(Part II of Signals' three-part series on the controversy over patenting research tools. For Part I, click here.)



The simmering debate over patented research tools boiled over last year when Dr. Harold Varmus, the director of the National Institutes of Health, refused to sign an agreement with DuPont to use transgenic mice created with a powerful --and patented --gene manipulation method called Cre-lox. DuPont requires all academic researchers using such mice to sign so-called "reach-through agreements" which require users to pay DuPont a royalty on any discoveries resulting from the technology. The agreement also prohibits the transfer of any new mice or cell lines developed using the technology at one lab to another that hasn’t signed the agreement.

That approach to profiting from patented research tools is the latest in several strategies, UC Berkeley geneticist Gerald Rubin told a recent meeting of university licensing professionals and others gathered to debate the growing complexity of research tool ownership. First, there was the Cohen-Boyer patent, which Stanford and the University of California allowed academics to use for free, but for which the institutions charged commercial entities a modest up-front fee as well as royalties if they used gene-splicing in actually making the product. Then, the PCR gene amplification technology invented by Cetus and later sold to Roche came along; Roche now recoups "licensing" revenues by simply charging a relatively expensive price for researchers to obtain the technology in kit form. But it carries no reach-through or later royalties. That puts an expense burden on academics, but doesn't later tie their hands or restrict their options. And then there's Cre-lox, which Rubin called both ugly and troubling for researchers: "It gives DuPont the right to go look at any discovery and decide whether it can be licensed or passed on to other people."


Lox and phages

The Cre-lox technique was developed in 1985 by Brian Sauer, then an employee at DuPont. Ironically, he has since moved to the NIH. The Cre-lox patent illustrates the complexity of the problem well: Cre-lox is a natural gene-splicing tool that allows researchers to "edit" DNA. Researchers insert stretches of bacteriophage DNA called loxP on either side of a target gene. These act like Post-It notes: When cells carrying the "notes" are exposed to Cre—a bacteriophage enzyme—the target gene is snipped out. The Cre-lox technique is used to make knock-out mice, but its real power is in creating “conditional mutants” or mice in which a single gene can be deleted in specific cells--from the liver, for example--that carry the gene for the Cre enzyme. Researchers see Cre-lox as a powerful tool for figuring out gene function--the holy grail of genomics.

As useful a tool as it may be, however, Cre-lox will likely be no more an element of any eventual products or businesses that emerge from the elucidation of those functions than a hammer is a part of the eventual table it helps build. Cre-lox may be used in an early stage of a drug discovery process, but it would play no role in the actual manufacture of later products (This is a critical way Cre-lox differs from Cohen-Boyer. For more insights on that, click here). Some university licensing groups have come to call DuPont's approach the "Steinway Piano model" -- "If you sell me a piano, do you deserve royalties if I write a song on it?" asks one technology transfer official.


Breaking ranks

So far, 150 organizations, most of them universities and other non-profit research centers around the world, have agreed to DuPont’s terms. They include Stanford, Harvard, and the Howard Hughes Medical Institute. According to Robert Gruetzmacher, senior licensing business manager at DuPont Central Research in Wilmington, DE, “We’re executing five new academic licenses a month,” and many are from universities that wish to receive animals from another institution. DuPont-Merck is in charge of commercial licenses, which are available for a fee. The first commercial license was granted to Life Technologies in Maryland. They have the right to make and sell research kits employing Cre-lox technology. They pay a royalty fee on all sales.

But some prominent research institutions are not willing to play by DuPont’s rules. The Jackson Laboratory in Bar Harbor, ME for example, is the nation’s largest repository for research quality mice. They have so far refused to distribute any mice carrying Cre-lox genes and are still negotiating an agreement with DuPont-Merck. “We’ve had a rough road with them,” says Gruetzmacher. MIT and NIH have also refused to sign the agreements with DuPont, as has the University of California. Says Rubin: "I'd rather pay DuPont $5000 and then that's it, rather than take (the reach-through terms) and if anything comes out of it they'll take 20% later."

This conflict has caused problems for researchers who are clamoring for the mice, says MIT’s Licensing Director Lita Nelson. “We sure as hell would like to use the Cre-lox vector. Our researchers get frustrated when another (university or other research lab) has the right to use the vector and we can’t even use their mouse because it carries the Cre-lox vector.” It's also caused resentment among universities: One university licensing officer who asked to remain anonymous says the universities who've refused to sign the Cre-lox license are furious at the signatories for "breaking ranks" over this issue. "Some of us are not willing to concede that DuPont deserves such broad reach-through on this."

Gruetzmacher argues that DuPont is fully justified in asking for the reach-through royalties. When the technology was first available for licensing DuPont floated the idea of paying $10,000 per institution for use of the Cre-lox technology. “That went over like a lead balloon,” he says (Rubin's preference notwithstanding). Universities were not willing—or perhaps unable—to make that kind of commitment to a still basic-stage research tool. They wanted the chance to play with it in the lab for a while and learn more about its possibilities. That’s when DuPont came up with the idea of a reach-through agreement. “We’re not out there to strangle universities,” says Gruetzmacher, who adds that there’s a cap of 25% on royalties. “We just want compensation.” He also claims that there are plenty of organizations that are happy with the agreement. “It’s alleged that these agreements hinder research, but I think that’s blown way out of proportion.”

Push comes to shove comes to panel

Don't tell that to Harold Varmus. After his refusal to sign, Varmus sent a letter to DuPont calling the policy, “an incredible burden for the individual investigator,” and told the chemical giant that he was worried that the legal ramifications will “slow things down, make research unattractive, and turn people off.” He established a panel to look into the Cre-lox issue as well as patents on other biomedical research tools.

[The panel issued its report June 4. To view it click here, and watch for Part III of Signals report, which will look more closely at the report]

If Cre-lox becomes as important a research tool as DuPont envisions, the reach-through agreements now piling up could ultimately create a significant revenue stream for DuPont years down the road. But another possible scenario is a tangled legacy of litigation as researchers and companies sign other agreements that conflict or compete with DuPont's claims, or even try to conveniently forget that they used Cre-lox. One thing is certain, however: DuPont is not the lone black hat on this issue. Universities, themselves, are also asking for reach-through provisions for technology they're exporting to other institutions and companies, and those provisions are not unlike the demands DuPont is making for Cre-lox.