II 

109TH CONGRESS 

2D SESSION S. 4040 

To ensure that innovations developed at federally-funded institutions are 

available in certain developing countries at the lowest possible cost. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 29, 2006 

Mr. LEAHY introduced the following bill; which was read twice and referred 

to the Committee on the Judiciary 

A BILL 

To ensure that innovations developed at federally-funded institutions are available in certain developing countries 

at the lowest possible cost. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Public Research in 

5 the Public Interest Act of 2006’’. 

6 SEC. 2. PURPOSE AND FINDINGS. 

7 (a) PURPOSE.—The purpose of this Act is to promote 

8 global public health and America’s national security by en9 suring that innovations developed at federally-funded inVerDate Aug 31 2005 05:26 Oct 04, 2006 Jkt 049200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4040.IS S4040

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1 stitutions are available in eligible developing countries at 

2 the lowest possible cost. 

3 (b) FINDINGS.—Congress finds the following: 

4 (1) It is in the national interest of the United 

5 States that people around the world live healthier 

6 lives, and that they perceive the United States in a 

7 more favorable light. 

8 (2) The United States Government funds a 

9 major portion of all academic research. 

10 (3) Congress funds universities and Federal re11 search laboratories as institutions dedicated to the 

12 creation and dissemination of knowledge in the pub13 lic interest. 

14 (4) The Federal Government’s investment in 

15 science and technology fuels a thriving pharma16 ceutical industry and rising longevity and quality of 

17 life in the United States. In 2000, a Senate Joint 

18 Economic Committee Report found that public re19 search was instrumental in developing 15 of the 21 

20 drugs considered by experts to have had the highest 

21 therapeutic impact on society. 

22 (5) Millions of people with HIV/AIDS in devel23 oping countries need antiretroviral drugs. More than 

24 40,000,000 people worldwide have HIV and 95 per25 cent of them live in developing countries. Malaria, 


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1 tuberculosis, and other infectious diseases kill mil2 lions of people a year in developing nations. 

3 (6) The World Health Organization (‘‘WHO’’) 

has estimated that 1 4 ⁄3 of the world’s population lacks 

5 regular access to essential medicines, including 

6 antiretroviral drugs. The WHO reported that just by 

7 improving access to existing medicines roughly 

8 10,000,000 lives could be saved around the world 

9 every year. 

10 (7) To help address the access to medicines cri11 sis, the World Health Organization’s 2006 Commis12 sion on Intellectual Property Rights, Innovation, and 

13 Public Health recommended that universities adopt 

14 licensing practices designed to increase access to 

15 medicines in developing countries. 

16 (8) The Department of State has reported to 

17 Congress under the President’s Emergency Plan for 

18 AIDS Relief that, ‘‘[I]n every case generics prices 

19 present an opportunity for cost savings; in some 

20 cases, the branded price per pack of a drug is up to 

21 11 times the cost of the approved generic version.’’. 

22 (9) Since sales of the patented, brand-name 

23 versions of such medicines are minimal or non-exist24 ent in many impoverished regions of the world, al25 lowing generic versions of those medicines will have 


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1 minimal impact on the sales of brand-name, pat2 ented versions in such regions, or the licensing reve3 nues of publicly funded research institutions, while 

4 saving an untold number of lives. 

5 SEC. 3. DEFINITIONS. 

6 In this Act: 

7 (1) ASSOCIATED MEDICAL PRODUCT.—The 

8 term ‘‘associated medical product’’, when used in re9 lation to a subject invention, means any medical 

10 product of which the manufacture, use, sale, offering 

11 for sale, import, or export relies upon or is covered 

12 by the rights guaranteed by title in that invention. 

13 (2) ASSOCIATED RIGHTS.—The term ‘‘associ14 ated rights,’’ when used in relation to a subject in15 vention, means— 

16 (A) all patent and marketing rights, pos17 sessed by a current or former holder of title in 

18 that invention, or licensee of rights guaranteed 

19 by such title, that are reasonably necessary to 

20 make, use, sell, offer to sell, import, export, or 

21 test any associated medical product ever made, 

22 used, sold, offered for sale, imported, or ex23 ported by that party; and 

24 (B) the right to rely on biological, chem25 ical, biochemical, toxicological, pharmacological, 


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1 metabolic, formulation, clinical, analytical, sta2 bility, and other information and data for pur3 poses of regulatory approval of any associated 

4 medical product. 

5 (3) DRUG.—The term ‘‘drug’’ has the meaning 

6 given such term in section 201 of the Federal Food, 

7 Drug and Cosmetic Act (21 U.S.C. 321). 

8 (4) ELIGIBLE COUNTRY.—The term ‘‘eligible 

9 country’’ means any country of which the economy 

10 is classified by the World Bank as ‘‘low-income’’, or 

11 ‘‘lower-middle-income’’. 

12 (5) FAIR ROYALTY.—The term ‘‘fair royalty’’, 

13 when used in relation to a subject invention, 

14 means— 

15 (A) for a country classified by the World 

16 Bank as ‘‘low-income’’ at the time of the sales 

17 on which royalties are due, 2 percent of a li18 censee’s net sales of associated medical prod19 ucts in such country; and 

20 (B) for a country classified by the World 

21 Bank as ‘‘lower-middle-income’’ at the time of 

22 sales on which royalties are due, 5 percent of 

23 a licensee’s net sales of associated medical prod24 ucts in such country. 


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1 (6) INVENTION.—The term ‘‘invention’’ means 

2 any invention or discovery which is or may be pat3 entable or otherwise protectable under title 35, 

4 United States Code, or any novel variety of plant 

5 which is or may be protectable under the Plant Vari6 ety Protection Act (7 U.S.C. 2321 et seq.). 

7 (7) MEDICAL DEVICE.—The term ‘‘medical de8 vice’’ means a device, as defined in section 201(h) 

9 of the Federal Food, Drug, and Cosmetic Act (21 

10 U.S.C. 321(h)), and includes any device component 

11 of any combination product, as that term is used in 

12 section 503(g) of such Act (21 U.S.C. 353(g)). 

13 (8) MEDICAL PRODUCT.—The term ‘‘medical 

14 product’’ means any drug, treatment, prophylaxis, 

15 vaccine, or medical device. 

16 (9) NEGLECTED RESEARCH.—The term ‘‘ne17 glected research’’ means any use of a subjected in18 vention or the associated rights in an effort to de19 velop medical products for a rare disease or condi20 tion, as defined in section 526(a)(2) of the Federal 

21 Food, Drug, and Cosmetic Act (21 U.S.C. 

22 360bb(a)(2)). 

23 (10) SUBJECT INSTITUTION.—The term ‘‘sub24 ject institution’’ means any institution of higher edu25 cation (as such term is defined in section 101(a) of 


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1 the Higher Education Act of 1965 (20 U.S.C. 

2 1001(a)) or research that receives federal financial 

3 assistance, including Federal laboratories as defined 

4 in section 12(d) of the Stevenson-Wydler Technology 

5 Innovation Act of 1980 (15 U.S.C. 3710a(d)). 

6 (11) SUBJECT INVENTION.—The term ‘‘subject 

7 invention’’ means any invention— 

8 (A) conceived or first actually reduced to 

9 practice by a subject institution, or its employ10 ees in the course of their employment, on or 

11 after the effective date of this Act; or 

12 (B) in which a subject institution holds 

13 title, provided the invention was first conceived 

14 or reduced to practice on or after the effective 

15 date of this Act. 

16 SEC. 4. ACCESS TO LIFESAVING MEDICINES DEVELOPED AT 

17 GOVERNMENT FUNDED INSTITUTIONS. 

18 (a) GRANT OF LICENSE.— 

19 (1) IN GENERAL.—As a condition of receiving 

20 Federal assistance, any subject institution that con21 ceives, reduced to practice, or holds title in a subject 

22 invention shall be required to grant irrevocable, per23 petual, nonexclusive licenses to the invention and 

24 any associated rights the institution may own or 


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1 ever acquire, to any party requesting such a license 

2 pursuant to subsection (g). 

3 (2) PURPOSE OF LICENSE.—The licenses de4 scribed under paragraph (1) shall be for the sole 

5 purpose of— 

6 (A) supplying medical products in accord7 ance with subsection (e); or 

8 (B) conducting neglected research any9 where in the world, royalty-free. 

10 (b) INCORPORATION INTO TITLE.—The open-licens11 ing requirement created by subsection (a) and all licenses 

12 granted thereunder shall be part of the subject institu13 tion’s title in a subject invention. No transfer or license 

14 may be interpreted in any manner inconsistent with mak15 ing any grant under subsection (a) effective, or in any 

16 manner that prevents or frees the holder of title in the 

17 invention from granting licenses. 

18 (c) SUBSEQUENT LICENSES.— 

19 (1) IN GENERAL.—If a subject institution li20 censes or grants rights in a subject invention to any 

21 other party, as a condition of such grant the licensee 

22 or grantee, and any future sublicensees or subse23 quent grantees, ad infinitum, shall also be required 

24 in perpetuity, to grant irrevocable, perpetual, non25 exclusive licenses on any associated rights which the 


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1 licensee or grantee may own or later acquire, to any 

2 party requesting such a license pursuant to sub3 section (g). 

4 (2) PURPOSE OF LICENSE.—The licenses shall 

5 be for the sole purposes described in subsection 

6 (a)(2). 

7 (3) APPLICATION OF THIS SUBSECTION.—This 

8 subsection applies to licenses for a subject invention 

9 acquired under subsection (a). 

10 (d) CONSTRUCTION.—No grant or licensee of any 

11 subject invention may be interpreted in any manner that 

12 prevents or frees the grantee or licensee from granting li13 censes for associated rights under subsection (c). 

14 (e) LICENSE FOR SUPPLY OF MEDICAL PRODUCTS.— 

15 (1) IN GENERAL.—A license under subsection 

16 (a)(2)(A) shall be a license for the sole purpose of 

17 permitting the making, using, selling, offering to 

18 sell, importing, exporting, and testing of medical 

19 products in eligible countries and the making and 

20 exporting of medical products worldwide for the sole 

21 purpose of supplying medical products to eligible 

22 countries. 

23 (2) LABELING.—If the recipient of a license 

24 under subsection (a) exercises its right to make and 

25 export a medical product in any country other than 


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1 an eligible country for the sole purpose of export to 

2 an eligible country, then the licensee shall use rea3 sonable efforts to visibly distinguish the medical 

4 product it manufactures from any similar medical 

5 product sold by others in the country of manufac6 ture, provided that such reasonable efforts do not re7 quire the licensee to expend significant expense. 

8 (3) ROYALTIES.— 

9 (A) LICENSE OF SUBJECT INVENTION.—A 

10 license of a subject invention under subsection 

11 (a)(2)(A) shall be irrevocable and perpetual so 

12 long as the licensee submits to the licensor pay13 ment of a fair royalty on sales of any associated 

14 medical product within 90 days of such sales. 

15 Failure or refusal of the licensor to accept the 

16 fair royalty shall not terminate or affect in any 

17 way the license. 

18 (B) LICENSE OF ASSOCIATED RIGHTS.—A 

19 license of associated rights to a subject inven20 tion under subsection (a)(2)(A) shall be royalty 

21 free. 

22 (f) TRANSFER.—In accordance with subsections (a) 

23 through (d), any license or other transfer of a subject in24 vention by a subject institution or the licensee or grantee 


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1 of such institution for a subject invention, shall be invalid 

2 unless— 

3 (1) the license or grant includes a clause, ‘‘This 

4 grant or license is subject to the provisions of the 

5 Public Research in the Public Interest Act of 

6 2006.’’; 

7 (2) the licensor or grantor complies with the 

8 notification requirements of subsection (h); and 

9 (3) the license or grant does not include any 

10 terms that contradict any requirement of this Act. 

11 (g) PROCEDURES FOR ACQUISITION OF LICENSES.— 

12 (1) IN GENERAL.—Any party, upon providing 

13 to the Food and Drug Administration— 

14 (A) notification of its intent to supply med15 ical products or conduct neglected research as 

16 provided in subsection (a); 

17 (B) a specific list of the rights it wishes to 

18 license for those purposes; and 

19 (C) the names of the party or parties it be20 lieves are obligated to grant such licenses under 

21 subsections (a) through (d), 

22 shall automatically be deemed to receive the license 

23 so requested without the need for any further action 

24 on the part of the licensing party if the party or par25 ties specified in the request do not object and notify 


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1 the requesting party of such objection, within 30 

2 days of the publication of such request by the Ad3 ministration. 

4 (2) ENFORCEMENT ACTION.— 

5 (A) IN GENERAL.—If the party or parties 

6 specified under paragraph (1) object to the 

7 grant of a requested license, the requesting 

8 party may bring an action to enforce its right 

9 to a license of a subject invention or associated 

10 rights under subsections (a) through (d). 

11 (B) PROCESS.—In any suit under this sub12 section, the requesting party shall be entitled to 

13 separate, expedited review of the legal issues re14 quired to adjudicate whether it is entitled to the 

15 requested license, without prejudice to any 

16 other issues in the lawsuit. If the party object17 ing to the license is found to have objected 

18 without reasonable cause or without a good 

19 faith belief that there was a justifiable con20 troversy under the facts and the law, the party 

21 requesting the license shall be entitled to attor22 ney’s fees, other reasonably necessary costs of 

23 the lawsuit, and treble damages from the ob24 jecting party. 


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1 (3) PUBLICATION.—The Food and Drug Ad2 ministration shall publish any request made under 

3 paragraph (1) within 15 days of receipt of such re4 quest. The Food and Drug Administration shall also 

5 make reasonable efforts to directly notify the parties 

6 named in any such request. 

7 (h) NOTIFICATION OF TRANSFER OR LICENSE OF

8 SUBJECT INVENTIONS.—The holder of title or any license 

9 in a subject invention shall notify the Food and Drug Ad10 ministration of any grant or license of rights in that inven11 tion. The Food and Drug Administration shall publish all 

12 such notifications within 15 days of receipt. 

Æ 


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