International Technology Transfer Raymond S. Fersko, Esq. Managing Member Ferskos LLC

1. 1 International Technology TransferRaymond S. Fersko, Esq.Managing MemberFerskos LLC

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3. 3 I. The International Context Technology is not regional – its global Advances are fruits of international collaboration Major Markets – North America, Europe, Japan Markets are different and inconsistent Patents, regulatory, medical, pricing (Europe and Japan), healthcare reimbursement, country-wide and local nuances

4. 4 Selected Key Technologies Date Innovation 1953 DNA structure 1974 In vitro recom. DNA 1975 Monoclonal antibodies 1977 DNA sequencing 1978 Polymerase Chain React 1979 p53 Cancer Gene 1985 DNA profiling 1996 Transgenic Sheep 1998 Antibody engineering 1998 Nematode sequence Scientist Country Watson/Crick UK Cohen/Boyer USA Milstein/Kohler UK Sanger et al. UK Mullis USA Lane UK Jeffreys UK Wilmut UK Winter UK Sulston UK

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6. 6 US IS LARGEST PLAYER IN WORLD BIOTECHNOLOGY MARKET

7. 7 I. The International Context Whether companies are formed in the US or anywhere, what we are seeing is that the same CRITICAL SUCCESS FACTORS impact their drive towards success. These include; READ ABOVE LIST. Lets talk about a couple of important things impacting the way bio-tech companies operate globally With little fanfare in 2001 the International Conference on Harmonization finalized the Common Technical Document or “CTD”, a common drug-approval application format for use in Japan, Europe and the US. Biogen became the first bio-tech company to use the CTD for Amevive. The CTD becomes mandatory in 2003. The CTD is expected to save companies up to 6 months in the application process and save precious resources. Protection of intellectual property rights is critical> Mexico, Japan, South Korea and Italy all saw growth. Whether companies are formed in the US or anywhere, what we are seeing is that the same CRITICAL SUCCESS FACTORS impact their drive towards success. These include; READ ABOVE LIST. Lets talk about a couple of important things impacting the way bio-tech companies operate globally With little fanfare in 2001 the International Conference on Harmonization finalized the Common Technical Document or “CTD”, a common drug-approval application format for use in Japan, Europe and the US. Biogen became the first bio-tech company to use the CTD for Amevive. The CTD becomes mandatory in 2003. The CTD is expected to save companies up to 6 months in the application process and save precious resources. Protection of intellectual property rights is critical> Mexico, Japan, South Korea and Italy all saw growth.

8. 8 Europe lacks government and university technology licensing US Develops Biotech Industry: In US, Bayh-Dole Act (1980) provided for commercial return on research exploitation by universities of government-funded research. Federal Technology Transfer Act (1984) – Government enabled to collaborate with industry and license technology. I. The International Context

9. 9 Combination of gov/university-generated discovery and VC inducement to commercialize technology, outsource early experimental work to universities, foundations and other labs resulted in US biotech industry; e.g., Boyer & Cohen at UCSF patented rDNA; VC Kleiner Perkins, Caufield, & Byers funded Genentech; Early experiments sub-contracted out. I. The International Context

10. 10 Success will depend on mobilization of all actors

11. 11 II. Context of Globalization and IP IP is a truly international area of law International treaties: GATT (General Agreements on Tariffs and Trades)- TRIPS (Agreement on Trade-Related Aspects of Intellectual Property) B. European Patent Convention C. Community Patent Convention D. Patent Cooperation Treaty

12. 12 TRIPS evidences the success of a coalition of private, American high technology firms in linking intellectual property to trade and to GATT/WTO Coalition formed early 1990s Two major aims: Make IP protection central part of United States foreign trade policy Improve international IP protection II. Context of Globalization and IP TRIPS Agreement: International rules governing the Trade-Related Aspects of Intellectual Property Rights (TRIPS), formulated at the December 1993 Uruguay Round of GATT. All GATT member-countries agreed to rewrite their national laws to conform to internationally agreed norms for protecting patents, trademarks, copyrights, industrial designs, and trade secrets. The TRIPS agreement also extended protection to such technological areas as pharmaceutical products and computer software, which were previously unprotected in many countries. The general timetable for implementing the TRIPS agreement, which entered into force on July 1, 1995, is one year for industrialized countries; five years for developing countries and countries shifting from centrally planned economies; and 10 years for least-developed countries. TRIPS Agreement: International rules governing the Trade-Related Aspects of Intellectual Property Rights (TRIPS), formulated at the December 1993 Uruguay Round of GATT. All GATT member-countries agreed to rewrite their national laws to conform to internationally agreed norms for protecting patents, trademarks, copyrights, industrial designs, and trade secrets. The TRIPS agreement also extended protection to such technological areas as pharmaceutical products and computer software, which were previously unprotected in many countries. The general timetable for implementing the TRIPS agreement, which entered into force on July 1, 1995, is one year for industrialized countries; five years for developing countries and countries shifting from centrally planned economies; and 10 years for least-developed countries.

13. 13 Prior to TRIPS, many countries had only limited or non-existent laws to protect IP rights, and a country’s laws were not necessarily honored in another country. India did not grant patents for pharmaceutical products, nor did Brazil for pharmaceutical products or processes. II. Context of Globalization and IP

14. 14 TRIPS addresses differences between developing and developed by giving developing countries 10 year window to become TRIPS compliant. TRIPS is to ensure that developing countries have access to technologies-- imperative to development. Patent rights protections such as TRIPS should work to protect individuals, not allow a more powerful individual to exploit a less powerful individual

15. 15 IP and trade were formally linked global basis as a result of TRIPS conducted under GATT. WTO, succeeded GATT, now oversees TRIPS and dispute resolution (including settlement) between member states. Under TRIPS, Patent term is minimum of 20 years from filing date. In implementing TRIPS, US revised patent term to conform to single TRIPS standard. II. Context of Globalization and IP

16. 16 No express prohibition on use of parallel imports or price controls-- a common practice in developed countries. US is exception. Despite unprecedented level of positive rulemaking, IP provisions of TRIPS leave substantial room for countries to exercise regulatory control over pharmaceutical pricing. TRIPS explicitly acknowledges necessity of considering public interest- specifically health policy- in formulating domestic intellectual property regulations.

17. 17 The Paris Convention is a treaty by which most nations give limited recognition to each other's patent application filing dates. For one year after the filing date of U.S. patent application, Foreign Counterpart Application may be filed in any or all other countries that subscribe to Paris Convention.

18. 18 Any Foreign Counterpart Application has benefit of the actual U.S. priority date as opposed to date of filing in the foreign country. II. Context of Globalization and IP

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25. 25 Patent Cooperation Treaty: A multilateral treaty among more than 50 nations that is designed to simplify the process of an applicant's seeking a patent on the same invention in more than one nation. Administered by the World Intellectual Property Organization and effective since 1978, the Patent Cooperation Treaty enables an inventor to file a single international application in addition to the main patent application filed in a treaty-member country. Patent Cooperation Treaty: A multilateral treaty among more than 50 nations that is designed to simplify the process of an applicant's seeking a patent on the same invention in more than one nation. Administered by the World Intellectual Property Organization and effective since 1978, the Patent Cooperation Treaty enables an inventor to file a single international application in addition to the main patent application filed in a treaty-member country.

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27. 27 The PCT allows filing delay in these countries even further - up to 30 months from your U.S. filing date in most countries.  After 30 month period, still need to file national applications in each country in which a patent is desired.  Thus, the ultimate goal of the treaty was never achieved. II. Context of Globalization and IP

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29. 29 US vs. European Patent Law US provides the broadest protection of biotech inventions. In US, GMOs and other new types of technology are protected. In US, if subject matter to be patented falls within one of four statutory classes (process, machine, manufacture, and composition of matter) and involves human intervention, it is patentable.

30. 30 DATABASE RIGHTS Protects investment in obtaining, verifying or obtaining data 15 year term of protection Recent English case suggests it protects raw data from extraction/re-utilisation May be useful for protecting databases used in bio-informatics, compound databases, gene databases etc

31. 31 A European Right Corporate - maker of database must be: Incorporated under the laws of an EEA state AND EITHER has its central administration or principal place of business within EEA; OR has its registered office within EEA and its operations are linked on an ongoing basis with EEA state II. Context of Globalization and IP

32. 32 Partnership - maker must be: a partnership which was formed under the law of an EEA state AND has its central administration or principal place of business within the EEA II. Context of Globalization and IP

33. 33 III. BLOCK EXEMPTIONS Article 81 - General prohibition on anti-competitive practices affecting trade between member states

34. 34 Horizontal Agreements R&D Collaboration Co-promotion Co-marketing III. BLOCK EXEMPTIONS

35. 35 III. BLOCK EXEMPTIONS Vertical Agreements Licensing Distribution Supply/Contract Manufacture Mixed Agreements Full Joint Ventures

36. 36 III. BLOCK EXEMPTIONS Moving away from clause based approach To a general exemption for companies holding no significant market power Must keep an eye on market share throughout Agreement

37. 37 III. BLOCK EXEMPTIONS BUT Hardcore Restrictions Apply eg price fixing output limitation exclusivity limitations Improvements mutual - no assignment of licensee improvements passive versus active sales

38. 38 III. BLOCK EXEMPTIONS R&D Technology Transfer Specialisation Vertical Agreements

39. 39 III. BLOCK EXEMPTIONS Implications if outside block exemption: unenforceable fines

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42. 42 The USPTO has narrowed the amount of patent protection it will grant to genomic sequences. USPTO guidelines issues in January 2001 provide that gene fragments, SNPs, genes and protein structures of unknown function lack utility, and thus are not patentable. 

43. 43 The requirements of E.U. biotechnology patents are set forth in the European Patent Convention (EPC) and a 1998 E.U.  Biotechnology Directive An invention must: Comprise patentable subject matter. Be new. Be “susceptible of industrial application.” Involve an “inventive step.”

44. 44 Europe, like the U.S., recently has strengthened its utility standard (“susceptible of industrial application”) with respect to biotech patents. Article 57 of the EPC states, “an invention shall be considered as susceptible of industrial application if it can be made or used in any kind of industry, including agriculture.”

45. 45 Ethical objections to patents on human DNA sequences are more robust in the E.U. than in the U.S. The EPC states that, “European patents shall not be granted in respect of inventions the publication or exploitation of which would be contrary to ordre public or morality, provided that the exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation in some or all of the Contracting States.”

46. 46 Patenting human DNA sequences is inherently unethical according to European critics. Netherlands commenced legal action against European Parliament to annul the directive. French officials are especially vigorous in their efforts to circumscribe patenting. French President Jacques Chirac stressed need to prevent “any possibility of patenting the discovery of a gene” except for “therapeutic or diagnostic applications”

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49. 49 OWNERSHIP OF FRUITS OF R&D COLLABORATIONS Clearly mark out ownership of pre-existing IPR being contributed Get confidentiality protection in place Who owns the fruits? Be wary of co-ownership of patents

50. 50 WHO OWNS THE FRUIT? Inventors entitled to apply for patent Note: Inventors MUST be determined by laws of country where patent is sought Joint ownership of patent owned in equal undivided shares each owner can do any act that would otherwise amount to infringement cannot licence/assign/grant security without consent of other co-owners can take action against infringer but must join in co-owners

51. 51 OWNERSHIP PROVISIONS IN R&D AGREEMENTS Agree explicitly- who owns inventions and can apply for patents/defend validity proceedings who can exploit patents who can licence patents how are profits distributed how are infringement actions conducted/financed/damages shared

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63. 63 The Office of the U.S. Trade Representative (the "USTR") asks U.S. industries and the Pharmaceutical Research and Manufacturing Association (“PhRMA”) to identify countries denying adequate protection of IP rights or fair market access to their products. The Executive Branch uses these reports to consider appropriate action under U.S. trade laws. VI. The International IP Watch List

64. 64 The deficiencies in some of these countries (e.g., Argentina, Brazil, and Israel) are tailored to those TRIPS obligations that are the most crucial to the research-based pharmaceutical industry (e.g., patents, trade secrets, data protection). Whereas other developing countries have simply refused to make some or all of the necessary legislative and procedural reforms to bring their regimes into compliance with TRIPS. VI. The International IP Watch List

65. 65 Several countries, including Argentina, Colombia, India, Turkey have: “failed to meet key obligations and instead have adopted policies that deny PhRMA members adequate and effective patent protection for pharmaceutical products.” Statement of the Pharmaceutical Research and Manufacturers of America These countries are on a “Priority Watch” status with PhRMA. VI. The International IP Watch List

66. 66 In addition, the PhRMA has placed 18 countries, including Australia, Taiwan, Russia, Spain, Saudi Arabia, Costa Rica and Israel on its “Watch List” of countries that violate international IP agreements. VI. The International IP Watch List

67. 67 PhRMA has been urging the USTR to initiate WTO dispute settlement actions against the worst TRIPS offenders Argentina, Egypt and India. VI. The International IP Watch List

68. 68 The first global alliances that I saw being formed were in the manaufacturing area many years ago. Asia was very friendly to biotech investment and they were offering strong incentives to open plants over there. It also made sense because of the large populations in Asia that are markets for the products. Europe with its strong Pharma infrastructure was also a logical choice for manufacturing. Biogen built its first international mfg facility in Denmark in 2001. Genzyme in 2001 began a major expansion of mfg in 2001 opening a new production facility in Ireland as well as expanding in the UK and Belgium. As the foreign markets have become efficient at regulation, patent protection and product approval, more research and development alliances are being forged in Europe (where after the establishment of EMEA, products are sometimes receiving approval faster in Europe than in the US) and in Asia/Pacific. In addition European Pharma is looking for product to fill their pipelines similar to US Pharma. It can also be desirable to perform clinical trials in various regions to obtain better data and establish international research relationships. Also as products mature in the US and European markets there are opportunities to extend the life cycle of products by entering into sales/marketing arrangements in other parts of the world, particularly Asia/Pacific as well as, to develop different formulations of drugs which are shortly coming off patent (such as extended life formulations) to extend the life of the product. Some international deals are Ireland’s Elan buying two US companies (Dura Pharma and The Liposme Co,), Evotec Biosystems in Germany purchasing Oxsford Asymetry in the UK, Sequenom in the US merged with Gemini Genomics in the UK, Medigene in Germany acquired Neuro Vir Therapeutics in the US and LION Bioscience in Germany bought Trega Biosciences in the US.The first global alliances that I saw being formed were in the manaufacturing area many years ago. Asia was very friendly to biotech investment and they were offering strong incentives to open plants over there. It also made sense because of the large populations in Asia that are markets for the products. Europe with its strong Pharma infrastructure was also a logical choice for manufacturing. Biogen built its first international mfg facility in Denmark in 2001. Genzyme in 2001 began a major expansion of mfg in 2001 opening a new production facility in Ireland as well as expanding in the UK and Belgium. As the foreign markets have become efficient at regulation, patent protection and product approval, more research and development alliances are being forged in Europe (where after the establishment of EMEA, products are sometimes receiving approval faster in Europe than in the US) and in Asia/Pacific. In addition European Pharma is looking for product to fill their pipelines similar to US Pharma. It can also be desirable to perform clinical trials in various regions to obtain better data and establish international research relationships. Also as products mature in the US and European markets there are opportunities to extend the life cycle of products by entering into sales/marketing arrangements in other parts of the world, particularly Asia/Pacific as well as, to develop different formulations of drugs which are shortly coming off patent (such as extended life formulations) to extend the life of the product. Some international deals are Ireland’s Elan buying two US companies (Dura Pharma and The Liposme Co,), Evotec Biosystems in Germany purchasing Oxsford Asymetry in the UK, Sequenom in the US merged with Gemini Genomics in the UK, Medigene in Germany acquired Neuro Vir Therapeutics in the US and LION Bioscience in Germany bought Trega Biosciences in the US.

69. 69 Partnering Across Borders Science, talent and money are crossing borders with ever increasing efficiency. Companies must develop global strategies to be successful. The US is still the global powerhouse in biotechnology with 72% of global revenues, Financing which was 4 times that of the nearest region (Europe) at 8 billion in 2001, product pipeline which is approximately 3 times that of Europe (300 in Phase 3versus, Europe 110 in Phase 2 and 3, and Canada with 400 in all phases), 72% of worldwide R&D expenditures and employment levels that are 2.2 times that of Europe. However, the US market is maturing and the other geographies are emerging and growing fast. The global outlook will be significantly different in the next 5-10 years. TO BE SUCCESSFUL, COMPANIES IN OUR AREA NEED TO RECOGNIZE THIS TREND AND INCORPORATE IT IN THEIR STRATEGIES Science, talent and money are crossing borders with ever increasing efficiency. Companies must develop global strategies to be successful. The US is still the global powerhouse in biotechnology with 72% of global revenues, Financing which was 4 times that of the nearest region (Europe) at 8 billion in 2001, product pipeline which is approximately 3 times that of Europe (300 in Phase 3versus, Europe 110 in Phase 2 and 3, and Canada with 400 in all phases), 72% of worldwide R&D expenditures and employment levels that are 2.2 times that of Europe. However, the US market is maturing and the other geographies are emerging and growing fast. The global outlook will be significantly different in the next 5-10 years. TO BE SUCCESSFUL, COMPANIES IN OUR AREA NEED TO RECOGNIZE THIS TREND AND INCORPORATE IT IN THEIR STRATEGIES

70. 70 Relation between persons (including corporates) Carrying on business With a common view of profit Profit/Loss sharing? (eg co-marketing)

71. 71 IMPLICATIONS OF PARTNERSHIP Joint and several liability Address authority and indemnity Tax Get advice

72. 72 MORE THAN ONE COLLABORATOR? EU - single market Exhaustion of Rights Pricing of medicines Enlargement

73. 73 Before the Marriage... Every Marriage needs a pre-nuptial Goal is o resolve problems and stay married or if divorce parties get what is appropriate, not necessarily the wish list Avoid the 150% rule Consider interim disputes

74. 74 After the marriage... Joint Steering Teams Equal representation from both sides Depending on size of agreement, team size will vary Easy substitution for members on both teams

75. 75 Saving the Marriage... Alternative provisions to resolve interim disputes and rights and obligations after termination YOU DON’T WANT TO LITIGATE! Ways to avoid litigation Interim disputes Research agreement – the research should continue, in spite of disputes

76. 76 Saving the Marriage... Typical R&D agreement – research, development, and commercialization Steering team members may differ depending on the phase Research phase- scientists vs. financial controllers Development phase – (money is always an issue) clinical trials and regulatory affairs personnel.

77. 77 Saving the Marriage... Commercialization phase – How to carve up the pie – marketing, regulatory, finance and don’t leave out the scientists Try to deal with these issues early Provide commercialization dispute resolution mechanisms now not later e.g. – form of license.

78. 78 What if? What if the steering team can’t resolve the dispute? Who else can decide besides the steering team? CEO’s tackle the big ones Each side designates representative(s)

79. 79 When do we need third parties? If issue can not be resolved using one of these methods, parties normally want to terminate but... If issue is isolated, try to save the agreement. Consult a third party

80. 80 Third Parties Mediation – binding or non-binding? You get what you put into it Is it worth the money? Mediator can save the marriage or strike a fair settlement

81. 81 Arbitration Not Cheap Not always fast What rules to follow American Arbitration Association (AAA) International Chamber of Commerce United Nations Commission in International Trade Law Arbitrations Laws (UNCITRAL) Your own rules – but appointing authority needed

82. 82 Arbitration Define the rules now not later Choosing the arbitrator Doctor, lawyer, industry executive Tight deadlines Applicable law (code or common law) Conflict rules Location If it is only a number – play baseball

83. 83 Overarching Issues “Without prejudice and for purposes of settlement only” Confidentiality and privilege Private matter but may become public during enforcement process

84. 84 More Overarching Issues In Europe, ADR more practical than going to court In US, public policy favors arbitration

85. 85 What do I get when we terminate? Think of termination like you are or maybe like you are dating again... Address the consequences of termination while you are courtting Rights upon termination What do I get if you terminate with or without cause? Nothing is free Continuing manufacturing Different uses for know how Partner with others Further research

86. 86 Plan Ahead for Termination Who get IP/Patent Rights Financial commitments needs to be settled Rights and IP need to be determined Surviving responsibilities Options may be exercised Tax implications Disposal of materials Employee Issues Regulatory Issues

87. 87 More Planning for Termination How long options remain open How to determine price of one’s interest in selling to the other Rights of first refusal Right of first negotiation Transfers to affiliates Return of confidential information Continuing confidential obligations Indemnification issues Need to establish contingency escrow

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