Each year, hundreds of new inventions are made in CDC laboratories. The Technology Transfer Office (TTO) transfers these inventions – through licenses – to the private sector for further research and development and eventual commercialization. Often, companies require patent protection to justify the expenditure of resources needed to fully develop a particular invention. Where necessary to ensure the rapid and effective development of a particular invention, TTO seeks intellectual property protection (both domestic and foreign) on CDC inventions.
- Flowchart of the Licensing Process
- Federal Register Notices [Announcing the prospective grant of exclusive licenses]
Upon reporting of an invention to TTO, TTO evaluates the invention to assess patentability and probability of commercial success of the invention, as well as the need for patent protection to ensure rapid and effective development of the invention. TTO generally seeks the broadest possible patent protection for commercially valuable inventions and initiates this process by filing an application for a patent in the U.S. Patent and Trademark Office (USPTO).
Within 12 months of filing a U.S. patent application, TTO will update its initial patentability and market assessments, and, after consultation with the Division that sponsored the research leading to the invention, will file international patent applications as appropriate. In general, where international filing is possible and commercial interest in the invention can reasonably be anticipated, TTO recommends at least preliminary filing of an international application under the Patent Cooperation Treaty. Approximately one year after the filing of an international application, TTO again reevaluates the commercial potential of the invention. When appropriate, TTO files national stage patent applications in those countries where it is believed that patent protection is required for the full development of the invention.
If a company would like to acquire rights to use or commercialize either an unpatented material, or a patented or patent-pending invention developed in PHS laboratories, a license is required. A license is a legal agreement by which the owner of an invention promises not to take action to exclude the licensed party from making, using, and/or selling the invention. Where appropriate, licenses to PHS inventions are granted on a worldwide basis. Most biomedical companies, whether large or small, desire worldwide patent protection to secure foreign markets or to use their assets in establishing strategic alliances which can add to the further development of the invention and the distribution of its benefits to the public.
For non-patented materials, the standard licensing agreements are BMLAs – biological materials license agreements, and PTLAs – proprietary technology licensing agreements, for non-biological materials. If a company would like to test the technology first, then a Commercial Evaluation License Agreement (CELA) would apply. Each of these agreement types is described below. If for internal use only then an Internal Use Agreement (IU) applies.
Biological Materials Licenses allow a company to make, use and/or sell commercially useful biological materials which are not in the public domain and for which patent protection will not be obtained. This type of license typically is nonexclusive and facilitates the commercial development of biological materials developed in PHS laboratories without requiring that patent protection be obtained for every material. Commercial Evaluation and Internal use BMLAs are also available.
The Proprietary Technology Licensing Agreement is a way to provide incentives to industry to develop some of CDC's unpatented technologies, such as software, medical devices and other equipment, and processes. The PTLA alsoprovides the ability to license certain biological and other materials on an exclusive basis when appropriate.
A Patent License Agreement is a legal agreement, subject to Federal, state, and local regulatory authorities, by which a patent owner promises not to take action to exclude the licensed party from making, using, or selling a potential invention. An exclusive PLA limits the use of the invention to a single group or entity, while a nonexclusive PLA allows for use by multiple concerns. A PLA may be for patented, or patent-pending technology. Co-exclusive PLAs are licensed to 2 or 3 entities only.
Nonexclusive and Exclusive Patent Licenses allow a company to commercialize the invention, under appropriate circumstances pursuant to applicable statutes and regulations. An exclusive license limits the use of the invention to a single group or entity while a nonexclusive license allows for use by multiple concerns. Co-exclusive license agreements limiting the number of entities to 2 or 3 are also available.
A Commercial Evaluation License Agreement provides a nonexclusive right to make and use the technology for the purpose of evaluating its commercial potential. Under a CELA, the license does not grant the right to sell the technology. Companies are subsequently then required to obtain a PLA, PTLA, or BMLA for further use and development of a technology. CDC offers the CELA to allow for the evaluation of an invention for a shortened period, usually not-to-exceed six (6) months.
Internal Commercial Use Licenses grant the nonexclusive right to make and use the invention for the purpose of internal use by the licensee. These licenses do not grant the right to sell or otherwise distribute the invention, but allow the licensee to use the invention as a tool in their commercial development activities. Internal Commercial Use Licenses are available for BMLAs, PTLAs, and PLAs. The term is usually for 10 years, but it is negotiable and extendable.
A company that desires a license to develop a CDC invention must complete and submit to the CDC unit of the NIH Office of Technology Transfer (OTT) an Application For License To Public Health Service Inventions PDF | WORD. This application forms the primary basis for licensing decisions. It provides NIH OTT with information about the potential licensee, the type of license desired, some of the terms desired and the potential licensee's plans for development and/or commercialization of the invention. Also, if the applicant desires a license with some form of exclusivity, the completed application provides NIH OTT with the applicant's justification for an exclusive license.
After reviewing the license application, NIH OTT, in consultation with the CDC TTO, determines if the applicant's proposal is consistent with the licensing strategy developed for the invention and whether the grant of the license would benefit the public and be consistent with the interests of the Federal government. If the applicant has requested a nonexclusive license and a favorable determination has been made upon the application by NIH OTT Licensing and Patenting Managers, then negotiations will begin as appropriate.
If the applicant has requested an exclusive or partially exclusive license TTO will publish a notice in the Federal Register, as required by law, and after a 30 day period will reevaluate the application and all comments received from the public to make a final determination regarding the license. The criteria to be considered in evaluating exclusive license applications (37 CFR §404.7) include whether:
- Exclusive licensing serves the best interests of the public.
- Practical application of the invention is not likely to be achieved under a nonexclusive license.
- An exclusive or partially exclusive license is a reasonable and necessary incentive to promote the investment of risk capital to bring the invention to practical application.
- Exclusive or partially exclusive license terms and conditions are not broader than necessary.
- Exclusive licensing will not lessen competition.
The PHS has developed several model license agreements that serve as the basis for license negotiation. The business development plan submitted as part of the license application process serves as the basis for establishing performance benchmarks that are included in the license agreement. TTO works closely with licensees to monitor performance and to adjust benchmarks, when appropriate, to ensure the successful commercial development of its inventions.
Licensees are required to respond at least annually on their utilization of or efforts to utilize license patent rights. These responses are kept confidential and, to the extent permitted by law, are exempt from disclosure under the Freedom of Information Act (5 U.S.C. §552).
Licenses are revocable for specific reasons, such as non-use of or failure to develop the invention, failure to comply with governing regulations, or failure to satisfy public health needs. Licensees also must normally agree that any products embodying the invention or made through the use of the invention, and which are sold in the United States will be manufactured in the United States.