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BILL AS INTRODUCED 2007-2008

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H.781

Introduced by Representative Pugh of S. Burlington

Referred to Committee on

Date:

Subject:  State-funded institutions; public research; patents

Statement of purpose:  This bill proposes to make innovations developed at state-funded institutions available to eligible developing countries at affordable prices by requiring the owners of patented innovations to offer licenses with low or no royalties.

AN ACT RELATING TO THE AVAILABILITY OF STATE-FUNDED INNOVATIONS IN DEVELOPING COUNTRIES

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  SHORT TITLE

     This act may be referred to as the Vermont Public Research in the Public Interest Act of 2008.

Sec. 2.  LEGISLATIVE FINDINGS

     The general assembly finds:

(1)  It is in the interest of the state of Vermont that people around the world live healthier lives.

(2)  The state of Vermont funds universities and research laboratories dedicated to the creation and dissemination of knowledge for the public good.

(3)  Investments in science and technology by government fuel a thriving pharmaceutical industry, increasing longevity and quality of life in the United States.

(4)  Millions of people with HIV/AIDS in developing countries need antiretroviral drugs.  More than 40 million people worldwide have HIV, 95 percent of whom live in developing countries where malaria, tuberculosis, and other infectious diseases kill millions of people a year.

(5)  The World Health Organization (WHO) has estimated that one-third of the world’s population lacks regular access to essential drugs, including antiretroviral drugs.  WHO has reported that just by improving access to existing medicines roughly 10 million lives could be saved around the world every year.

(6)  To help address the access to medicine crisis, WHO’s 2006 Commission on Intellectual Property Rights recommended that universities adopt licensing practices designed to increase access to medicines in developing countries.

(7)  Since sales of the patented, brand-name versions of such medicines are minimal in many impoverished regions of the world, allowing generic versions of those medicines will have minimal impact on the sales of brand‑name, patented versions in such regions, or the licensing revenues of publicly funded universities and research institutions, while saving an untold number of lives.

Sec. 3.  16 V.S.A. chapter 84 is added to read:

CHAPTER 84.  AVAILABILITY OF STATE-FUNDED

INNOVATION TO DEVELOPING COUNTRIES

§ 2745.  DEFINITIONS

For the purposes of this chapter:

(1)  “Associated medical product,” when used in relation to a subject invention, means any medical product of which the manufacture, use, sale, offering for sale, import, or export relies upon or is covered by the rights guaranteed by title in that invention.

(2)  “Associated rights,” when used in relation to a subject invention, means:

(A)  all patent and marketing rights, possessed by a current or former holder of title in that invention or licensee of rights guaranteed by such title that are reasonably necessary to make, use, sell, offer to sell, import, export, or test any associated medical product ever made, used sold, offered for sale, imported, or exported by that party; and

(B)  the right to rely on biological, chemical, biochemical, toxicological, pharmacological, metabolic, formulation, clinical, analytical, stability, and other information and data for purposes of regulatory approval of any associated medical product.

(3)  “Drug” has the meaning given in Section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 321).

(4)  “Eligible country” means any country of which the economy is classified by the World Bank as “low-income,” or “lower-middle-income.”

(5)  “Fair royalty,” when used in relation to a subject invention, means:

(A)  for a country classified by the World Bank as “low-income” at the time the sales on which royalties are due, two percent of a licensee’s net sales of associated medical products in such country; and

(B)  for a country classified by the World Bank as

“lower-middle-income” at the time of sales on which royalties are due, five percent of a licensee’s net sales of associated medical products in such country.

(6)  “Invention” means any invention or discovery which is or may be patentable or otherwise protectable under Title 35, 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.).

(7)  “Medical device” means a device, as defined in Section 201(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 321(h)), and includes any device component of any combination product, as the term is used in Section 503(g) of the act (21 U.S.C. § 353(g)).

(8)  “Medical product” means drug, treatment, prophylaxis, vaccine, or medical device.

(9)  “Neglected research” means any use of a subjected invention or the associated rights in an effort to develop medical products for a rare disease or condition, as defined in Section 526(a)(2) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 360bb(a)(2)).

(10)  “Subject institution” means any institution of higher education (as defined in Section 101(a) of the Higher Education Act of 1965 [20 U.S.C. 1001(a)]) located in Vermont, or research that receives state financial assistance, including funds distributed through state administered federal grant programs.

(11)  “Subject invention” means any invention:

(A)  conceived or first actually reduced to practice by a subject institution, or its employees in the course of their employment, on or after the effective date of this act; or

(B)  in which a subject institution holds title, provided the invention was first conceived or reduced to practice on or after the effective date of this act.

§ 2746.  ACCESS TO LIFESAVING MEDICINES DEVELOPED AT

               GOVERNMENT-FUNDED INSTITUTIONS

(a)  Grant of license.

(1)  In general.  As a condition of receiving state assistance, any subject institution that conceives, reduces to practice, or holds title in a subject invention shall be required to grant irrevocable, perpetual, nonexclusive licenses to the invention and any associated rights the institution may own or ever acquire, to any party requesting such a license pursuant to subsection (g) of this section.

(2)  Purpose of license.  The licenses described under subdivision (1) shall be for the sole purpose of this subsection:

(A)  supplying medical products in accordance with subsection (e) of this section; or

(B)  conducting neglected research anywhere in the world,

royalty-free.

(b)  Incorporation into title.  The open-licensing requirement created by subsection (a) of this section and all licenses granted thereunder shall be part of the subject institution’s title in a subject invention.  No transfer or license may be interpreted in any manner inconsistent with making any grant under subsection (a) of this section effective, or in any manner that prevents or frees the holder of title in the invention from granting licenses.

(c)  Subsequent licenses.

(1)  In general.  If a subject institution licenses or grants rights in a subject invention to any other party, as a condition of the grant the licensee or grantee, and any future sublicensees or subsequent grantees, ad infinitum, shall also be required in perpetuity, to grant irrevocable, perpetual, nonexclusive licenses on any associated rights which the licensee or grantee may own or later acquire, to any party requesting such a license pursuant to subsection (g) of this section.

(2)  Purpose of license.  The licenses shall be for the sole purposes described in subdivision (a)(2) of this section.

(3)  Application of this subsection.  This subsection applies to licenses for a subject invention acquired under subsection (a) of this section.

(d)  Construction.  No grant or license of any subject invention may be interpreted in any manner that prevents or frees the grantee or licensee from getting licenses for associated rights under subsection (c) of this section.

(e)  License for the supply of medical products.

(1)  In general.  A license under subdivision (a)(2)(A) of this section shall be a license for the sole purpose of permitting the making, using, selling, offering to sell, importing, exporting, and testing of medical products in eligible countries and the making and exporting of medical products worldwide for the sole purpose of supplying medical products to eligible countries.

(2)  Labeling.  If the recipient of a license under subdivision (a)(2)(A) of this section exercises its right to make and export a medical product in any country other than an eligible country for the sole purpose of export to an eligible country, then the licensee shall use reasonable efforts to distinguish visibly the medical product it manufactures from any similar medical product sold by others in the country of manufacture, provided that such reasonable efforts do not require the licensee to expend significant expense.

(3)  Royalties.

(A)  License of a subject invention.  A license of a subject invention under subdivision (a)(2)(A) of this section shall be irrevocable and perpetual so long as the licensee submits to the licensor payment of a fair royalty on sales of any associated medical product within 90 days of such sales.  Failure or refusal of the licensor to accept the fair royalty shall not terminate or affect in any way the licensee.

(B)  License of associated rights.  A license of associated rights to a subject invention under subdivision (a)(2)(A) of this section shall be royalty free.

(f)  Transfer.  In accordance with subsections (a) through (d), any license or other transfer of a subject invention by a subject institution or the licensee or grantee of such institution for a subject invention, shall be invalid unless:

(1)  The license or grant includes the clause: “This grant or license is subject to the provisions of the Vermont Public Research in the Public Interest Act of 2008.”;

(2)  The licensor or grantor complies with the notification requirements of subsection (h) of this section; and

(3)  The license or grant does not include any terms that contradict any requirement of this act.

(g)  Procedures for acquisition of licenses.

(1)  In general.  Any party, upon providing the following information to the Food and Drug Administration, shall automatically be deemed to receive the license so requested without the need for any further action on the part of the licensing party if the party or parties specified in the request do not object and notify the requesting party of such objection, within 30 days of the publication of such request by the Food and Drug Administration:

(A)  Notification of its intent to supply medical products or conduct neglected research as provided in subsection (a) of this section;

(B)  A specific list of the rights it wishes to license for those purposes; and

(C)  The names of the party or parties it believes are obligated to grant such licenses under subsections (a) through (d) of this section.

(2)  Enforcement action.

(A)  In general.  If the party or parties specified in subdivision (1)(C) of this subsection object to the grant of a requested license, the requesting party may bring an action to enforce its rights to a license of a subject invention or associated rights under subsections (a) through (d) of this section.

(B)  Process.  In any suit under this subsection, the requesting party shall be entitled to separate, expedited review of the legal issues required to adjudicate whether it is entitled to the requested license, without prejudice to any other issues in the lawsuit.  If the party objecting to the license is found to have objected without reasonable cause or without a good faith belief that there was a justifiable controversy under the facts of the law, the party requesting the license shall be entitled to attorney’s fees, other reasonably necessary costs of the lawsuit, and treble damages from the objecting party.

(3)  Publication.  The Food and Drug Administration shall publish any request made under subdivision (1)(A) of this subsection within 15 days of such request.  The Food and Drug Administration shall also make reasonable efforts to notify directly the parties named in any such request.

(h)  Notification of transfer or license of subject inventions.  The holder of title or any license in a subject invention shall notify the Food and Drug Administration of any grant or license of rights in that invention.  The Food and Drug Administration shall publish all such notifications within 15 days of receipt.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us