According to Dr. Wigler, the idea to patent the discovery initially came from Dr. Richard Axel, and it struck Wigler “as a rather odd thing to do… it seemed like a long shot, but it wasn’t any effort on our part, since the patents were based on manuscripts that we had prepared” (Wigler, 2005
). Furthermore, aside from the trouble of applying for and being granted a patent, the scientists had no guarantee that the effort would pay off:
“We all agreed on the scientific importance of what we had done. Whether this thing would become useful or not—we’re all very objective people, and I think we all would have said ‘Yeah, there’s some probability of being useful, but there’s no certainty.’ It was not clear at the time whether bacteria would be useful for producing all proteins, all medicinal proteins. And it was clearly a possibility that they were not, in which case this would be a better method… but there wasn’t a guarantee that it would be valuable” (Wigler, 2005
Even after the first patent issued, Silverstein wasn’t sure that it would be valuable: “When it was issued, everybody said ‘Gee that’s terrific,’ and I pointed out to them, ‘Yeah, it’s terrific if we get somebody to actually license it’” (Silverstein, 2005
). If the viewpoint of the scientists here seems somewhat naive, one reason may be that patenting at universities had not yet become commonplace: it was a “nice to have” rather than a “need to have.” Concerns about university patenting had not reached the intensity they would in coming years; the technologically related Cohen-Boyer patent had only recently been granted to Stanford and the University of California, and biotechnology was a nascent field. While university patenting was not novel in organic chemistry, engineering, and solid state physics, it was relatively new to molecular biology, and the economic, social, legal, and ethical questions about patenting were just becoming the subject of a debate.
The inventors informed Paul A. Marks, then the Vice President of the Health Sciences at Columbia University, of their decision to patent. Their decision to go to Marks was most likely made because Columbia did not have a technology transfer office at the time. As Marks recalled in an interview, “I don’t think the Columbia University industrial licensing group was very sophisticated, and they were not encouraging or enthusiastic about going forward to try to get a patent on this work” (Marks, 2005
). Marks then went to the provost, Michael I. Sovern, who referred the inventors to the law firm Cooper-Dunham, where attorney John White (who had received his BS in chemical engineering, MA in chemical biology, and MPh in biophysical chemistry from Columbia) handled the patent prosecution. The scientists were involved in the initial drafting process, but most of the writing and framing of claims was done by the legal expert; both Wigler and Silverstein confirmed that their role was negligible once the initial draft was completed. Silverstein recalled, “I do remember the hours spent with John White, who was the lead attorney at that time on this series of patents… he asked us lots of good questions, and we had to figure out answers” (Silverstein, 2005
The patent application was filed on February 25, 1980. The claims in the application, which included any cell transformed via the method of cotransformation, anticipated the landmark Supreme Court decision in Diamond v. Chakrabarty
by about four months. Diamond v. Chakrabarty
was a watershed for biotechnology patenting, because in that decision the Supreme Court made clear that living organisms were patentable subject matter.2
While some of the claims in the Axel patents were about general methods and not organisms per se
, the Axel patents also included claims covering cell lines that produced proteins of interest, and so the Supreme Court decision made it likely such claims would be upheld in court, strengthening Columbia’s hand in licensing its patents.
The Bayh-Dole Act was also being debated in Congress that year and passed in a lame duck session on December 12, 1980 (see Stevens, 2004
). Its stated purpose was to encourage dissemination and commercialization of federally funded research. Although the Cohen-Boyer and Axel patents are sometimes cited as exemplars of Bayh-Dole, the first of the Cohen-Boyer patents had been granted ten days before the Bayh-Dole Act passed in Congress, on December 2, and Columbia had applied for the first Axel patent ten months before Bayh-Dole was enacted. Because Bayh-Dole had not yet been implemented, the NIH, which had funded the research, could have asserted ownership of the patents, imposed requirements on them (e.g. required the institution to send annual reports, allowed nonprofit institutions to license them free of charge, etc.), or decided not to apply for patents at all. At that time, if an institution wanted to patent an invention stemming from research funded by NIH, it had to request the right to do so, often under terms of an Institutional Patent Agreement, and sometimes as an ad hoc
Columbia sent a letter to NIH on April 4, 1980, seeking permission from the NIH to apply for and control patents stemming from the Axel group’s work, six weeks after it filed the patent application (Mowery et al. 2004
). Columbia specifically sought permission to patent and then license the technology exclusively (e.g. to license the patent to just one company or institution, thereby denying all other companies or institutions the right to use the patent’s protected technology except through the exclusive licensee). On February 24, 1981, NIH wrote back to Columbia giving permission to patent and to assign the patent to Columbia, but denying the request for Columbia to offer an exclusive license unless Columbia could demonstrate that nonexclusive licensing was not viable (Miller 1981
). The NIH also required that Columbia give the Department of Health and Human Services copies of any licensing agreements and provide a detailed annual report:
“…regarding the development and commercial use that is being made and is intended to be made of the invention, including the amounts and source of money expended in such development and such other data and information as the HHS may specify. After the first commercial sale of any product embodying the invention, such report shall specify the date of the first commercial sale and shall include information relating to gross sales by licensees, and gross royalties received by the University” (Miller, 1981
NIH also specified the royalty share for the university and the inventors, and stipulated that any potential licenses must “include adequate safeguards against unreasonable royalties and repressive practices,” a point to which we will return later (Miller 1981
While Columbia did request the right to exclusively license the Axel patents, this was by no means the only option, or even the one Columbia preferred. Paul Marks said that Columbia’s attitude was that it would not hurt to ask. In retrospect, Marks commented, “I think it’s very fortunate for a number of reasons that we didn’t succeed because I don’t think we fully anticipated the sort of impact that this discovery would have on drug development” (Marks, 2005
In 1982, Columbia formed the Office of Science and Technology Development (OSTD), which took over the administration of the patent application (Mowery et al. 2004
). The office has since gone through two name changes, and is now called the Science and Technology Ventures Office. The first of five patents was granted on August 16, 1983 (U.S. Patent 4,399,216, hereafter ‘216).
Five days before the first patent was granted, Columbia’s OSTD filed a divisional application, which covered the cotransformation process using a phage or plasmid vehicle. A divisional application shares the priority date (initial filing date) from a previously filed patent application in which more than one invention was disclosed, and claims a separate invention that was a part of the original patent application. Divisional applications are generally a response to the patent office’s objection that the application claims more than one invention. The applicant then chooses to pursue a subset of claims as one invention from the original application, and can opt to file a divisional application containing claims for another invention.3
Divisional applications are distinct from continuation applications. Continuation applications also retain the priority date from an earlier application, but they are filed when the applicant wants to revise the claims.4
The application filed on December 7, 1980, was the first of nine divisional or continuation applications that Columbia was to file stemming from the original February 1980 application.
The divisional application became the second Axel patent on January 6, 1987 (patent 4,634,665, hereafter the ‘665 patent). Because this patent was very similar in claims to the original ‘216 patent, Columbia agreed that the ‘665 patent would expire on the same date. This kind of agreement is known as a “terminal disclaimer.” When an inventor obtains more than one patent on a closely related invention, the inventor agrees to “disclaim” extra duration that would normally come with the later-issued patent, so that rights end with expiration of the original patent on the related inventions from the original patent application. On the basis of the ‘665 patent, Columbia filed divisional and continuation patent applications in 1986, 1989, and 1991. The applications in 1986 and 1989 were abandoned, while the 1991 application turned into Columbia’s third Axel Patent on January 12, 1993 (patent 5,179,017, or the ‘017 patent). The ‘017 patent was also subject to a terminal disclaimer, expiring with the first and second patents. In this way, the ‘216, ‘665, and ‘017 patents were considered by both Columbia and the patent office to be in the same invention family. Together, the three patents cover the Wigler Method in any eucaryotic cell, specific markers, any proteins produced with the process, and cell lines producing the desired proteins, called transformants (Dudzinski 2004
). On the basis of the 1993 application, Columbia filed more divisional and continuation applications in 1992 (1 application), 1994 (1 application), and 1995 (3 applications, one on February 27, and two on June 7).
The timing of the two June 7, 1995 applications was significant: the next day, amendments to U.S. patent law took effect, bringing US patent law into harmony with most other jurisdictions around the world. For applications filed on or after June 8, 1995, Congress changed the length of a patent term from 17 years from date of patent issue (and publication) to 20 years from the date the application was filed. This moved the starting point of patent term from the finish line of patent examination (getting a patent) to the starting line (date of filing a patent application), which in turn changed the underlying incentives in the patent examination process.
This change made the practice of filing numerous continuation and divisional applications to keep the application open less attractive as a strategy to extend patent rights, since the patent term would no longer be extended by protracted examination proceedings. After June 1994, patent examination proceedings instead ate into valuable patent duration. However, because Columbia’s last two continuation applications were filed a day before that change took effect, any resulting patents would still last for 17 years from the date they were granted.
On September 22, 1992, Columbia was granted US 5,149,636 (the ‘636 patent). This patent resulted from a different set of original applications (in other words, it was not a divisional or a continuation of the original 1980 application). It was the third continuation application stemming from an original application filed March 15, 1982. The ‘636 patent claimed a method for cotransforming eucaryotic cells with multiple copies of foreign DNA fragments. This patent will expire in September 2009, as it was a separate invention not subject to the terminal disclaimer that Columbia agreed to with the previous three patents. The inventors named on the ‘636 patent are Richard Axel and James M. Roberts (who was a graduate student in Axel’s lab at the time), and it was licensed as part of a package with the other three Axel patents (Kestler, 2008
In August 2000, the three original Axel patents expired. For companies with licensing agreements, this ended their obligation to pay royalties. On September 24, 2002, however, the USPTO granted a fourth patent stemming from the original application (patent number 6,455,275 expiration date September 24, 2019). The continuation application that resulted in this patent was filed just before the June 1995 deadline. If Columbia University had waited until June 8, 1995 under the new rules, the ‘275 patent would have expired in February 2000, twenty years after the original filing date (that is, it would have expired before it was granted in 2002). But under the old rules, the patent term for the 2002 patent extended for 17 years from its date of issue in 2002. shows a chronology of the US patents.6
Another June 7, 1995 continuation application is still pending.
Schematic of Columbia’s Patent Applications and Patents
Commercialization and Licensing
By the time the first Axel patent issued in 1983, many research laboratories were already using cotransformation: the citation graphs in show that the ‘77 and ’79 papers were cited over 80 and over 60 times that year, respectively, and a September 2, 1983, Science
article noted that “the procedures developed by Axel and his colleagues are being used extensively in basic research” (Fox 1983
). As Harvard University molecular biologist James Barbosa put it,
“The patent’s process has been in use all over the academic world since ’77… it’s been such a boon in getting mammalian cell gene transfer off the ground that it has almost become a laboratory reagent.” (Mowery et al. 2004
To some in the scientific community, a patent on a widely used research process was frightening and offensive with the potential to deter laboratory work through high costs and strict protection of patented materials. Some of these fears were unrealistic and were based on misunderstanding patents, or failing to see how patent owners could manage their patents to avoid impeding research. Columbia never required fellow researchers at nonprofit institutions to license the patent, for example, and it did not collect licensing fees from nonprofit research (unlike the Wisconsin Alumni Research Foundation, which initially charged research institutions a licensing fee on stem cell patents) (see Rabin, 2005
; Editorial, 2007
; and Cohn, 2007
). The scientific community was nonetheless concerned. Barbosa went on to say that, “…the fact that the process has been patented just doesn’t seem right” (Mowery et al, 2004
From the perspective of Columbia’s licensing office, the fact that the process was in wide use posed a potential problem: if academic laboratories were already using the process, pharmaceutical and biotech firm R&D laboratories were using it too. Furthermore, because the patents primarily covered a process rather than a final product, infringement would be difficult to prove. A final product would not necessarily “embody” the invention or reveal how it was made. In the beginning, Columbia’s licensing strategy was to identify firms that were using the technology, and advise them to take a license. To do this,
“… Columbia licensing personnel examined the patents, end products, and scientific publications of industrial firms… and informed these firms that if they were using the cotransformation process to produce proteins, they must pay royalties to Columbia” (Mowery et al. 2004
Columbia’s OSTD made it clear that if infringing companies did not comply, they would face legal action. That fact that this step was necessary is an indication that industry had adopted the method without a patent incentive. Columbia also recognized, as Stanford University did with the Cohen-Boyer patents, that if they charged too much for licenses, they invited challenges to the patents, requiring unwelcome and expensive litigation to enforce patent rights. Instead, Columbia charged an annual fee of $30,000 and relatively modest royalty streams of a few percent of final product revenues in the hopes that companies would choose to take out a license rather than challenge the patents in court (Sampat, 2000
To encourage companies to sign up early, Columbia took another lesson from Stanford’s handling of the Cohen-Boyer patents, and offered reduced licensing fees to firms that took a license before June 1, 1984 (Sampat, 2000
). The “early bird” terms were $20,000 annually, with royalty rates of 1.5% of sales for finished products, 3% of sales for bulk products, 12% of sales for basic genetic research products, and 15% of cost savings from process improvements. The standard terms after the “early bird” incentive were $30,000 annually and royalties of 3%, 6%, 15%, and 18% for the categories listed above (Sampat 2000
). According to Jeffrey Kestler, Associate General Counsel of the Patent and Licensing Group at Columbia University, the original standard licensing terms for the Axel patents also included a provision allowing the licensee “to take advantage of more favorable rates that might be granted to other licensees in certain circumstances, which prevented concerns that a licensee would be prejudiced by early adoption of the technology,” and a royalty stacking provision lessening the amount owed to Columbia if the licensee paid royalties to other patent owners on the same product (Kestler, 2008
). Also according to Kestler, “the intent of the licensing program was to license the patents as widely as possible and to provide licensees with as much flexibility as possible” (Kestler, 2008
Ten firms signed up under the “early bird” agreement, and Columbia continued until at least the 1990s to identify potential users and advise more companies to take a license. As co-inventor Dr. Saul Silverstein put it in an interview, “They [Columbia] were fairly aggressive at pursuing some of the companies who we knew were making pharmacologically active drugs that would require using this technology” (Silverstein, 2005
). All in all, thirty-four firms licensed the cotransformation technology, ten as early birds, and twenty-four under the regular license agreement (Sampat, 2000
Columbia’s threats of litigation were not idle in 2000, Columbia brought action against Roche Diagnostics (formerly Boehringer Mannheim) for patent infringement in a complicated case also involving the therapeutic protein erythropoietin (EPO). Columbia alleged that EPO made in co-transformant cells at the Genetics Institute (which was acquired by Roche) was shipped to Roche in 1985, infringing the Axel patents.7
Judge Nancy Gertner ultimately awarded Columbia $1.2 million in damages from Roche.