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Questions and Answers on Implementation of the NIH Procedures for Handling Non-Election of Title to Patentable Biological Materials

Questions and Answers on Implementation of the NIH Procedures for Handling Non-Election of Title to Patentable Biological Materials
Issued in the NIH Guide August 30, 1996
National Institutes of Health

A. Purpose:

This notice is in response to frequently asked questions concerning the new procedure for handling non-election of title for patentable biological materials made with National Institutes of Health (NIH) funding that appeared in the May 17, 1996 NIH Guide. It is intended to help clarify the expectations of the NIH and what grantee/contractor organizations need to do to meet these expectations.

B. Q&As

1) Which biological materials are subject to these Procedures?

Only biological materials that meet the definition of "Subject Inventions" as included in the regulations implementing the Bayh-Dole Act need to be reported. That definition is as follows:

"any invention or discovery which is or may be patentable or otherwise protectable under Title 35 of the United States Code, or any novel variety of plant which is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.)...conceived or first actually reduced to practice in the performance of work under any contract, grant, or cooperative agreement [with NIH]."

It is expected that grantee institutions will follow the same decision-making process for determining whether a disclosure of a biological material qualifies as a "subject invention" as they follow for disclosures of other types of inventions or discoveries. In other words, if the institution determines that the biological material would normally not be reported to NIH as a "subject invention," it would not be covered by these Procedures. In such cases institutions should document these decisions in their files.

2) What does NIH mean by the requirement to "address continuing availability of the material to the nonprofit research community" when granting an exclusive license for internal use by a for-profit entity?

Perhaps the simplest way to meet NIH's expectations regarding "continuing availability" is to reserve the right, as part of the exclusive license agreement, for the licensor (the grantee institution) to make the materials available for non-commercial research purposes to nonprofit organizations. Of course, the licensor/grantee institution would need to arrange with the originating laboratory to provide the materials to appropriate researchers at nonprofit organizations so long as supplies of the material are available or can be reasonably produced. Consistent with the Public Health Service policy relating to the distribution of unique research resources, these materials should be provided either without cost or at cost. Clearly this obligation cannot extend forever, but should continue for a reasonable period while the materials are useful to the research of other scholars.

If the grantee institution expects to have difficulty with the preservation of a supply of the material, it might require the licensee to provide a sample of the material to the licensor institution in the event the institution's supply is depleted and cannot be easily replicated. In that way the grantee institution could continue to provide the material to researchers at nonprofit organizations. Another alternative would be to require the licensee to provide the materials to a reasonable number of appropriate researchers at nonprofit organizations -- perhaps under material transfer agreements between the licensee and the recipient organization.

3) When does an exclusive license need to "provide for conversion to nonexclusive status or termination of the licensee's rights upon failure to comply with the terms addressing continuing availability?"

If the licensor (grantee institution) has retained the right to make the materials available to other nonprofit organizations, such a provision is generally unnecessary. However, if the only source for the materials is via the licensee (i.e., if the licensee is responsible for providing the materials to other researchers), then such a clause would be required.

4) What is meant by the requirement to provide for "independent maintenance of the material?"

NIH is concerned that if the sole source of the materials is an exclusive licensee and that licensee fails to meet its obligations as to availability, then the materials may become totally unavailable to the research community. Thus, the grantee institution should make efforts to obtain the commitment of the originating laboratory to maintain the materials for a reasonable period. Clearly such a commitment cannot be unlimited since that laboratory might close, the supply of material could be accidentally destroyed or could be depleted and recreating the material (due to cost or manpower constraints) may not be feasible.

Depositing the material at a national repository would also meet the requirement. However, it is recognized that there is a cost involved and that an exclusive licensee would undoubtedly require that the licensor insure that access to samples from the repository be limited to researchers at nonprofit institutions conducting noncommercial research.

5) Will the government pay the costs of supplying material to government researchers? What happens if there are no further supplies?

If there are costs involved in preparing the materials and/or in shipping and handling, the university and NIH need to reach an agreement regarding them. NIH expects that grantee institutions and the originating laboratories will make reasonable and good faith efforts to supply requested materials to government researchers. Nonetheless, NIH recognizes that occasionally supplies may cease to be available.

6) What happens if NIH utilizes its right "to distribute the material" because of the failure of the grantee institution to follow these procedures?

Since NIH's concern is that the materials are available to the nonprofit research community, it would restrict its distribution to that community. An easy way to ensure that NIH retains its right, would be for the university to include in its license agreement a provision that the license is subject to these NIH procedures.

7) Does the grantee institution still need to sign an agreement with NIH for each unpatented biological material it reports to NIH?

No. Grantee organizations are no longer required to sign a terms and conditions agreement for each patentable biological material they wish to commercially license, but not patent. For those reporting electronically, NIH only requires that you report your decision in EDISON under "Institution Invention Status" within "New Inventions" in the main menu. Others who are reporting with paper should submit a letter informing NIH of the decision to license commercially, but not patent. A confirmatory license to the government must be sent to NIH whether you report in writing or electronically.