. However, 

any lingering quality issues surrounding how gene inventions are examined could 

very well be impacted by the recent KSR v. Teleflex decision. 

Still others fear that gene patents will be used to hinder research. They argue 

that if patent thickets were to form, it could become too costly or too troublesome 

for researchers to license the patented inventions they need, forcing them to abandon their research. There is anecdotal information that supports this notion that researchers have discontinued research pursuits because of the threat of lawsuits by 

4

gene patent holders. However, there is also data that suggests just the opposite; 

that gene patents have had little impact on basic research. 

A recent survey by the National Academy of Sciences found that in biomedical research, there is a ‘‘lack of substantial evidence for a patent thicket or a patent blocking problem’’ primarily because researchers aren’t very concerned about patents 

being enforced against them. However, the report went on to say that this nonchalant attitude was based on the assumption by many researchers that they qualify for a robust research use exception, which many believe was eliminated in the 

2002 Madey v. Duke decision. Regardless, it might only take one major victory 

against a university to create a real and substantial chilling effect. As such, we may 

need to examine the effects or necessity of a clear research use exception. 

Finally, for some, opposition to gene patents is a matter of principle. They point 

out that patents on genetic tests is harming patient access to, and stunting improvements of, these tests. First, it is reasoned that since most insurance providers do 

not provide coverage for genetic tests, the patent mark-up can price tests out of 

reach for many patients. In addition, some claim that gene patents have been asserted in order to prevent others from improving possibly inaccurate genetic tests 

and identifying whether the tests are even applicable to certain population subgroups. While I firmly support a patent holder’s right to charge what the market 

will bare for his invention, using a patent to block efforts that check the efficacy 

of such tests borders on the realm of patent misuse and may constitute anti-competitive practices. 

Patents are meant to encourage technical progress—thus, it is antithetical to the 

patent system for companies to use their patents to freeze a technology at a particular stage of development. But is that what is happening? Are the practices of 

a few unfairly coloring all gene patents in a negative light? Are complaints related 

to gene patents based more on how they are being used instead of what is being 

patented? We need to examine the role gene patents play in stimulating or stifling 

research and genetic testing. It is my hope that this hearing will help us answer 

these and many other underlying questions.

Mr. COBLE. Thank you, Mr. Chairman and ladies and gentlemen. 

This is a good hearing topic, Mr. Chairman, in large part because 

the subject matter lends itself oftentimes to misrepresentation. 

At the outset, it seems to me that an inventor whose application 

satisfies the requirements for gene patent is not trying to patent 

‘‘life’’ or personal DNA chemistry in violation of the 13th amendment. The inventor’s ultimate goal is to develop a protein-based 

drug, a diagnostic test, or a therapeutic modality that will improve 

public health, if not save lives. 

I, therefore, hope the Subcommittee will collectively acknowledge 

after this hearing that gene patenting is a legitimate part of our 

patent system. It is a thriving component, it seems to me, of our 

knowledge-based economy. More importantly, gene patents ultimately contribute to the health and welfare of the American people 

and patients all over the world. 

The National Institutes of Health is the world’s largest agency 

for conducting basic medical and biological research with a budget 

in excess of $28 billion, but the pharmaceutical and biotech industries devote more than $50 billion annually to research. The process of identifying a DNA sequence through clinical testing and 

manufacturing of an FDA-approved drug may cost the patent holder in excess of a billion dollars, yet only a third of all drugs ever 

generate revenues sufficient to cover those costs, and the great majority, I am told, Mr. Chairman, of the biotech companies do not 

realize a profit. 

Mr. Chairman, you did a very good, masterful job, I will say, in 

negotiating the recently passed Patent Reform Act of 2007, but one 

thing we learned while debating that legislation is that different 

5

industries employ different business models. They use the patent 

system in various and sundry ways. 

American biotech companies are more reliant on the Patent Act 

than any other industry. While a few biotech companies are large, 

most are smaller and lack the internal financing resources to subsidize their drug research and development. This is especially true 

of small start-up companies whose valuation is an exclusive function of their patent portfolios. 

At our hearing today, the witnesses and the Subcommittee will 

explore some legitimate topics associated with gene patents. Are 

gene patents an impediment to university research? Do they inhibit 

competition and limit patient access to diagnostic testing? Should 

the Government exercise march-in rights to promote greater testing and research? 

I look forward to the testimonies of our witnesses today on these 

and other issues. 

And, in conclusion, Mr. Chairman, on March the 14 of 2000, 

about 4 months before you and I were involved in a Subcommittee 

on this very issue, at a hearing—gene patents, as you know, make 

inventions—I remember President Clinton and Prime Minster Blair 

issued a joint statement on the human genome. They said that all 

genes in the human body should be made freely available to scientists everywhere, and some interpreted that as an announcement 

of new Government policy that genes could not be patented. 

Then the biotech industry, of course, experienced bad difficulty, 

losing several billion dollars and, the following day, the White 

House released another statement emphasizing that the Administration supported the patenting of genes. 

I guess the moral of the story, Mr. Chairman, is to proceed cautiously and deliberately, and you have a good reputation of doing 

that, and I think I do, too. 

This is a good topic for an oversight hearing, but I think we must 

exercise great care about legislating in this area, lest possibly important industry and compromised public health could result. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Coble follows:]

PREPARED STATEMENT OF THE HONORABLE HOWARD COBLE, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NORTH CAROLINA, AND RANKING MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

Thank you, Mr. Chairman. 

This is a good hearing topic, in large part because the subject matter lends itself 

to misrepresentation. At the outset, let’s be clear that an inventor whose application 

satisfies the requirements for a gene patent isn’t trying to patent ‘‘life’’ or personal 

DNA chemistry in violation of the 13th Amendment. The inventor’s ultimate goal 

is to develop a protein-based drug, a diagnostic test, or a therapeutic modality that 

will improve public health if not save lives. 

I therefore hope the Subcommittee will collectively acknowledge after this hearing 

that gene patenting is a legitimate part of our patent system. It is a thriving component of our knowledge-based economy. More importantly, gene patents ultimately 

contribute to the health and welfare of the American people and patients all over 

the world. 

The National Institutes of Health is the world’s largest agency for conducting 

basic medical and biological research, with a budget in excess of $28 billion. But 

the pharmaceutical and biotech industries devote more than $50 billion annually to 

research. The process of identifying a DNA sequence through clinical testing and 

manufacturing of an FDA-approved drug may cost the patent holder north of oneVerDate 0ct 09 2002 11:52 Apr 10, 2008 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\103007\38639.000 HJUD1 PsN: 38639
6

billion dollars. Yet only a third of all drugs ever generate revenue sufficient to cover 

their costs. And the great majority of biotech companies do not turn a profit. 

Mr. Chairman, you did an outstanding job of negotiating House passage of the 

‘‘Patent Reform Act of 2007.’’ One thing we learned while debating the legislation 

is that different industries employ different business models that use the patent system in different ways. American biotech companies are more reliant on the Patent 

Act than any other industry. While a few biotech companies are large, most are 

much smaller and lack the internal financing resources to subsidize their drug research and development. This is especially true of small start-up companies, whose 

valuation is an exclusive function of their patent portfolios. 

At our hearing today, the witnesses and the Subcommittee will explore some legitimate topics associated with gene patents. Are gene patents an impediment to 

university research? Do they inhibit competition and limit patient access to diagnostic testing? Should the government exercise ‘‘march-in’’ rights to promote greater 

testing and research? I look forward to the testimony of our witnesses today on 

these and other issues. 

But I conclude with a cautionary tale. On March 14, 2000, about four months before I chaired a Subcommittee hearing on gene patents and genomic inventions, 

President Clinton and Prime Minister Blair issued a joint statement on the human 

genome. They said that all genes in the human body ‘‘should be made freely available to scientists everywhere,’’ implying the announcement of a new government 

policy that genes could not be patented. The biotech industry promptly crashed, losing more than $40 billion in market capitalization. The following day the White 

House released another statement emphasizing that the Administration supported 

the patenting of genes. 

The moral of the story, Mr. Chairman, is to proceed cautiously and deliberately. 

This is a good topic for an oversight hearing. But we must exercise great care about 

legislating in this area, lest we wreck an important industry and compromise public 

health. 

That concludes my statement, Mr. Chairman.

Mr. BERMAN. Thank you, Mr. Coble. 

I am wondering whether the asset value of the companies went 

back up by $2 billion on that next day when he said that because, 

if it had, I can say anything now and correct it tomorrow. 

Mr. COBLE. And I am not sure I can answer that. [Laughter.] 

Mr. BERMAN. I now will introduce a very distinguished panel of 

witnesses. 

Lawrence Sung is Director of the Intellectual Property law program at the University of Maryland School of Law. He is a partner 

in the Washington, D.C., office of Dewey & LeBouef, where he specializes in biotechnology, medical device, and pharmaceutical patent litigation and counseling. Additionally, he serves as a consultant to the National Human Genome Research Institute and as 

Chair for Intellectual Property for the National Research Council. 

Professor Sung earned a Ph.D. in microbiology from the U.S. Department of Defense Uniformed Services University of the Health 

Sciences and a J.D. from American University’s Washington College of Law. 

John Soderstrom is the Managing Director of the Office of Cooperative Research at Yale University, where he is responsible for 

managing the university’s intellectual property portfolio, executing 

commercialization strategies and developing spinoff ventures. His 

posture has allowed him to participate in the formation of more 

than 25 new start-up companies, many in the biotechnology sector. 

Prior to joining Yale, Dr. Soderstrom was the director of program 

development for Oak Ridge National Laboratory. Dr. Soderstrom is 

also President-Elect of the Association of University Technology 

Managers. Dr. Soderstrom received his Ph.D. from Northwestern 

University. 

7

And I might point out we have had no less than the President 

of Yale University testifying on patent issues several times in the 

past few years. 

Marc Grodman is founder of Bio-Reference Laboratories, the 

largest clinical laboratory operating in the Northeast. In addition 

to being a major regional laboratory, Bio-Reference Laboratories 

also provides national services in informatics and genomics. Dr. 

Grodman is also an Assistant Professor of clinical medicine at Columbia University’s College of Physicians and Surgeons. Dr. 

Grodman received his B.A. from the University of Pennsylvania, 

his M.D. from Columbia University, and attended Harvard University’s Kennedy School of Government. 

Jeffrey Kushan is a Partner with Sidley & Austin, where he 

serves as Practice Group Chair for the firm’s D.C. office. Mr. 

Kushan focuses his practice on Hatch-Waxman patent litigation, 

patent appeals and proceedings, patent portfolio reviews, and he 

represents clients, including trade associations, on domestic and 

international patent policy matters. He is testifying today on behalf 

of the Biotechnology Industry Organization. Before entering private 

practice, Mr. Kushan worked in Government as a patent examiner, 

in various policy advisory positions at the USPTO, and as an IP 

negotiator at the USTR. Mr. Kushan received his M.A. in chemistry from the University of North Carolina at Chapel Hill and his 

J.D. from George Washington University. 

Gentlemen, it is really an honor to have you all here today. Your 

written statements will be made part of the record, in their entirety. I would ask you, if you would be willing to, to summarize 

your testimony in 5 minutes or less, and to stay within the time, 

there is a timing light at the table. When 1 minute remains, the 

light will switch from green to yellow, and then red when then 5 

minutes are up. 

We are glad to have you here. 

Dr. Sung? 

TESTIMONY OF LAWRENCE M. SUNG, J.D., Ph.D., LAW SCHOOL 

PROFESSOR AND INTELLECTUAL PROPERTY LAW PROGRAM 

DIRECTOR, UNIVERSITY OF MARYLAND, SCHOOL OF LAW, 

BALTIMORE, MD 

Mr. SUNG. My charge during our brief time is relatively modest. 

I am not here to represent an organization, nor am I here to press 

an agenda. Rather, I hope to help inform your deliberations on 

gene patenting with insights about the nature of patent protections 

for genomic inventions and also to describe some available options 

that might assist in effectuating the particular balance between 

patent exclusivity and public access you ultimately deem appropriate. 

These may not be actual answers to the question of gene patenting, but then, as you know, what law professors do best is to 

answer a question by raising more questions. 

This Subcommittee has had the benefit of hearings focusing on 

the state of the patent system and on the possibility of patent reform legislation. I will not revisit these general principles of the 

patent system, but instead address some of the distinctions of gene 

patenting, three in particular. 

8

First, patenting genomic inventions is different because the underlying technology is different. Metaphorically speaking, in the 

physical sciences, if one dedicates her career to climbing the highest mountain, then on that day she can be confident that she has 

seen all there is to see. By contrast in the biological sciences, once 

you summit the highest mountain, only then do you see that there 

are other mountains you have never seen before. The science in 

this field is fluid, and this creates an inherent tension with the patent system which, like other systems of legal rights, depends upon 

static definition. Gene patents defy this type of containment. 

Second, genes are simply something that we have a sense should 

be part of the public common. That the subject matter might fit 

within the legal standards of what is patentable does not necessarily change the fact that many are left feeling that something 

is just not right about treating genetic information as property. 

Third, the temporal distortion that exists between the time one 

files a patent application and the time the courts adjudicate those 

patent rights seems even greater when dealing with gene patents. 

Sometimes decades separate these two events, and when courts 

make pronouncements today about what was a fledgling technology 

20 years ago, that does not sit well with a public that sees foremost 

what is at stake today. 

Now the state of gene patenting has seen significant evolution. 

When technology developed to allow rapid gene sequencing to 

occur, patent claims began being filed in hordes, what some called 

the patent gold rush, but, like most gold rushes, virtually all of the 

claims were speculative and the prospect of great wealth became 

illusory. 

The Patent Office wisely issued a moratorium on examination 

until setting forth revised standards of utility in written description that could be applied more sensibly to patent claims to DNA 

fragments known as expressed sequence tags or ESTs. This era 

concluded with the 2005 Federal Circuit decision In re Fisher 

which clarified that DNA fragments without some demonstrated 

knowledge about its biological relevance were not patentable for 

failure to teach a specific substantial and credible utility. 

This case arguably alleviates much of the wild concern over what 

many generically and inaccurately call gene patents. To be clear, 

gene patents still exist, but they are claims for DNA for which we 

have been taught both what it is and what it does, and this is 

somewhat more acceptable than the EST patent claims that the 

public first rallied against. 

But the issue of gene patents and their effect on research and 

public access to genetic testing remains. For those of the mind that 

action is necessary, one option is the maintenance or the enhancement of the rigor with which the Patent Office examines gene patent applications. The evolving jurisprudence generally in the patent law doctrines of anticipation, inherency, and obviousness, including the Supreme Court’s decision in KSR v. Teleflex, combined 

with the existing disclosure requirements of written description 

and enablement suggest that fewer gene patents will pass muster. 

In addition, the Supreme Court decision in Merck v. Integra will 

likely lessen the ability of certain patents, including some gene patents to be enforced. The Supreme Court decision in eBay v. 

9

MercExchange also implicates the restraint on the grounds of public interest in granting injunctive relief to gene patent plaintiffs 

even where infringement has occurred. 

The Government’s implementation of existing march-in rights for 

federally funded technology covered by gene patents would be another avenue to ensure public access. 

For those that feel the status quo or the reinvigoration of these 

standards fall short, new legislation might be considered and these 

include three options. First is the creation of the heightened standard of inventorship that effectively precludes the mere elucidation 

of a natural property, such as the DNA sequence or a biological 

pathway. Second is compulsory licensing of gene patents or some 

form of mandatory patent pooling of gene patents. And, third, is an 

academic research use exemption from patent infringement. 

In this last regard, my written submission for this hearing details a proposal of an elective right to use patented technology. 

I appreciate your attention. In closing, I ask your indulgence to 

be mindful that in the brief time here, I have necessarily oversimplified many aspects of a complex set of considerations. As I caution in my written statement, generalization is problematic with regard to gene patents, and I hope you will seek further insights of 

others on the important specifics. 

Thank you. 

[The prepared statement of Mr. Sung follows:]

10

PREPARED STATEMENT OF LAWRENCE M. SUNG


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Mr. BERMAN. Thank you very much, Dr. Sung. 

Mr. Soderstrom? 

TESTIMONY OF E. JONATHAN SODERSTROM, MANAGING DIRECTOR, OFFICE OF COOPERATIVE RESEARCH, YALE UNIVERSITY, NEW HAVEN, CT 

Mr. SODERSTROM. Thank you, Mr. Chairman, for the invitation 

to be here today. 

As you indicated in your opening statement, some scholars have 

argued that patents and their enforcement may impose significant 

costs upon noncommercial biomedical research by creating an anticommons or a patent thicket that may make the acquisition of licenses and other rights too burdensome to permit the pursuit of 

these otherwise scientifically and socially worthwhile research. 

These concerns have grown since the Madey v. Duke decision that 

affirmed the affirmation of any research exemption shielding universities from patent infringement liability. 

Without diminishing the importance of these potential concerns, 

it should be pointed out that the evidence offered to support these 

contentions is primarily anecdotal, and I need not remind you that 

the plural of anecdote is not data. Although a few isolated incidents 

have received significant attention, there is little systematic evidence that widespread assertion of patent rights on genes has been 

significantly hampered biomedical research. 

Two recent surveys, as you pointed out, offer little empirical 

basis for claims that restricted access to intellectual property is 

currently impeding academic biomedical research. The authors, in 

fact, further note that patents are not typically used to restrict access to knowledge and tangible materials that biomedical scientists 

require. 

The surveys further show that firms generally do not threaten 

infringement litigation against academic research institutions, a de 

factor research exemption, if you will, in part because such academic use may improve their invention or because they wish to 

maintain good will and ensure access to future academic inventions 

and also because the damages, as we all know, are likely to be very 

small. 

These studies also confirm that university technology managers 

take a very nuanced approach to patenting and licensing seeking 

only enough intellectual property protection to facilitate the commercial development of an invention. Decisions to patent and strategies for commercializing the inventions depend on a determination 

of the level of protection necessary to induce an interested company 

into investing in the further development, testing, manufacturing, 

marketing, sales of a product embodying the technology. 

But these results should not be surprising. The practice of university technology transfer managers reflect the salutary effects of 

the guidance that the National Institutes of Health has issued on 

patenting of research tools and genomic inventions as well as the 

formation of professional norms and standards of behavior encouraged by groups, such as the one that I help lead, the Association 

of University Technology Managers. 

Universities share certain core values, and we seek to maintain 

to the fullest extent possible in all technology transfer agreements. 

25

Chief among these values are the protection of academic freedom 

and the open pursuit of scientific inquiry. We seek balance between 

the business needs of our licensing partners and the shared value 

of our respective academic institutions. 

Recently, a group of university research officers, licensing directors, and a representative from the Association of American Medical Colleges recognized the need to clearly articulate a set of principles that strike such an appropriate public policy balance. 

The participating universities released a white paper in the public interest, nine points to consider in licensing university technology. These considerations were put forth in an aspirational or 

self-correcting sense to encourage the profession to set a high 

standard by creatively stretching the boundaries of conventional 

and licensing practices and ensuring that licensing activities are in 

the public interest for society’s benefits. 

The nine points included: one, universities should reserve the 

right to practice licensed inventions and to allow other nonprofit 

and governmental organizations to do so; two, exclusive licenses 

should be structured in a manner that encourage technology development and use as broadly and as quickly as possible; three, that 

we should strive to minimize the licensing of ‘‘future improvements’’; four, that universities should anticipate and help manage 

technology transfer-related conflicts of interest; five, ensure broad 

access to research tools; six, enforcement action should be carefully 

considered; seven, we should be mindful of export regulations; 

eight, we should be mindful of the implications of working with 

patent aggregators; and, nine, we should consider including provisions that address unmet needs, such as those of neglected patient 

populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for 

the developing world. 

Many of these points were already being practiced. In fact, the 

nine points have been endorsed by a growing number of academic 

institutions and professional organizations around the world. We 

applaud these participating universities’ efforts to articulate these 

important principles and urge their adoption and application by the 

wider community of universities. 

In the end, we hope to foster thoughtful approaches and creative 

solutions to complex problems that may arise when universities license technologies in the public interest and for society’s benefit. 

We believe that patent policy, as well as practice, should be guided 

by the goal of promoting innovation and, in turn, improvements in 

human welfare. 

That view drove Yale’s interest in helping to draft the nine 

points guidelines, which recommended that universities endeavor 

to make genomic inventions that will serve primarily as research 

tools as broadly available as possible. 

Yale has long taken a balanced approach to patenting, taking 

into account the nature of the invention, its relevance to research, 

and the extent to which patent protection would be necessary to 

give a commercial partner adequate incentive to develop the product completely. We have taken a similar approach to licensing, especially by insisting on the right to make the invention available 

to researchers at Yale and other academic institutions. 

26

1 Heller, M.A. and Eisenberg, R. S. 1998. ‘‘Can Patents Deter Innovation? The Anti-Commons 

in Biomedical Research.’’ Science, Vol. 280. No. 5364, pp. 698–701 2Merges, R. P. and R. R. Nelson. 1990. ‘‘On the Complex Economics of Patent Scope. ‘‘Columbia Law Review 90:839–916 3Scotchmer, S. 1991. ‘‘Standing on the Shoulders of Giants: Cumulative Research and the Patent Law.’’ Journal of Economic Perspectives 5:29–41. 4 Cohen, W. M., R. Florida, and R. Goe. 1994. ‘‘University-Industry Research Centers in the 

United States.’’; Thursby, Jerry G. and Marie C. Thursby. 2003. ‘‘University Licensing and the 

Bayh-Dole Act.’’ Science 301:1052. 

We do not think that gene patents are having a significant negative impact on academic research. There have been thoughtful 

analyses of problems that could arise, but the most comprehensive 

studies of this issue concluded that the patents are not slowing the 

pace of research. 

Yale and other research universities have a major stake in ensuring access to research tools. We also recognize that circumstances may change as the field of genomics and proteomics 

continue to advance, and I am confident that the scientific community, working with the National Institutes of Health, the Association of Technology Managers, the Association of American Medical 

Colleges and others, will continue to monitor whether gene patents 

are interfering significantly with research. 

My colleagues and I are grateful for the Subcommittee’s interest 

in this topic. 

Thank you. 

[The prepared statement of Mr. Soderstrom follows:]

PREPARED STATEMENT OF E. JONATHAN SODERSTROM

Mr. Chairman, thank you for the opportunity to testify before your Subcommittee 

on the topic of whether gene patents are helping or hurting research in the life 

sciences. 

My name is Jon Soderstrom. I am the Managing Director of the Office of Cooperative Research (OCR) at Yale University. The Office of Cooperative Research is the 

intellectual property management and licensing organization for Yale University. I 

also serve as the President-Elect for the Association of University Technology Managers known as AUTM. AUTM is a nonprofit organization created to function as a 

professional and educational society for academic technology transfer professionals 

involved with the management of intellectual property. AUTM was founded in 1974 

as the Society of University Patent Administrators. That group laid the foundation 

for the association that exists today with more than 3,000 members strong representing over 1,500 institutions and companies across the globe. 

SOURCES OF CONCERN

Scholars have recently argued that patents may impose significant costs upon 

noncommercial biomedical research. Heller and Eisenberg 1 suggest that the patenting of a broad range of the inputs that researchers need to do their work may 

give rise to an ‘‘anti-commons’’ or ‘‘patent thicket’’ that may make the acquisition 

of licenses and other rights too burdensome to permit the pursuit of what should 

otherwise be scientifically and socially worthwhile research. Merges and Nelson 2

and Scotchmer 3 highlight the related possibility that, in some fields of technology, 

the assertion of patents on only one or two key upstream, foundational discoveries 

may significantly restrict follow-on research. A further concern is that the prospect 

of realizing financial gain from upstream research may make researchers reluctant 

to share information or research materials with one another, thereby impeding the 

realization of research efficiencies and complementarities. Similarly, researchers 

may be trading away rights to conduct future research or to freely disseminate their 

discoveries in exchange for current access to research inputs or financial support.4

Finally, prospective financial gains from the exploitation of intellectual property 

may induce researchers to choose research projects on the basis of commercial potential rather than scientific merit. 

Another aspect of the debate about whether intellectual property fosters or 

hinders biomedical research relates to the ‘research tools,’ which are the ideas, data, 

27

5Walsh, J. P. Cho, C. Cohen, W. M. 2005. ‘‘View from the Bench: Patents and Material Transfers.’’ Science 309: 2002–2003. 6Pressman, L. Burgess, R. Cook-Deegan, R. M. McCormack, S. J. Nami-Wolk, I. Soucy, M. 

& Walters, L. 2006. ‘‘The Licensing of DNA Patents by US Academic Institutions: An Empirical 

Survey.’’ Nature Biotechnology 24: 31–39. 

materials or methods used to conduct research. Many such materials and methods 

are disclosed or claimed in DNA patents. Among DNA patents, there is particular 

concern about the subset of gene patents and their relevance to research tools because genes are not only inputs to developing genetic tests and therapeutic proteins, 

and thus directly relevant to medically important products and services, but also are 

crucially important tools for ongoing research. Concern over the impact of patenting 

and licensing on biomedical research has grown since the Court of Appeals for the 

Federal Circuit’s 2002 Madey v. Duke decision, which visibly affirmed the absence 

of any research exemption shielding universities from patent infringement liability. 

Patent claims based on DNA sequences can be infringed by research activities that 

entail making or using the claimed sequence, not just by selling products or services. 

Without diminishing the importance of these potential concerns, it should be 

pointed out that the evidence offered to support these contentions is primarily anecdotal. Although these isolated instances have received significant attention, there is 

no evidence that widespread assertion of patent rights on genes has significantly 

hampered biomedical research. Contrary to these prevailing beliefs, findings from a 

recent survey of 414 biomedical researchers in universities, government, and nonprofit institutions offers little empirical basis for claims that restricted access to intellectual property is currently impeding academic biomedical research.5 The authors noted that, although common, patents in this field are not typically used to 

restrict access to the knowledge and tangible materials that biomedical scientists require. 

The authors cite a number of reasons, including the fact that firms generally do 

not threaten infringement litigation against academic research institutions (a de 

facto research exemption), in part because such academic use may improve their invention, because they wish to maintain good will and to ensure access to future academic inventions, and also because the damages are likely to be very small. According to the authors:

‘‘Our research thus suggests that ‘law on the books’ need not be the same as 

‘law in action’ if the law on the books contravenes a community’s norms and 

interests.’’

These findings are consistent with another recent major survey of 19 of the 30 

US universities with the largest number of DNA patents. Their results showed that 

the licensing of DNA patents at US academic institutions has not led to the decline 

in academic cooperation and technology transfer that many observers have feared.6

In fact, based on responses, the study demonstrated that in most cases the licensing 

behavior of universities allows for collaboration and sharing of DNA-based inventions among academic institutions. 

The study investigated the patenting and licensing behavior for four main types 

of DNA-based inventions:

• DNA sequences that encode therapeutic proteins

• DNA sequences that are phenotypic markers only

• DNA sequences comprising genes encoding drug targets

• DNA discoveries or inventions representing research tools

The authors discovered that most universities base their decisions to patent and 

strategies for commercializing the invention on a determination of the level of protection necessary to induce an interested company into investing in the further development, testing, manufacture, marketing and sales of a product embodying the 

technology. Thus, in the case of a fully sequenced gene that encodes a therapeutic 

protein, where the utility and the development risks are both generally acknowledged to be high, survey respondents generally agreed that they would patent and 

license such inventions exclusively. However, in the case where the gene encoded 

is simply a target for drug discovery, few would consider even patenting such a discovery since researchers would be free to screen their compound libraries against 

the target while the patent application was pending and to use any resulting information without fear on infringement. In addition, it has become commonplace for 

universities, when licensing their inventions, to reserve the right for their own faculty, as well as researchers at other non-profit entities, to use the patented invention. The study confirmed that university technology managers take a nuanced apVerDate 0ct 09 2002 11:52 Apr 10, 2008 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\103007\38639.000 HJUD1 PsN: 38639
28

7The participating universities included: California Institute of Technology, Cornell University, Harvard University, Massachusetts Institute of Technology, Stanford University, University of California, University of Illinois, Chicago, University of Illinois, Urbana-Champaign, University of Washington, Wisconsin Alumni Research Foundation, Yale University and Association 

of American Medical Colleges (AAMC). 8 ‘‘In the Public Interest: Nine Points to Consider in University Licensing,’’ March 6, 2007. 

http://www.autm.org/aboutTT/PointsltolConsider.pdf 

proach to patenting and licensing, seeking only enough intellectual property protection to facilitate the commercial development of the invention. 

This market sensitivity is also reflected in data on patent trends. The number of 

DNA patents has shown a fairly dramatic and steady decline since their peak in 

2001 (from about 4,500 to around 2,700 in 2005). Patent prosecution, maintenance 

and management costs that are typically between $20,000 and $30,000 per patent 

militate against patenting inventions that are unlikely to recover those costs and 

encourage considerable selectivity in which inventions are patented. As Pressman 

et al. point out, ‘‘these practices are designed pragmatically to accommodate both 

economic goals, such as revenue generation and new company formation, and social 

goals, such as ensuring utilization and availability of federally funded inventions.’’

ESTABLISHING LICENSING PRINCIPLES TO PROMOTE ACCESS

These results are not surprising to persons currently involved in technology licensing activities as practiced at major research universities. To some extent the 

practices of university technology transfer managers reflect the salutary effects of 

guidance that the National Institutes of Health has issued on patenting of research 

tools and genomic inventions as well as the formation of professional norms and 

standards of behavior encouraged by groups such as the Association of University 

Technology Managers. Universities share certain core values that can and should 

be maintained to the fullest extent possible in all technology transfer agreements, 

chief among these are the protection of academic freedom and open pursuit of scientific inquiry. When crafting agreements with industry, a balance must be struck 

between the business needs of our licensing partners to generate returns on their 

investments and the shared values of our respective academic institutions. 

Recognizing the need to clearly articulate a set of technology licensing principles 

that strikes the appropriate balance, a group of university research officers, licensing directors and a representative from the Association of American Medical Colleges met in July 2006 to brainstorm about critical societal, policy, legislative and 

other issues in university technology transfer.7 Our aim was and is to encourage our 

colleagues in the academic technology transfer profession to analyze each licensing 

opportunity individually, but with certain core principles in mind. 

The participating universities released a white paper, ‘‘In the Public Interest: 

Nine Points to Consider in Licensing University Technology.’’ 8 The paper seeks to 

capture the shared perspectives of the participating university research officers and 

licensing directors on policy issues related to university technology transfer, in particular, with respect to ensuring that licensing activities are ‘‘in the public interest 

and for society’s benefit.’’ These considerations are put forth in an aspirational, rather than proscriptive, sense to encourage others in the profession to set a higher 

standard by stretching the boundaries of conventional licensing practices and sharing with the greater technology transfer community the insights that they gain in 

doing so. 

The nine points identified in the white paper (see Appendix for the full elaboration of each point) included:

Point 1: Universities should reserve the right to practice licensed inventions and to allow other non-profit and governmental organizations to do so

Point 2: Exclusive licenses should be structured in a manner that encourages technology development and use

Point 3: Strive to minimize the licensing of ‘‘future improvements’’

Point 4: Universities should anticipate and help to manage technology 

transfer related conflicts of interest

Point 5: Ensure broad access to research tools

Point 6: Enforcement action should be carefully considered

Point 7: Be mindful of export regulations

Point 8: Be mindful of the implications of working with patent aggregators

29

Point 9: Consider including provisions that address unmet needs, such 

as those of neglected patient populations or geographic areas, 

giving particular attention to improved therapeutics, 

diagnostics and agricultural technologies for the developing 

world

IN CONCLUSION

As technology transfer professionals, we recognize that many of these points are 

already being practiced. In fact, these points have been endorsed by a growing number of institutions and professional organizations around the world. We applaud the 

participating institutions’ efforts to articulate these important principles and urge 

their adoption and application by the wider community of universities. As often is 

the case, guidance as to implementation of practices that will advance the mission 

of university technology transfer lags behind our collective awareness of both the 

needs that exist and our role in fostering an environment in which such needs can 

be met effectively. Given recent criticism from some sectors that question the motives and methods underlying university technology commercialization activities, 

however, it is especially important that the principles used to support our decisionmaking be recognized as serving the best interest of the public not just of individual 

universities. Beyond the simple economics of any agreement, it is our hope that our 

colleagues will give serious consideration to these additional points before finalizing 

the terms and conditions of any technology transfer agreement. In the end, we hope 

to foster thoughtful approaches and encourage creative solutions to complex problems that may arise when universities license technologies in the public interest and 

for society’s benefit. 

We believe that patent policy, as well as practice, should be guided by the goal 

of promoting innovation and, in turn, improvements in human welfare. That view 

drove Yale’s interest in helping to draft the ‘‘Nine Points’’ guidelines, which recommend that universities refrain from patenting genomic inventions that will serve 

primarily as research tools. Yale has long taken a balanced approach to patenting, 

taking into account the nature of the invention, its relevance to research, and the 

extent to which patent protection would be necessary to give a commercial partner 

adequate incentive to develop the product completely. We have taken a similar approach to licensing, especially by insisting upon the right to make the invention 

available to researchers at Yale and other academic institutions. 

We do not think that gene patents are having a significant negative impact on 

academic research. There have been thoughtful analyses of problems that could 

arise, and there have been anecdotal reports and two comprehensive studies of this 

issue, cited earlier in my testimony, that concluded that patents are not slowing the 

pace of research for several reasons. Universities take a nuanced approach to patenting and they are increasingly making specific provision for research uses of inventions in licenses. There is evidence that a ‘‘de facto research exemption’’ exists 

because companies rarely prosecute academic investigators for research uses that 

may be infringing. 

Yale and other universities have a major stake in ensuring that access to research 

tools is not compromised (the ‘‘Nine Points’’ document is evidence of that); we also 

recognize that circumstances may change as the fields of genomics and proteomics 

continue to advance. I am confident that the scientific community, working with the 

National Institutes of Health, the Association of University Technology Managers, 

the Association of American Medical Colleges and others, we will continue to monitor whether gene patents are interfering significantly with research. My colleagues 

and I are grateful for the Subcommittee’s interest in this topic. 

—— APPENDIX——

In the Public Interest:

Nine Points to Consider in Licensing University Technology

Point 1

Universities should reserve the right to practice licensed inventions and to 

allow other non-profit and governmental organizations to do so 

In the spirit of preserving the ability of all universities to perform research, ensuring that researchers are able to publish the results of their research in dissertations and peer-reviewed journals and that other scholars are able to verify published 

30

results without concern for patents, universities should consider reserving rights in 

all fields of use, even if the invention is licensed exclusively to a commercial entity, 

for themselves and other non-profit and governmental organizations:

• to practice inventions and to use associated information and data for research 

and educational purposes, including research sponsored by commercial entities; and

• to transfer tangible research materials (e.g., biological materials and chemical 

compounds) and intangible materials (e.g., computer software, databases and 

know-how) to others in the non-profit and governmental sectors.

Clear articulation of the scope of reserved rights is critical. 

Point 2

Exclusive licenses should be structured in a manner that encourages 

technology development and use 

When significant investment of time and resources in a technology are needed in 

order to achieve its broad implementation, an exclusive license often is necessary 

and appropriate. However, it is important that technology transfer offices be aware 

of the potential impact that the exclusive license might have on further research, 

unanticipated uses, future commercialization efforts and markets. Universities need 

to be mindful of the impact of granting overly broad exclusive rights and should 

strive to grant just those rights necessary to encourage development of the technology. 

Special consideration should be given to the impact of an exclusive license on uses 

of a technology that may not be appreciated at the time of initial licensing. A license 

grant that encompasses all fields of use for the life of the licensed patent(s) may 

have negative consequences if the subject technology is found to have unanticipated 

utility. This possibility is particularly troublesome if the licensee is not able or willing to develop the technology in fields outside of its core business. Universities are 

encouraged to use approaches that balance a licensee’s legitimate commercial needs 

against the university’s goal (based on its educational and charitable mission and 

the public interest) of ensuring broad practical application of the fruits of its research programs. 

In situations where an exclusive license is warranted, it is important that licensees commit to diligently develop the technology to protect against a licensee that 

is unable or unwilling to move an innovation forward. In long-term exclusive licenses, diligent development should be well-defined and regularly monitored during 

the exclusive term of the agreement and should promote the development and broad 

dissemination of the licensed technology. Ideally, objective, time-limited performance 

milestones are set, with termination or non-exclusivity (subject to limited, but reasonable, cure provisions) as the penalty for breach of the diligence obligation. 

Another means of ensuring diligent development, often used in conjunction with 

milestones, is to require exclusive licensees to grant sublicenses to third parties to 

address unmet market or public health needs (‘‘mandatory sublicensing’’) and/or to 

diligently commercialize new applications of the licensed rights. Such a requirement 

could also be implemented through a reserved right of the licensor to grant direct 

licenses within the scope of the exclusive grant to third parties based on unmet 

need. In such situations, it is important to ensure that the parties have a common 

understanding of what constitutes a new application or unmet need for the purpose 

of implementing such a provision. 

Absent the need for a significant investment—such as to optimize a technology 

for wide use—broad, non-exclusive licensing of tools such as genomic and proteomic 

inventions can help maximize the benefits derived from those technologies, in part 

by removing obstacles to further innovation. Unlike most research tools or manufacturing methods, diagnostic tests often must go through the regulatory approval process, and so may warrant exclusive licensing when the costs of test development, approval or diffusion require substantial investment of capital. Nevertheless, licensing 

of diagnostic tests based on broadly applicable genomics or proteomics methods 

should strive to preserve sufficient flexibility to permit testing for multiple indications (i.e., not an exclusive licensee’s single disease of interest) perhaps through 

multiple field-restricted or non-exclusive licenses. Exclusive licensing of a single 

gene for a diagnostic may be counterproductive in a multi-gene pathology where 

only a panel of genes can yield an adequate diagnosis, unless the licensee has access 

to the other genes of the panel. Such licenses can also be limited in other ways. For 

example, a university might license a genomics method exclusively for a company 

to optimize and sell licensed products for diagnostic use. The drafting of the exclusive grant could make it clear that the license is exclusive for the sale, but not use,

31

of such products; in doing so, the university ensures that it is free to license nonexclusively to others the right (or may simply not assert its rights) to use the patented technology, which they may do either using products purchased from the exclusive licensee or those that they make in-house for their own use. 

In general, when no alternative testing strategy is available for a given indication, 

consideration should be given to means of ensuring reasonable access for patients 

and shielding individual healthcare providers from the risk of suit for patent infringement. As with any medical technology, licenses should not hinder clinical research, professional education and training, use by public health authorities, independent validation of test results or quality verification and/or control. 

Point 3

Strive to minimize the licensing of ‘‘future improvements’’

Although licensees often seek guaranteed access to future improvements on licensed inventions, the obligation of such future inventions may effectively enslave 

a faculty member’s research program to the company, thereby exerting a chilling effect on their ability to receive corporate and other research funding and to engage 

in productive collaborations with scientists employed by companies other than the 

licensee—perhaps even to collaborate with other academic scientists. In particular, 

if such future rights reach to inventions made elsewhere in the university, researchers who did not benefit from the licensing of the original invention may have their 

opportunities restricted as well, and may be disadvantaged economically relative to 

the original inventors if the licensing office has pre-committed their inventions to 

a licensee. 

For these reasons, exclusive licensees should not automatically receive rights to 

‘‘improvement’’ or ‘‘follow-on’’ inventions. Instead, as a matter of course, licensed 

rights should be limited to existing patent applications and patents, and only to 

those claims in any continuing patent applications that are (i) fully supported by 

information in an identified, existing patent application or patent and (ii) entitled 

to the priority date of that application or patent. 

In the rare case where a licensee is granted rights to improvement patents, it is 

critical to limit the scope of the grant so that it does not impact uninvolved researchers and does not extend indefinitely into the future. It is important to further 

restrict the grant of improvements to inventions that are owned and controlled by 

the licensor institution—i.e., (i) not made by the inventor at another institution, 

should they move on or (ii) co-owned with, or controlled by, another party. One refinement to this strategy would be to limit the license to inventions that are dominated by the original licensed patents, as these could not be meaningfully licensed 

to a third party, at least within the first licensee’s exclusive field. As was discussed 

earlier, appropriate field restrictions enable the licensing not only of the background 

technology, but also of improvements, to third parties for use outside the initial licensee’s core business. In all cases, a license to improvements should be subject to 

appropriate diligent development requirements. 

It should be recognized, however, that not all ‘‘improvements’’ have commercial 

potential (for example, they may not confer sufficient additional benefit over the existing technology to merit the expense of the development of new or modified products), in which case a licensee might not wish to develop them. In general, it may 

be best simply not to patent such improvements. 

Point 4

Universities should anticipate and help to manage technology transfer 

related conflicts of interest 

Technology transfer offices should be particularly conscious and sensitive about 

their roles in the identification, review and management of conflicts of interest, both 

at the investigator and institutional levels. Licensing to a start-up founded by faculty, student or other university inventors raises the potential for conflicts of interest; these conflicts should be properly reviewed and managed by academic and administrative officers and committees outside of the technology transfer office. A 

technology licensing professional ideally works in an open and collegial manner with 

those directly responsible for oversight of conflicts of interest so as to ensure that 

potential conflicts arising from licensing arrangements are reviewed and managed 

in a way that reflects well on their university and its community. Ideally, the university has an administrative channel and reporting point whereby potential conflicts can be non-punitively reported and discussed, and through which consistent 

decisions are made in a timely manner. 

32

Point 5

Ensure broad access to research tools 

Consistent with the NIH Guidelines on Research Tools, principles set forth by 

various charitable foundations that sponsor academic research programs and by the 

mission of the typical university to advance scientific research, universities are expected to make research tools as broadly available as possible. Such an approach 

is in keeping with the policies of numerous peer-reviewed scientific journals, on 

which the scientific enterprise depends as much as it does on the receipt of funding: 

in order to publish research results, scientists must agree to make unique resources 

(e.g., novel antibodies, cell lines, animal models, chemical compounds) available to 

others for verification of their published data and conclusions. 

Through a blend of field-exclusive and non-exclusive licenses, research tools may 

be licensed appropriately, depending on the resources needed to develop each particular invention, the licensee’s needs and the public good. As suggested with respect to genomics and proteomics method patents in Point 2 above, a university 

might license a research reagent, kit or device exclusively to a company to optimize 

and sell licensed products and services for research, diagnostic or other end uses. 

The drafting of such an exclusive grant should make clear that the license is exclusive for the sale, but not use, of such products and services; in doing so, the university ensures that it is free to license non-exclusively to others the right to use the 

patented technology, which they may do either using products purchased from the 

exclusive licensee or those that they make in-house for their own use. 

Point 6

Enforcement action should be carefully considered 

In considering enforcement of their intellectual property, it is important that universities be mindful of their primary mission to use patents to promote technology 

development for the benefit of society. All efforts should be made to reach a resolution that benefits both sides and promotes the continuing expansion and adoption 

of new technologies. Litigation is seldom the preferred option for resolving disputes. 

However, after serious consideration, if a university still decides to initiate an infringement lawsuit, it should be with a clear, mission-oriented rationale for doing 

so—one that can be clearly articulated both to its internal constituencies and to the 

public. Ideally, the university’s decision to litigate is based on factors that closely 

track the reasons for which universities obtain and license patents in the first place, 

as set out elsewhere in this paper. Examples might include:

• Contractual or ethical obligation to protect the rights of existing licensees to 

enjoy the benefits conferred by their licenses; and

• Blatant disregard on the part of the infringer for the university’s legitimate 

rights in availing itself of patent protection, as evidenced by refusal on the 

part of the infringer to negotiate with or otherwise entertain a reasonable 

offer of license terms.

Under all circumstances, it reflects poorly on universities to be involved in ‘‘nuisance suits.’’ Exclusive licensees should be encouraged to approach patent enforcement in a manner that is consistent with the philosophy described in this Point 6. 

Point 7

Be mindful of export regulations 

University technology transfer offices should have a heightened sensitivity about 

export laws and regulations and how these bodies of law could affect university licensing practices. Licensing ‘‘proprietary information’’ or ‘‘confidential information’’ 

can affect the ‘‘fundamental research exclusion’’ (enunciated by the various export 

regulations) enjoyed by most university research, so the use of appropriate language 

is particularly important. Diligence in ensuring that technology license transactions 

comply with federal export control laws helps to safeguard the continued ability of 

technology transfer offices to serve the public interest. 

Point 8

Be mindful of the implications of working with patent aggregators 

As is true of patents generally, the majority of university-owned patents are unlicensed. With increasing frequency, university technology transfer offices are approached by parties who wish to acquire rights in such ‘overstock’ in order to comVerDate 0ct 09 2002 11:52 Apr 10, 2008 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\103007\38639.000 HJUD1 PsN: 38639
33

9 A somewhat related issue is that of technology ‘flipping’, wherein a non-aggregator licensee 

of a university patent engages in sublicensing without having first advanced the technology, 

thereby increasing product development costs, potentially jeopardizing eventual product release 

and availability. This problem can be addressed most effectively by building positive incentives 

into the license agreement for the licensee to advance the licensed technology itself—e.g., design 

instrumentation, perform hit-to-lead optimization, file an IND. Such an incentive might be to 

decrease the percentage of sublicense revenues due to the university as the licensee meets specific milestones. 

mercialize it through further licenses. These patent aggregators typically work 

under one of two models: the ‘added value’ model and the so-called ‘patent troll’ 

model. 

Under the added value model, the primary licensee assembles a portfolio of patents related to a particular technology. In doing so, they are able to offer secondary 

licensees a complete package that affords them freedom to operate under patents 

perhaps obtained from multiple sources. As universities do not normally have the 

resources to identify and in-license relevant patents of importance, they cannot offer 

others all of the rights that may control practice (and, consequently, commercialization) of university inventions. By consolidating rights in patents that cover 

foundational technologies and later improvements, patent aggregators serve an important translational function in the successful development of new technologies and 

so exert a positive force toward commercialization. For example, aggregation of patents by venture capital groups regularly results in the establishment of corporate 

entities that focus on the development of new technologies, including those that 

arise from university research programs. To ensure that the potential benefits of 

patent aggregation actually are realized, however, license agreements, both primary 

and secondary, should contain terms (for example, time-limited diligence requirements) that are consistent with the university’s overarching goal of delivering useful 

products to the public. 

In contrast to patent aggregators who add value through technology-appropriate 

bundling of intellectual property rights, there are also aggregators (the ‘patent 

trolls’) who acquire rights that cut broadly across one or more technological fields 

with no real intention of commercializing the technologies. In the extreme case, this 

kind of aggregator approaches companies with a large bundle of patent rights with 

the expectation that they license the entire package on the theory that any company 

that operates in the relevant field(s) must be infringing at least one of the hundreds, 

or even thousands, of included patents. Daunted by the prospect of committing the 

human and financial resources needed to perform due diligence sufficient to establish their freedom to operate under each of the bundled patents, many companies 

in this situation will conclude that they must pay for a license that they may not 

need. Unlike the original patent owner, who has created the technology and so is 

reasonably entitled to some economic benefit in recognition for its innovative contribution, the commercial licensee who advances the technology prior to sublicensing, or the added value aggregator who helps overcome legal barriers to product development, the kind of aggregator described in this paragraph typically extracts payments in the absence of any enhancement to the licensed technology.9

Without delving more deeply into the very real issues of patent misuse and badfaith dealing by such aggregators, suffice it to say that universities would better 

serve the public interest by ensuring appropriate use of their technology by requiring their licensees to operate under a business model that encourages commercialization and does not rely primarily on threats of infringement litigation to generate revenue. 

Point 9

Consider including provisions that address unmet needs, such as those of 

neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world 

Universities have a social compact with society. As educational and research institutions, it is our responsibility to generate and transmit knowledge, both to our students and the wider society. We have a specific and central role in helping to advance knowledge in many fields and to manage the deployment of resulting innovations for the public benefit. In no field is the importance of doing so clearer than 

it is in medicine. 

Around the world millions of people are suffering and dying from preventable or 

curable diseases. The failure to prevent or treat disease has many causes. We have 

a responsibility to try to alleviate it, including finding a way to share the fruits of 

34

what we learn globally, at sustainable and affordable prices, for the benefit of the 

world’s poor. There is an increased awareness that responsible licensing includes 

consideration of the needs of people in developing countries and members of other 

underserved populations. 

The details involved in any agreement provisions attempting to address this issue 

are complex and will require expert planning and careful negotiation. The application will vary in different contexts. The principle, however, is simple. Universities 

should strive to construct licensing arrangements in ways that ensure that these 

underprivileged populations have low- or no-cost access to adequate quantities of 

these medical innovations. 

We recognize that licensing initiatives cannot solve the problem by themselves. 

Licensing techniques alone, without significant added funding, can, at most, enhance access to medicines for which there is demand in wealthier countries. Diseases that afflict only the global poor have long suffered from lack of investment 

in research and development: the prospects of profit do not exist to draw commercial 

development, and public funding for diseases suffered by those who live far away 

from nations that can afford it is difficult to obtain and sustain. Through thoughtful 

management and licensing of intellectual property, however, drugs, therapies, and 

agricultural technologies developed at universities can at least help to alleviate suffering from disease or hunger in historically marginalized population groups.

Mr. BERMAN. Dr. Grodman? 

TESTIMONY OF MARC GRODMAN, CHAIR OF THE BOARD AND 

CEO, BIO-REFERENCE LABORATORIES, ELMWOOD PARK, NJ 

Dr. GRODMAN. Mr. Chairman, Members of the Subcommittee, I 

want to thank you for the opportunity to testify on a critical issue 

of public health. 

My name is Marc Grodman. I am a physician as well as founder 

and CEO of Bio-Reference Laboratories, a publicly traded company. 

We are the largest independent regional clinical laboratory in the 

Northeast, employing over 1,700 people with revenues this year 

that will exceed $250 million. In 2006, Bio-Reference Laboratories 

purchased Gene Dx, a laboratory in Gaithersburg, Maryland, that 

does primarily genetic testing. This is an important business opportunity. 

Unfortunately, the ability of Gene Dx to offer potentially lifesaving genetic tests have been severely restricted. Gene patent 

holders have granted exclusive licenses for the testing of genetic 

disorders, keeping competitors of Gene Dx out, and we think having an adverse effect on the public. 

I am not here today to attack the patenting of genes. What I am 

here to say is that using gene patents for the exclusive licensing 

of genetic tests for conditions, such as cancer, neurological disease, 

certain kinds of heart disease, among others, should be severely restricted, if not barred. 

A laboratory with an exclusive testing license does not have to 

compete. It results in substantive quality of the testing as well as 

excessive pricing, making the test unaffordable to many. It also stifles research innovation. Competition, on the other hand, is the 

most effective tool we have to address the needs of public health. 

Let me describe three examples that will explain what I mean. 

The first example concerns one of our society’s most dangerous 

killers, breast cancer, and the related breast cancer genes BRCA1 and BRCA-2. The patent holder has granted an exclusive license 

to one company to do the diagnostic testing for these genes. Not 

surprisingly, over the course of time, quality issues arose. 

35

Dr. Chung, from Columbia University, who has submitted testimony along with my testimony, cites in her testimony that for 

about 10 years the tests of breast cancer genes was not as comprehensive as it might have been, given that there were a number 

of subsequent mutations that were not found. Competition would 

never allow this situation to go on, and, in fact, this information 

is confirmed in the peer-reviewed article, which is also cited in Dr. 

Chung’s testimony. 

The second example involves long QT genes that can cause sudden death from heart arrhythmias. These genes were patented and 

an exclusive license was granted to a single laboratory. For 2 years, 

the exclusive licensed laboratory went into bankruptcy and no 

other laboratory could test for this gene. 

During this hiatus, Abigail, a 10-year-old child with long QT syndrome, died. 

It is not just one or two genes. Each of the genes may mean a 

different medicine may work. So you really have to do it and do it 

well, and in that period of time, this girl never had access to the 

test. 

Dr. Chung also describes persistent problems with a test performed by this exclusive laboratory, including long delays in getting results, in determinant findings, high costs, and just the basic 

lack of improvement by making the test better. 

We can make a better test, but under the existing system, we 

cannot. 

The third example is raised by testimony that I submitted from 

Dr. Kathy Matthews, a child neurologist and pediatrician at the 

University of Iowa. Dr. Matthews describes serious quality issues 

that she has encountered with the exclusive licensing of laboratory 

tests for certain neurological disorders. 

It is somewhat amazing that as time goes on and we learn more 

about the association of different medical conditions and genetic 

patterns that she is now at a point to where she is referring less. 

These scenarios illustrate another problem, that the laboratory 

with the exclusive license has no incentive to conduct further research, and other laboratories, including academic laboratories, are 

prevented by the patent holder from doing research as well in 

many cases. 

I believe that competition in diagnostic testing is critical to protecting the public health and, fortunately, is a remedy aside from 

legislative reform, and that is the Bayh-Dole Act of 1980. This is 

the act that allows universities to get paid patents on genes even 

though Federal funds help pay the research. The act, however, recognizes that the patent monopoly obtained through taxpayer funding could be misused. 

It specifies specifically a remedy. When the public’s health or 

safety needs are not being reasonably satisfied by the patent holder 

or its exclusive licensee, the Federal funding agency has the power 

to march in and provide licenses to other interested parties. Thus, 

under existing Bayh-Dole legislation, when there are legitimate 

health and quality complaints about genetic laboratory tests of an 

exclusive licensee, the NIH may give licenses to other laboratories 

willing and able to do the tests. 

36

Opening up the licensing process to more than one diagnostic 

testing laboratory will have a desirable benefit of improvement 

quality, more research, lower price, and creating a competitive 

framework at a higher standard by which even the exclusive licensees have to be able to attain. 

As a laboratory, we are not seeking any windfall. Under BayhDole, any laboratory given a license through the march-in provisions can and should be charged a reasonable royalty to use the 

patent. 

Even though the NIH has refused to march in in three instances 

in which it was asked to do so, those cases involved drugs and not 

gene diagnostic testing and involved issues of price, not efficacy. 

Therefore, Congress must compel the NIH to enforce the margin 

provisions of the Bayh-Dole Act. 

In conclusion, if we or any company can be able to provide a faster, better, more thorough result, more complete, more efficient tests 

to the public, the ability to go in and obtain this on a nonexclusive 

license and then sweep the market will be in the public health’s advantage. 

Thank you very much. 

[The prepared statement of Dr. Grodman follows:]

37

PREPARED STATEMENT OF MARC GRODMAN


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Mr. BERMAN. I now change your name to Mr. Kushan. 

TESTIMONY OF JEFFREY KUSHAN, PARTNER, SIDLEY AUSTIN, 

LLP, ON BEHALF OF BIOTECHNOLOGY INDUSTRY 

ORGANZATION (BIO), WASHINGTON, DC 

Mr. KUSHAN. Thank you, Mr. Chairman. Thank you, Mr. Chairman. 

I am pleased to be here today to provide the views of the Biotechnology Industry Organization on the issue of gene patents. BIO 

is the principle trade association representing the biotechnology industry. There are more than 1,100 members of BIO. You can find 

them in every state of the union, and they presently employ more 

than 1.2 million people in the United States. 

Biotechnology is still a young and growing industry. There are 

about 300 public companies in the biotech industry. At the end of 

2005, their market cap was about $410 billion. The remainder of 

the companies in the biotechnology industry are private companies. 

The typical biotech company is a small business with no products, no revenues and running itself on investor funding. Many of 

these companies are formed to take advantage of a significant scientific discovery or development. These companies focus on performing cutting-edge research aimed at discovering new products 

and services and bringing them to market. They follow a high-risk, 

high-reward business model. This model has been a signature of 

the industry since its inception. 

Three fundamental requirements exist for biotech companies that 

are following this business model: first, scientific innovation; second, adequate funding; and, third, dependable intellectual protection. 

I have chosen the word ‘‘dependable’’ in relation to intellectual 

property intentionally. When a biotech company develops an invention, they must make a judgment on whether the invention can be 

patented and whether these patent rights can be effectively used 

when and if they finally get a product to market. That judgment 

is based on existing legal standards and an assessment. 

This certainty in the availability and use of patent rights in the 

future is critical given the uncertainty that exists on the scientific 

side of the business and whether they will ever reach the market 

with a product. 

Today’s discussions focus on gene patents. The word ‘‘gene patent,’’ as some of the other panelists have already pointed out, is 

somewhat imprecise. What is at issue are patents that claim nucleic acids. Nucleic acid inventions are developed following extensive research and development. They rely on sophisticated research 

on genomic information. The research focuses on deciphering that 

genetic information and identifying a practical application for using 

the nucleic acid. 

It is important to recognize this is not a debate about the quality 

of these patents. This is perhaps the one area of the Patent Office 

that is the most competent, the most high quality of all the areas. 

The PTF for more than 20 years has been doing extensive research 

on developing its own first-class examination group. You have more 

Ph.D.s in the biotech group than any other area, and they certainly 

know their stuff. 

58

One of my other co-panelists had mentioned that the standards 

governing patent law in the biotech area have evolved significantly 

over the last 20 years. I think one thing we can assure you of is 

that when a patent issues in this sector, it is reflective of a significant advance, the company is deserving of the protection, and that 

will be used to develop products and bring them to market. 

There are three points that I feel need to be addressed today. 

First, the biotechnology industry is extremely competitive, and it 

is a lucrative business. You know, that dynamic is going to create 

conflicts no matter how you look at it. It is good for companies to 

have competition. It is also good for companies to be able to develop 

their own technology, protect it and rely on patents to do so. 

You also have to appreciate that the competition is making the 

industry healthy and strong, and it is also delivering significant 

benefits for patients as products reach the market. Without that lucrative drive for the incentive for reward on innovation, you will 

not see the products coming to the market. You will not see the 

technology reaching the market and form valuable products and 

services. 

It is also a fact that conflicts arise whenever you have a lucrative, competitive market. Patent conflicts also are common in this 

world, and the biotechnology industry accepts that as part of the 

equation of doing business in this environment. 

Given the dependence on patent rights and the acceptance of the 

industry that there will be need to resolve disputes over property 

rights, we are very concerned that there might be some tinkering 

of the patent system that would alter the equation that so many 

companies have relied on before they made their investments. 

The second point that was raised was the question of using the 

march-in rights under the Bayh-Dole Act. In the mid-1990’s, there 

was some thought to using that authority in the Bayh-Dole Act to 

regulate pricing of pharmaceutical products. The only impact we 

could see from that is that the private companies ran away from 

the Federal funding because to attach a string like that upstream 

to invention of a product before you took the funding from the Government basically made that a nonstarter for the companies looking at that source of funding. 

Third is to just touch on the research exemption. I think what 

we have seen—and Dr. Soderstrom had pointed this out—there are 

very few instances of patent owners suing universities for many of 

the reasons he has already pointed out. The Madey v. Duke was 

kind of a weird case involving a particularly unhappy patent owner 

with an employment dispute with Duke University, and I do not 

think it is a representative fact pattern that most companies who 

hold patents see when they are dealing with universities. 

So I would just like to conclude in encouraging the Committee 

to look very carefully at the issue of gene patents and to also carefully consider what impact upstream, downstream that might have 

if you start to look at changing some of the parameters that companies have relied on before they made their investments in the sector. 

Thank you. 

[The prepared statement of Mr. Kushan follows:]

59

PREPARED STATEMENT OF JEFFREY P. KUSHAN


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Mr. BERMAN. Well, thank you all very much. 

I will recognize myself for 5 minutes to begin the questioning 

process. 

Dr. Sung, you proposed in your written testimony a very specific 

legislative proposal that creates a research use exception. One 

problem I have heard often in designing a research use exception 

is being able to draw a bright line between commercial use and a 

research use of an invention. How did your proposal deal with that 

issue? 

Mr. SUNG. Well, Congressman, I should say that the research use 

proposal that I laid out in my written submission was used as a 

piece for further discussion points about that very aspect of it. I do 

not think that it has been traditionally very easy to make that delineation between commercial and noncommercial use. In fact, a 

focus of the Federal Circuit opinion in Madey v. Duke related to 

that difficulty. 

That being said, the proposal, therefore, takes it and makes it a 

selective opt-in process whereby it is a self-identification issue on 

the part of entities interested in engaging in that type of ‘‘academic’’ research use, and to the extent they are willing to self-identify, there would need to be some transparency and accountability 

for what they plan on doing through the submission of a detailed 

research plan. 

This is not meant to put both the academics and the private industry at odds, but, hopefully, to help foster a more open working 

relationship between the two for that purpose. 

Mr. BERMAN. So the researcher opts in and then has some kind 

of transparent process submitted to, what, the PTO or another authority? 

Mr. SUNG. Actually, it could be a notice directly to the patent 

owner for that purpose and, again, to facilitate the dialogue. Now 

some may say that it is problematic because oftentimes researchers 

would not know about a patent in existence, much less the patent 

owner, and the reason this is drafted as an opt-in procedure is you 

could certainly rely on status quo and conduct your affairs accordingly. 

Mr. BERMAN. Mr. Kushan, you say that any change to the law 

regarding gene patents would negatively affect expectations by investors in biotechnology companies. You also indicate that the biotechnology industry has had a long tradition of refraining from asserting their patents against universities, and you point to data 

that supports this. 

Since the biotechnology industry does not sue universities that 

are making research use of their gene patents, would legislating a 

clear research use exception upset investor expectations? Wouldn’t 

an explicit research use exception for gene patents just codify an 

already existing practice and, therefore, be of no real importance 

to investors? 

Mr. KUSHAN. Well, as your past 3 years of effort in carefully 

drafting patent reform has shown, the words you choose to articulate that line will be very difficult to write down and to make sure 

they do not have an overbroad or underbroad or unintended consequences. 

Mr. BERMAN. We will not use a second window. [Laughter.] 

106

Mr. KUSHAN. I think it is fair to say that this has been kind of 

an academic question that we have seen for the past 15 years, 

whether it is necessary to create this kind of statutory bright line 

to shield purely academic research. One of the challenges we see, 

is that we very infrequently see purely academic research. 

I think one concern that can immediately come up is if you have 

an academic researcher who is sponsored by your biggest competitor running programs intending to make an infringing product, we 

would not want to see a statutory research exemption somehow 

shield that person from the commercial liability they are going to 

create, and I think as you go through some of these types of scenarios——

Mr. BERMAN. Why would it? Take Dr. Sung’s formulation. The 

researcher opts in and then tells the patent holder, even though he 

is being asked to do this by the potential competitor, exactly what 

he is doing, and the patent holder is sitting there watching to see 

the day it goes from research into commercial development and 

whacks him not only for infringement, but for breach of contract 

or whatever. 

Mr. KUSHAN. Well, I will go back to kind of whether that would 

ever happen. First, there are two scenarios that are out there on 

this example. 

One is that a researcher who is doing purely academic research 

is going to be concerned about a patent and liability from that, and 

I do not think there are many researchers who do purely academic 

research that believe that they are at risk. 

The second scenario is if there is really a commercial motivation 

driving that researcher, putting yourself squarely in the headlights 

of a patent owner would not be recommended by most attorneys 

representing the company that is sponsoring that research because 

it will create unnecessary risks. 

I think as a practical matter, we see very few instances of patent 

owners going after purely academic research, both because there 

are very limited damages at the outset. You know, the work that 

is being done does not reflect the kind of scale——

Mr. BERMAN. Well, my time has expired, but——

Mr. KUSHAN. Yes, I am sorry. 

Mr. BERMAN. You say they very rarely go after purely academic 

research, and then you say but they really do not do purely academic research. 

Mr. KUSHAN. Well, that is part of the challenge of drawing that 

line you are trying to draw. I think if it is truly academic research, 

there is nothing they should be concerned with. If it is something 

that is not—if it is a sheep in wolf’s clothing or a wolf in sheep’s 

clothing—then you should not really be shielding that activity 

under a research exemption because it is not appropriate to do 

that. That is actually commercially competitive types of scenarios. 

Mr. BERMAN. Thank you. 

Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. 

Let me direct this question to all the witnesses. 

Are most of the complaints about gene patents based on isolated 

incidents or anecdotal evidence? The appendices of Dr. Grodman’s 

testimony cite some disturbing cases, and I am wondering is there 

107

a systematic problem with the exclusive licensing of genetic associations. 

Mr. Grodman, why don’t I start with you? 

Dr. GRODMAN. Thanks. 

In the testimony, we both have in there, both peer-reviewed articles. There is one article, that from JAMA, that talks about breast 

cancer specifically and talked about in those areas where there 

were two genes that were found out that scientific research said 

that there were other areas, other insertions, genetic arrangements 

and mutations that, in fact, that 17 percent of the cases in which 

it seemed to be negative were, in fact, positive under the light of 

new studies. But in the cases of the one laboratory doing the test, 

it was not the same incentive or urge to be able to go up and update the test, as if there was another laboratory that was keeping 

it up to date. 

There also were in there specific cases when results come back 

in an indeterminate manner, which is something that no degree of 

regulation could attach, could be able to deal with, that in those 

cases, it is up to between the referring geneticist and the doctor in 

the laboratory to come up with a satisfactory result, and in that 

case, that geneticist who referred the test had nowhere else to go 

for the test. 

So the concern is that exclusive licenses in diagnostic gene testing, we believe, does lead to a situation of where there is no proper 

competition or urge to produce a better service. 

Mr. COBLE. Mr. Kushan, let me ask you this. What would happen to the biotechnology industry if the Federal Government exercised march-in rights on a regular basis, A, and should the standards of section 203 of the Patent Act be amended to encourage 

greater use of march-in rights? 

Mr. KUSHAN. Those are two difficult questions, and I will do 

what I can to respond to that. 

Mr. COBLE. Well, you are a Carolina man. That is why I put it 

to you. 

Mr. KUSHAN. Thank you. Notice my Carolina blue tie. 

I think the first question of the use of the march-in authority 

would have a fairly significant chilling effect on the biotech industry, in part because the political decisions that might drive use of 

that authority are very scary to companies that have invested 

money in developing a product. The idea that you are going to do 

all this work, spend all this money, finally reach the market, and 

then at the back end of your business model, an uncertainty that 

you could not have imagined will pop up and deprive you of the 

patent exclusivity is going to have an impact on use of those funds. 

The second part of this is that we have seen the NIH takes steps 

in the past decade to use their influence without the march-in authority. To set standards of conduct, for example, they developed 

guidelines relating to use of materials and sharing of research tools 

when there had been Federal funding involved in that, and that is 

kind of a better model, essentially putting on the table that before 

you take funding, you know that there will be conditions attached 

to it. 

I think when you look at the march-in experience, the fact that 

they have never been used, and that there is so much reticence 

108

about going to that as a mechanism, has created a fairly significant 

set of expectations in the industry that they will not be used at the 

back end in the commercial setting. 

Mr. COBLE. Thank you. 

Before my time expires, let me go to Dr. Sung and-or Dr. 

Soderstrom. 

We have compulsory licenses in the Copyright Act. Why 

shouldn’t we have compulsory licenses for patented pharmaceuticals and biologics, either of you two? 

Mr. SODERSTROM. I would simply echo many of the comments 

that Mr. Kushan just made in that when we are negotiating licenses, particularly to start-up companies or biotech companies, 

this issue comes up all the time. What are the Government reserved rights? What are march-in rights? How often are they used? 

It is something that for investors is of extreme concern because 

of the reasons he pointed out. If they are going to put a significant 

amount of money at risk over a long period of time in a fairly highrisk technology development exercise, they need some assurance 

that that investment, if they are successful, would be protected. 

Mr. SUNG. I would have little to add to those particular comments, just to say that I think the standard recourse for purposes 

of saying compulsory licensing is bad defeats investment-backed expectations at the front end. 

Mr. COBLE. Quickly, Dr. Grodman. The red light is about to illuminate. 

Dr. GRODMAN. It is already on there. 

Mr. COBLE. It has illuminated. 

Dr. GRODMAN. One point about it: As you mentioned in your 

opening comments, the cost of getting a new drug to market may 

well be a billion dollars. What we are talking about, what I am 

really addressing are diagnostic genetic tests, the cost of which 

could take from the association between the clinical rendition of 

this sequence that is done in the university and then licensed out. 

To have a laboratory to bring up that test, that might be anywhere 

from $25,000 to $50,000 to, at most with new technologies, may be 

a quarter of a million dollars. It is not the same investment that 

we are talking about with therapeutics. It is very, very different. 

Mr. COBLE. I yield back, Mr. Chairman. Thank you. 

Mr. BERMAN. Thank you. 

We will have a chance to explore that specific subject you are 

raising later in the third and fifth rounds of questioning. 

Mr. Issa? 

Mr. ISSA. Thank you. 

The fifth round is where I get my really tough questions in. 

You know, I looked for something that was akin to this subject. 

You know, when did we discover something and grant it a patent? 

And, oddly enough, I found something that was a little bit close, 

and that was when the product now known as Botox took something that was commonly understood and said, ‘‘But you can do it 

for this. Do what it does, and you can do it for this reason,’’ and 

it was granted a patent and continues to be an ever more broadly 

successful product, including for people with migraine headaches 

now. I think Congress should figure out that Botox is the antidote 

for what we do. 

109

So, I mean, I see the importance of it, and I guess I will ask two 

major questions. 

Dr. Grodman, this is Coca-Cola. It is a secret. Nobody knows 

what it is. And I understand that you support the patents, but just 

because you support it and yet have a problem with the exclusion, 

if we were to not grant patents in this area, would it be a little 

bit like this, except we would not see it in the marketplace? 

People would discover and then continue to keep it a secret so 

that they could do the follow-on work. Isn’t that a risk we take 

when we do not patent something which we want discovered, but 

it could be discovered and kept a secret and, for example, diagnostic centers could preclude you from knowing what you need to 

know while they know what they need to know and say, ‘‘Just send 

it to us, and we will tell you whether you have this fatal disease.’’

Dr. GRODMAN. Well, I would probably be scarcely the last one on 

this panel who would be championing patents. I think that in the 

medical arena, we do know what the formula, if you will, of CocaCola is. It has been well researched and referenced in medical journals. The question is whether or not we are able to go in and have 

access to that different information. 

So I am by no means, for my purpose today, supporting or not 

supporting patents. What I am supporting is the fact that there 

needs to be competition that when we have certain information 

about diagnostics that people can compete over producing a better 

test. 

My own preference is that the information is open and that people do benefit. In a system of what I am addressing, that license 

for Coke is the best one there is and everyone knows what it is, 

I am saying, fine, but pay them a license if you want to be able 

to do it, but be able to allow everyone to be able to enjoy Coke no 

matter what the outside——

Mr. ISSA. So, essentially, you have to make the argument for a 

patent. Otherwise, there would be nothing to license. It would just 

be a secret. 

Dr. GRODMAN. I am not making the case for or against patents. 

My concern is the ultimate amount of patient care and creating the 

competition for the exclusionary idea that people cannot perform a 

test. 

Mr. ISSA. Mr. Sung, I guess I will switch to you just to see if I 

can get a dissenting opinion. 

If we, in fact, deny patents in this field, don’t we induce universities, perhaps the private sector because universities might choose 

to publish regardless, don’t we induce people to cloak discoveries in 

a way that allow them to further their business practices without 

ever releasing them? Couldn’t you end up with five or ten or 20 different research facilities discovering the same thing, but keeping it 

to themselves because if they cannot enjoy a period of patent protection, they might as well enjoy a period of exclusivity through 

nondisclosure? 

Mr. SUNG. No, I agree with those comments. I think that what 

you are risking if you were to deny patent exclusivity in a particular area is to risk that, without that encouragement for disclosure, that there may be, I guess, more of a motivation, if you will, 

toward keeping something secret for a business purpose, but that 

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would depend in a particular industry on the various market and 

business approaches. But I do agree that you would be removing 

the encouragement for disclosure that the patent system was designed to protect. 

Mr. ISSA. And, Dr. Grodman, I will go back to you. I will get off 

Coca-Cola for a moment. 

I was an electronics manufacturer with now hundreds, but in 

those days 37 of my own patents, and I made it a practice not to 

license anybody. I made it a practice to produce my own products 

and to provide a superior product based on my patent. 

Why is it, you think, that a medical diagnostic company, whether 

or not they invented it or they licensed it, should not have that 

same ability to do it, and why do you think that it, per se, causes 

them not to want innovation? Isn’t their clock ticking, and that if 

there is not an encouragement by the licensee to get the inventor 

to invent more and to continue, if that encouragement is not there 

by the large dollars and the ticking clock on the patent, why 

wouldn’t that, in fact, induce good development and good products? 

Dr. GRODMAN. I would argue that that is not necessarily the case 

when it comes to medical diagnostic and genetic diagnostics, that 

when you go in and have an area which has a clinical association, 

what you are really doing is not having a product or something 

that you are going to sell. You are patenting an association, whether it be for a type of arrhythmia in three or four different genes, 

and if you go in and you will do that test, if you do it without competition, you will perform that test, and if people have that, they 

will have nowhere else to go for that answer. 

Let us say someone else goes in and says, ‘‘You know what? 

There are three or four other genes that we can discover that will 

make the answer clearer, better for those who are at risk, maybe 

with medicines they need to be on or not. There is no possible way 

that a test could be done on those without getting the permission 

or a license on the original genes. As a result, innovation in that 

case, gets to be stifled and patient care is affected. 

If the second group of people had a license to perform those tests, 

they can go in and make the ultimate test better. That would be 

lost if only one person had the innovation. 

The example in the testimony that we gave about where there 

were certain genes about breast cancer that were done, it took 10 

years of time for the one company that had the exclusive license 

to include those other genes to help make the test clearer for risk 

of breast disease. In a competitive framework, that would not be 

the case. 

I would argue that the genes on products or patents on products 

or drugs is different than in this case of the diagnostic association 

between a clinical condition and a sequence. There are fundamental differences which makes it important for multiple people to 

do the test. 

Mr. ISSA. Thank you. I yield back. 

Mr. BERMAN. I think we will do a second round. 

I have a couple of questions, but let me just make sure I understand. You are not arguing to nullify gene patents? Is there something different between a patent on a gene segment and a patent 

on a genetic diagnostic test? Are those two different? 

111

Dr. Soderstrom? 

Mr. SODERSTROM. No, sir. They are essentially the same. In fact, 

were we as universities to have that competition on the front end 

where there are multiple companies that are interested in commercializing these products, that would be a great thing. That is not 

often the case. In fact, it is seldom the case with universities, and 

this is another misconception. 

We often think of it as there is a patent, and there is a product, 

and, as you know from your experience, those two things are not 

necessarily equal and, in fact, oftentimes, we are in the business 

of aggregating technology so that we can create the product, and 

that is one of the misconceptions. 

So, while I admit that there have been some examples where we 

probably as universities could have done licenses differently in 

hindsight, oftentimes we are not in that admirable position. We are 

looking toward trying to induce somebody to invest in the technology and trying to bring it into a product form as quickly as possible. 

So we do take a nuanced view. We do not necessarily always 

grant across-the-board licenses. We divide it up into fields of use, 

for example. 

Mr. BERMAN. For me, I want to really get it down to something 

so simple that I can pretend to understand it. I think of a medicine, 

and biotechnology produces medicines, and then I think of tests, 

which determine whether or not you have something, or you have 

a predisposition to something or a genetic makeup that might 

mean a higher likelihood of getting something. Should I be thinking about patents in the context of these different things, or does 

it all blur into one? 

Mr. SODERSTROM. Ultimately, they are the same. They are products that embody claims to a patented invention, and to the extent 

that you deliver that in a pill bottle or to the extent that you deliver that in a set of reagents that are going to be mixed with a 

patient’s blood and then spotted on a slide, they are no different. 

Mr. BERMAN. In other words, they may have different goals, 

treating versus diagnosing, but——

Mr. SODERSTROM. When we are presented with a discovery of a 

new gene that affects a disease category, there are usually four different sets of claims that you write for it. One is the use of the protein that is expressed as a therapeutic, the gene itself as a potential diagnostic, the gene potentially as an antigen that would be 

used in a vaccine or other prophylactic, and then the third is as 

a research reagent for the discovery of other things. Those are the 

four major claims that are on all DNA-based sequences that we 

typically use. How they——

Mr. BERMAN. You mean it is sort of boilerplate? 

Mr. SODERSTROM. It is pretty close nowadays, yes. It is fairly 

routine. It is still expensive, but it has become much more routine. 

Mr. BERMAN. All right. Then I will ask at least one other question that I wanted to ask before I went down this road. 

Mr. Kushan, why wouldn’t BIO support the use of march-in 

rights in the kind of case that Dr. Grodman is talking about, where 

the need to have others provide genetic tests is great? Again, I 

112

guess some of that depends on how I understand the questions I 

was asking you. 

Can you have march-in rights for this? I guess march-in rights 

exist. They are just never utilized. But can we encourage the use 

of march-in rights in this sort of subset of an area where the investment is not billions, it is thousands, tens of thousands, hundreds of thousands to achieve the kinds of purposes that Dr. 

Grodman was talking about? 

Mr. KUSHAN. Well, I think your earlier question is getting to the 

challenge that is at the root of this problem. The patents that issue 

are going to have claims on nucleic acids corresponding to a gene 

that, you know, you discovered. That single patent is going to protect many different potential applications. 

One might be development of a method of making the protein 

which then becomes a drug. Another might be using this clinical 

diagnostic setting where you are going to be screening and trying 

to determine if that gene is present in a sample. I do not know 

what another application might be, but for the purposes of this 

process, you are talking about the single patent. 

Putting a condition through march-in rights on limiting the use 

of that patent right is the thing that cause concern within the 

biotech sector. The idea that at the back end of the process, once 

you have reached the market, there is going to be a Governmentmediated decision to limit those patent rights, that is, I think, the 

chilling effect that I was trying to describe before. 

Mr. BERMAN. My——

Mr. KUSHAN. I think——

Mr. BERMAN. I am sorry. 

Mr. KUSHAN. No, I think one of the other questions that I wanted to address is just can you address the concerns that have been 

raised in these settings of clinical diagnostic use versus patent 

rights and product development. I do not think you can do that 

cleanly through the patent system or by limiting patent rights. 

One of the things we always like to point out is that the patent 

rights are rights over the invention, and if there is conduct or other 

types of conditions that are seen in the market regarding the behavior of these companies, there are other ways of addressing that, 

other than through the patent system, and I guess that is one 

question to tackle, is whether that is something that is worth looking into. 

Mr. BERMAN. Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. 

Because this issue is firing away, I will come back at you with 

a two-part question. What is your opinion of the biotech examiners 

at PTO, A, and, B, are they approving overly broad biotech patents 

similar to what occurred with business method patents in the late 

1990’s? 

Mr. KUSHAN. Well, I was at one point in my life a biotech examiner, and I think for that sector of the Patent Office, I feel like 

those patent examiners probably are on the higher end of the scale 

of experience and training of most patent examiners. Many of them 

have Ph.D.s. They are probably the best of the group over at the 

Patent Office based on their training, experience, et cetera. 

113

I think the Patent Office is doing the best job I have seen of really tying down our patent claims. I think anybody that works in the 

area of getting patents out of that group can share my pain of saying that the claims that you emerge with are often viewed to be 

exceedingly narrow, driven by both the strictness of the examiner’s 

perspective and how the Patent Office uses these significant cases 

that have come down. 

That goes to one of my comments in my testimony. This is one 

area where you are not talking about a patent that should not have 

issued. These are patents that are meritorious. They are narrow. 

They match the contribution in the patent application, and so that 

is why we are looking at these rights with great interest. They are 

very strong patent rights that should be respected. 

Mr. COBLE. Thank you, sir. 

To either of the other three witnesses, gentleman, to what extent 

are patent pools used today and should the Congress do anything 

to encourage their use? 

Mr. SODERSTROM. Congressman, the use of pooling of patents has 

become much more routine on universities’ parts, but probably the 

most impressive one is the pharmaceutical industry’s patent pooling on snips, the small repeated segments, unique segments in 

genes that we find. 

It has become a reality for most of us in licensing technologies 

that we only own a small part, in part because of what Mr. Kushan 

just said, which is our claims have become significantly narrowed, 

and that is a significant reality in the last 6 or 7 years, that it has 

become much more difficult to get broad claims in the Patent Office. 

In my case at my university, it is very frequent, probably 10 to 

20 percent of the time, we are putting together intellectual property, not just from Yale, but from other university colleagues to try 

to put together a package which then could be licensed. 

It is not difficult to do. It has become relatively routine, and I 

do not see it as being a significant barrier to entry for a product. 

Mr. COBLE. Yes, sir? 

Dr. GRODMAN. I cannot comment on what it is like in the academic environment. In the commercial environment, you know, it 

is a noble attempt to be able to overcome a problem, but it is something which has not taken hold. I mean, there are many cases in 

which we can talk about where some genes will diagnose a condition and three other genes may diagnose it better or differently, 

and in those cases, there is very little camaraderie or ability to be 

able to share information, often, when that happens, causing conflict. It is a noble attempt, but it has not helped the diagnostic 

arena in a commercial environment. 

Mr. COBLE. Dr. Sung, do you want to weigh in before my time 

expires? 

Mr. SUNG. Only to say that what we have here as a result for 

looking at patent pools is that DNA is a de facto industry standard 

for biological sciences. You cannot wake up tomorrow and say, ‘‘I 

will not use DNA for these purposes,’’ and so for that reason, the 

ability to design around in this field is very different than you 

might see in other mechanic or electrical technologies where patent 

114

pools first grew up. So I think there is a need for this in many instances that are more heavily——

Mr. COBLE. Thank you. 

Thank you, gentlemen. 

I yield back, Mr. Chairman. 

Mr. BERMAN. Mr. Issa, here is my problem. 

Mr. ISSA. Yes, sir. 

Mr. BERMAN. I have to go to the DOD Authorization Conference 

Committee to push language that the Foreign Affairs and Judiciary 

Committees are both recommending on the issue of Iraqi refugees. 

They want me there now for this Conference Committee. My inclination would be to give either of you the gavel to let you keep 

going, but I am told I am not allowed to do that. 

Mr. ISSA. Yes, the Senate has gotten in trouble for doing that, 

too. 

Mr. BERMAN. To give it to a Republican? 

Mr. ISSA. Giving it to me. [Laughter.] 

Mr. ISSA. And I did not even abuse it. Okay. You want me to 

wrap up? 

Mr. BERMAN. So, I mean, the fact is I have five or eight more 

questions I want to ask all of you, but I am not going to be able 

to do it during this process. I would hope you would allow us to 

be in touch with you to pursue some of these things because we 

have in some cases just touched the surface, and we intend no commercial use of our research. [Laughter.] 

Mr. ISSA. Thank you, Mr. Chairman. I will be quick. 

Dr. Soderstrom, there was an earlier statement that somehow 

patents were barring people from doing follow-on research to discover new genes. In your experience, is that incorrect? 

Mr. SODERSTROM. That is incorrect. 

Mr. ISSA. Okay. So Yale University does not feel that even if 

somebody over here has an exclusive license, that you read the patent, that it allows you to take what they have done and look at it 

for your follow-on work. You just cannot incorporate it in your later 

release. Would that be fair? 

Mr. SODERSTROM. Two points: One, is there is no tendency to 

look at patents prior to conducting research. At Yale, university 

faculty members are free to pick any area of inquiry. Second, in 

terms of the discovery that they ultimately make, we do do novelty 

searches to see if there is other intellectual property——

Mr. ISSA. Sure. 

Mr. SODERSTROM [continuing]. And in those cases, we may 

choose not to patent simply because we do not see the point, and 

we would just encourage publication as soon as possible. If we do 

think that it would be a significant improvement, we usually would 

approach whoever has the exclusive rights. 

Mr. ISSA. Okay. Now this is an academic question, but, for me, 

it was not academic. My experience has been that exclusivity, being 

excluded from somebody’s invention, caused me to, in fact, figure 

out a way to skin the cat differently. 

I am not in your industry. I am not in your academic endeavors, 

but isn’t it somewhat true in all areas of endeavor that what you 

do not have access to—and, Dr. Sung, Larry, I saw you perk up on 

this, so you get first thing—isn’t it true that in a sense there is a 

115

benefit to exclusivity which is it causes people to go elsewhere and 

discover other things or around it? Isn’t that an experience that 

even in medicine goes on? 

Mr. SUNG. Well, I do think as a generality the patent system is 

designed to encourage design-around efforts and forward progress 

as a result of those efforts. I do think that in certain instances, 

again, because we are talking about genomic information here, the 

ability to do so may be somewhat stricter and harder to do. So I 

think there are instances where there may be blocking patents that 

might issue to this that are impossible as a technological matter 

to design around. 

Mr. ISSA. Okay. 

Mr. SUNG. But I think your general proposition is correct. 

Mr. ISSA. And isn’t the pooling that has gone on, to a certain extent, the result of those blocks causing people to go to other areas, 

create, if you will, block backs that then lead to the pooling being 

a necessity so that you have an ability to invent in an area in 

which very little is known? 

Doctor? 

Mr. SODERSTROM. That has certainly been our experience. That 

is what we have recognized, because people see it as a utility, as 

an opportunity to get around some of the things that are blocking 

them. 

Mr. ISSA. Same? Same? 

Dr. GRODMAN. No, I would disagree with that. 

Mr. ISSA. So we only have three out of four. Okay. Well, you 

know that we can get a suspension pass with that here. Time is 

limited for the Chairman, too, so I appreciate that we sort of have 

a disagreement, but at least we got that out, as to what the value 

of exclusivity is potentially. 

Thank you, Mr. Chairman. 

Mr. BERMAN. All right. 

With great regret, I have to adjourn because of the way this 

place works, but I do appreciate you coming, all your efforts, particularly the effort some of you made coming a ways to testify, and 

we will be following up individually and perhaps with questions. 

Thank you very much. 

[Whereupon, at 3:28 p.m., the Subcommittee was adjourned.] 

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