Citation
Emerging biotechnologies in agriculture, issues and policies

Material Information

Title:
Emerging biotechnologies in agriculture, issues and policies
Abbreviated Title:
Emerg. biotechnol. agric.
Creator:
National Association of State Universities and Land-Grant Colleges -- Committee on Biotechnology
Place of Publication:
Washington, D.C.
Publisher:
Division of Agriculture, Committee on Biotechnology, National Association of State Universities and Land-Grant Colleges
Publication Date:
Frequency:
Annual
regular
Language:
English
Physical Description:
v. : ; 28 cm.

Subjects

Subjects / Keywords:
Agricultural biotechnology -- Law and legislation -- Periodicals -- United States ( lcsh )
Agricultural biotechnology -- Biotechnology -- United States ( lcsh )
Agricultural biotechnology -- Periodicals ( nal )
Genre:
serial ( sobekcm )

Notes

Dates or Sequential Designation:
<1> (Nov. 1982)-15 (1996).
Numbering Peculiarities:
Vols. for Nov. 1982-<Nov. 1986> called also Progress report.
Funding:
Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.

Record Information

Source Institution:
University of Florida
Holding Location:
University of Florida
Rights Management:
The University of Florida George A. Smathers Libraries respect the intellectual property rights of others and do not claim any copyright interest in this item. This item may be protected by copyright but is made available here under a claim of fair use (17 U.S.C. §107) for non-profit research and educational purposes. Users of this work have responsibility for determining copyright status prior to reusing, publishing or reproducing this item for purposes other than what is allowed by fair use or other copyright exemptions. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder. The Smathers Libraries would like to learn more about this item and invite individuals or organizations to contact Digital Services (UFDC@uflib.ufl.edu) with any additional information they can provide.
Resource Identifier:
000883030 ( ALEPH )
14918369 ( OCLC )
AEJ1015 ( NOTIS )
88652017 ( LCCN )
0896-0305 ( ISSN )

Related Items

Succeeded by:
Report of the committee on biotechnology emerging issues and policies

Full Text



EMERGING BIOTECHNOLOGIES IN AGRICULTURE: ISSUES AND POLICIES
Progress Report III
November 1984
Division of Agriculture Committee on Biotechnology National Association of State Universities and Land-Grant Colleges




DIVIIONOF AGRICULTURE
COMMITTEE ON BIOTECHNOLOGY
Dr. Frank B. Armstrong Dr. Neville P. Clarke
Department of Biochei-iiistry Director of the Texas Agricultural
North Carolina State University Experiment Station
Raleigh, NC 27650 Texas A & M University
College Station, TX 77843
919/737-2581
409/845-8484
Dr. Durward F. Bateman Dr. Neil E. Harl
Associate Dean and Director of the Charles F. Curtiss Distinguished
North Carolina Agricultural Professor in Agriculture
Experiment Station Professor of Economics
North Carolina State University Department of Economics
Raleigh, NC 27650 Iowa State University
Ames, IA 50011
919/737-2718
515/294-2210
Dr. Bill R. Baumgardt Dr. Charles E. Hess
Associate Dean and Director of the Dean of the College of Agriculture
Indiana Agricultural Experiment and Environmental Sciences and
Stati on Associate Director of California
Purdue University Agricultural Experiment Station
West Lafayette, IN 47907 228 Mrak Hall
University of California
31 7/494-8360 Davis, CA 95616
916/752-1605
Dr. Charles B. Browning Dr. Theodore L. Hullar
Dean and Director of the Oklahoma Executive Vice Chancellor
Agricultural Experiment Station University of Californi'a Riverside
139 Agriculture Hall Riverside, CA 92521
Oklahoma State University
Stillwater, OK 74074 714/787-5034
405/624-5398
Dr. Lee A. Bulla, Jr. Dr. Richard J. Sauer
Dean Deputy Vice President and Director
College of Agriculture of the Minnesota Agricultural
University of Wyoming Experiment Station
Laramie, WY 82071 220 Coffey Hall
University of Minnesota
307/766-4133 St. Paul, MN 55108
61 2/373-0734
i




DIVISION OF AGRICULTURE
COMMITTEE ON BIOTECHNOLOGY
Dr. Samuel H. Smith Dr. James S. Wershow
Dean of the College of Agriculture, Professor of Agricultural Law
Director of the Agricultural Food and Resource Economics
Experiment Station and Director 1130 McCarty Hall
of Cooperative Extension Serivce University of Florida
The Pennsylvania State University Gainesville, FL 32611
University Park, PA 10302
904/392-5131
814/865-2541
Dr. Leo M. Walsh Dr. F. Aloysius Wood, Chairman
Dean of the College of Agriculture Dean for Research and Associate
and Life Sciences Director of the Florida
University of Wisconsin Agricultural Experiment Station
Madison, WI 53706 University of Florida
Gainesville, FL 32611
608/262-4930
904/392-1784
SUBCOMMITTEES
Land-Grant Institutions Funding & University/Industry
Charles F. Hess Chairman Relationships
Durward F. Bateman Neville P. Clarke Chairman
Samuel H. Smith Neil E. Harl
Theodore L. Hullar
Education amd Manpower James S. Wershow
Charles B. Browning Chairman
Frank B. Armstrong National Program Leadership and
Richard J. Sauer Development
Leo M. Walsh Theodore L. Hullar Chairman
Bill R. Baumgardt
National Biological Impact Lee A. Bulla, Jr.
Assessment Program
Samuel H. Smith Chairman Social/Ethical Issues
Lee A. Bulla, Jr. Lee A. Bulla, Jr. Chairman
Charles B. Browning Frank B. Armstrong
Richard J. Sauer James S. Wershow
James S. Wershow
This Committee gratefully acknowledges the assistance of Dr. John F. Fulkerson, Principal Scientist, Cooperative State Research Service, Washington, D.C. 20250.
ii




PREFACE
The Division of Agriculture Committee on Biotechnology was appointed by the chairman of the Division of Agriculture of the National Association of State Universities and Land-Grant Colleges in April 1982. The Committee was charged to advise the Division on the following:
1. Policy matters including legislation that would impact on the ability of Division members to develop strong programs in biotechnological research and related education activities.
2. Any special problems that might emanate from industry providing support for biotechnological research in agriculture in land-grant institutions.
3. Budgeting matters that should be addressed by the Division's Policy and Budget Committees.
4. Other related matters that should be brought to the attention of Division members.
Committee membership includes individuals with varying degrees of administrative responsibility for agricultural research and education programs in land-grant institutions and attorneys versed in agricultural laws and relevant tax and patent laws and codes.
The overall activities of the Committee have been divided into six areas:
1. Land-grant institution structure and agricultural and biotechnological research program capability.
2. Education and manpower needs in biotechnological research and education.
3. University/Industry relationships.
4. National biotechnological research program development, coordination and evaluation in the state agricultural experiment station system.
5. Social and ethical issues related to application. of the new biological research techniques to agriculture.6. Environmental impact of the release of genetically engineered organisms into natural and agro-ecosystems.
Subcommittees have been established in each of the above areas and the division will be provided with a report annually and with interim reports as significant committee efforts are completed. This report represents a statement of progress since november of 1983. The data in this report are provided
as background information for the development of policies and the settling of issues related to the development of biotechnological research and education programs. The Committee has not attempted to develop a series of policy




statements or a specific set of guidelines in the various problem areas simply because of the infrastructural differences between and among institutions. It
is our hope and intent that a discussion of the basic issues involved in a given problem will provide institutions with background information necessary to the formulation of sound policies at the institutional level.
Finally, this report represents the third annual progress report of the Committee and we would appreciate receiving your overall reaction to the report with emphasis on suggestions of additional issues that we might address.
iv




TABLE OF CONTENTS
Page
1 Introduction 1
2. Legal Framework for Scientific Inquiry at Public Universities 5
1. Introduction 5
II. Public Purpose Doctrine 6
III. Academic Freedom 8
IV. Conflict of Interest 10
V. Protection of Intellectual Property 11
A. Patents and Certificates of Plant Variety Protection 12
1. Introduction 12
2. UtilityPatents 13
3. Design Patents 14
4. Plant Patents 14
5. Certificates of Plant Variety Protection 14
6. Persons Entitled to Receive Patents 14
7 Loss of Patent Rights 15
8: Mechanics and Procedures 16
9. Examination and Prosecution 17,
B. Trade Secrets 18
C. Copyrights 20
1'. Introduction 20
2. Subject Matter 20
3. Ownership 21
4. Exclusive Rights and Copyrights 22
5. Notice, Deposit and Registration 23
6 Infringement 24
7. Limitations on Exclusive Rights 25
8. Duration and Renewal 27
D. Record-Keeping 27
VI. Financing 29
A. Introduction 29
B. Tax Considerations 30
1. Tax Treatment of Transfers and Patents 30
2. Tax Deduction for Research and Experiment
Expenditures 31
3. Tax Credit for Increase in Research and
Experimental Expenses 32
4. Tax Deduction for Contributions of Scientific
Equipment 32
C. Research and Development Limited Partnerships 33
VII. Liability 35
A. Introduction 35
B. Tort Law 35
C. Negligence 35
D. Strict Liability 36
E. Government Immunity 36
VIII. Summary and Conclusion 37
v




Page
3. Guidelines for the Development of a University/Industry
Research Contvoact 50
I. Introduction 50
II. Memorandum of Agreement 51
III. General University Purpose 51
IV. General Purpose of the Sponsor 51
V. Scope of the Research Project 52
VI. Duties of the University 53
VII. Duties of the Sponsor 54
VIII. Publications, Copyrights, and Trade Secrets 55
IX. Press Releases 56
X. Patent Rights 56
XI. Project Assets 57
XII. Mutual Cooperation and Modification of the Agreement 57
XIII. Termination Rights 58
XIV. Arbitration 58
XV. Exclusivity of Funding 59
XVI. Assignment 59
XVII. Insurance and Liability 60
XVIII. Notices 60
XIX. Integration, Severability, Headings, and Contract Terms 61
XX. Governing Laws 62
XXI. Definitions 62
XXII. Research Agreement 63
XXIII. Funding Arrangements 64
4. Effects of Developments in Biotechnology on Society 66
I. Introduction 66
II. Effects within the Price or Market System 66
III. Environmental Effects 68
IV. Social Effects 69
5. Legal Challenge to the Deliberate Release of Genetically
Engineered Organisms, Foundation on Economic Trends,
et al. v. Margaret Heckler, et al. 70
6. National Biological Impact Assessment Program 76
I. Introduction 76
II. Concepts in Biological Change 76
III. Assessment of Biological Change 77
IV. Proposal for a National Biological Impact Assessment
Program 82
Level 1 Laboratory Research 83
Level 2 Experimental Field Releases 84
Level 3 Commercial Release of a Biotechnological
Research Project 86
V. The National Biological Impact Assessment Board 87
VI. Responsibilities of the Principal Investigator 88
VII. Legal Overview 88
vi




Page
VIII. Questions and Issues Yet to be Resolved or Addressed 89
7. The Cooperative Extension Service and Biotechnology for
Food and Agriculture 90
8. Support Obtained by Scientists of the State Agricultural
Experiment Stations from the National Science Foundation and
National Institutes of Health During 1982 93
I. Introduction 93
II. Procedure 93
III. Results and Discussion 93
IV. Summary 94
9. Additional Committee Activities 97
I. A National Program for Basic Research in
Biotechnology for Agriculture and Food Current
Status 97
II. Proposed Analysis of Instrumentation Needs in
Biotechnology for the State Agricultural Experiment
Stations System 97
III. Industry Survey of Biotechnology Research Activities
and Potential Manpower Needs 98
IV. Re-survey of SAES 99
V. AAAS Symposium 99
VI. Governor's Conference on Agricultural Innovation 99
10. Summary 100
11. Appendices 103
A. Policy Statement Governing Release and Introduction
of Plant Material 103
B. Regulations and Protocol for Introduction and Release of
Parasites, Predators, Weed Feeders and Other Beneficial
Species for Biological Control 109
vii




CHAPTER 1
I NTRODUCTI ON
Biotechnology, the use of living organisms or their components in industrial processes,' is not new to agriculture. Biotechnologies in the form of improved plants and animals have been the center piece of agriculture production for at least 80 years and in a rudimentary way for the past several thousand years. Plant and animal improvement. was, significantly enhanced by Mendel's discovery in the mid-1800's that characteristics of plants were transmitted from one generation to the next in an orderly fashion and that entities within the individual controlled the expression of a given trait. These entities have become known as genes. The amazing success of American
agriculture is largely a result of the application of the science of genetics to plant and animal improvement.
The new techniques include plant cell and protoplast culture, plant regeneration, somatic hybridization, embryo transfer, recombinant DNA approaches, including gene identification, characterization, spl icing, replication, regulation and transfer. Thus, "biotechnology" refers to the improved or modified organism, microbe, plant or animal, and "new research techniques" or "technology" refers to contemporary "tools" available to scientists for the purpose of biotechnology development. For purposes of this report, "biotechnological research" describes research utilizing these new research techniques.
These new research capabilities have been available for a number of years
and significant progress has been made. For example, in excess of forty
species of plants have been regenerated from protoplasts, that is, a single protoplast taken from the tissues of the parent plant has been manipulated in culture to the extent that it eventually differentiates into a plant similar to the parent from which the protoplast was taken. Somatic hybrids have been
developed between approximately thirty species and at least twelve genera. For example tomato and potato have been crossed using protoplast fusion or the
somatic hybridization process. Somatic hybridization makes it possible to cross plants that are reproductively isolated (incompatible). This provides
tremendous opportunities for bringing new combinations of genes together. Embryo rescue has been used in species where embryos tend to abort before they become mature or before the seed germinates. In such instances it is possible to remove the embryo from the developing seed and culture it in the laboratory
to the extent that it eventually develops into a mature plant. It is one
method for example that has been utilized in citrus to obtain hybrids which otherwise abort and are not available from genetic crosses.
In the area of molecular genetics three significant discoveries *have resulted from the application of genetic engineering techniques to agriculture. The gene or set of genes which controls ice nucleation in the ice nucleating bacteria has been removed to the extent that when the genetically engineered bacteria are present on the surface of a plant leaf they do not change the temperature at which the leaf freezes. This discovery has application across a wide variety of crops in terms of minimizing the impact of frost and cold injury.
One of the most significant discoveries to date in the area of genetic




engineering of plants has to do with transfer of the bacterial gene which controls degradation of the antibiotic kanarnycin into petunia protoplasts which were subsequently used to regenerate petunia plants. When tested, the
petunia plants regenerated from such protoplasts contained the gene for kanamycin degradation. This represents the, first transfer of a microbial gene to a higher plant with expression of that gene in the higher plant. Using similar techniques, the higher plant gene which controls phaseolin production (phaseolin is a seed protein in bean) has been transferred from bean to sunflower and has been expressed in sunflower plant tissues. This represents the first instance of the transfer of a higher plant gene to another higher plant with expression of that gene in the new host plant.
Recent biotechnology breakthroughs have immediate and widespread applications in the animal industry. Applications which are in some stage of development include: animal feed supplements, vaccines, hormones, growth regulators, embryo manipulation, pregnancy diagnosis, pest control, and improved ruminal fermentation. In the area of reproductive physiology, scientists are working to improve reproductive, growth, and lactational efficiency by identifying key limiting proteins. Once identified, these molecules may be produced
in quantity via recombinant techniques to supply to animals exogenously or to use in assays to identify important physiological events such as the onset of pregnancy. Examples of proteins being studied include bovine growth hormones, bovine placental lactogens, and bovine and ovine trophoblastins. The potential benefits of using such molecules is illustrated by recent trials using exogenous bovine growth hormone in lactating cattle. Milk production was
increased an average of 20%~.
Monoclonal antibodies and related research systems are being used to develop vaccines; the foot and mouth disease vaccine represents an example of. success in this area. In addition, monoclonal antibody systems are being used to develop early disease detection techniques; scientists have been especially successful in the development of such methods for the diagnosis of diseases of poultry.
Embryo transfer, embryo splitting and related techniques are being used successfully in the overall improvement of beef cattle and dairy animal production systems.
These examples highlight accomplishments in the application of the new biotechnological research capabilities to agriculture. These new research
capabilities have significantly increased our capability to improve plants and
animals and if we continue to apply then diligently, they will make it possible for us to maintain our technological edge relative to the agricultural productivity of other countries in the world. However, the application ,of these new research technologies to agriculture and, in particular the release of recombinant DNA into the environment have raised questions, questions which we in the agricultural community must be sensitive to and questions which we should attempt to address.
Application of the new research technologies to agriculture will require the efforts of scientists trained in microbiology, physiology and biochemistry who understand gene structure, function, regulation, and transfer. It will
require that these scientists collaborate with plant and animal geneticists, plant pathologists, entomologists, agronomists, horticulturists, foresters and
2




breeders in the identification on of agriculturally important genes and in
developing an understanding of the function and expression of such genes. Finally, potential new varieties will have to be tested in the field just as in traditional breeding programs.
Maximum success in the application of the new research technologies to the enhancement of agricultural 'productivity will require an integration of the basic sciences (molecular biology, biochemistry, microbiology, biophysics) with the disciplines of traditional agriculture science (entomology,
hematology, plant pathology, weed science, soil science, forestry, agronomy, horticulture, animal science, and aquaculture). Integration of the basic
sciences with these disciplines in the application of new research
technologies to agriculture will require different kinds and degrees of program coordination depending upon the hierarchical structure of the academic institution. By their very nature and structure, the land-grant universities
provide an ideal setting for the application of advances in biotechnological research to agriculture.
This report builds on past committee activities which have been summarized in reports submitted to the Division of Agriculture in November of 1982 and November of 1983. Highlights of this report include:
A. A chapter on the Legal Framework for Scientific Inquiry at Public Universities. The goal of this chapter is to provide in some detail a description of the legalistic environment within which scientists find themselves in today's high technology and related research efforts. In
general, we have attempted to sensitize scientists and administrators to various components of this legalistic environment and provide them with a basis for interacting more effectively with elements of the private sector.
B. A chapter is devoted to a set of Guidelines for the Development of a Research Contract between a university and a private industry. This contract
was published in Progress Report 11, 1983, in a preliminary form. It has
since been reviewed and revised as a result of the reviews provided by a .number of institutions across the country. It is important to realize that this information is provided as a set of guidelines and that the application of these guidelines at a given institution will depend largely on the infrastructure and nature of that institution.
C. A chapter is devoted to a statement of Social and Ethical Issues that
we in agricultural research and education should be sensitive to and that, within limits, we should assume responsibility for determining in advance potential social and ethical impacts of research and education programs in biotechnology.
D. A chapter is devoted to a chronology of the Lawsuit-Civil Action 83-2714, which was initiated in September of 1983. This action grew out of a
request on the part of the University of California, Berkeley to test ice nucleating bacteria in a field location. The request for approval to conduct this research in the field was submitted to the National Institutes of Health Recombinant DNA Advisory Committee and was subsequently challenged by individuals in the private sector. The chronology includes what we consider to be the highlights of that action.
3




E. A chapter has been devoted to a proposal for the development of a National Biological Impact Assessment Program. This proposal was stimulated, at least in part, by the notion that we, should accept the responsibility for assessing the environmental impact of tI~e release of recombinant DNA molecules into the environment. Further, the traditional agriculture community should take the initiative in establishing protocols that would provide for the assessment of such impacts. The proposed National Biological Impact
Assessment Program recognizes that agriculture has been assessing the impact of the release of genetically altered organisms into the environment for the last 75 years or so. As planned, the Program would make maximum use of existing structures at both the local and national level.
The balance of the report contains a brief statement on the role of extension in a biotechnological research and education program now and in the future; describes a survey procedure that has been developed to determine the instrumentation needs of research and education programs in the area of biotechnology; describes a survey process whereby the committee plans to determine the nature of industry programs in this area and in particular their current and future manpower needs; lists the results of a survey of the SAES to determine the level of support provided by grants obtained from the National Science Foundation and the National Institutes of Health; and a statement on the current status of the National Program for Basic Research in Biotechnology for- Food and Agriculture which was proposed and described in some detail in our 1983 report.
Objectives:
1. To assess the nature and magnitude of the biotechnological research
program in the SAES and ARS.
2. To assess manpower needs in this area of science in the land-grant
colleges and state universities, and U. S. Department of Agriculture
(USDA) and the private sector.
3. To determine the need for additional educational programs in this and
related areas of science.
4. To examine university/industry relationships with emphasis on consulting,
contractual, partnership and patent, and licensing arrangements.
5. To develop legislative proposals that will provide additional incentives
for industrial investment in biotechnological research in public
institutions and in particular, as applied to agriculture.
6. To examine university/federal government agency rel ati onshi ps including
an evaluation of regional and federal research program coordination by Cooperative State Research Service (CSRS) and the potential for coordination and development of a regional and national land-grant
institution based biotechnological research program in agriculture.
7. To determine the need for research and education programs arising from
biological and socioeconomic externalities emerging from new research
technology applications and development.
1Genetic Technology,__A New Frontier (Office of Technology Assessment,) WestView Press, Boulder, Colorado, 19821, 331 pages.
4




CHAPTER 2
LEGAL FRAMEWORK FOR SCIENTIFIC INQUIRY AT PUBLIC UNIVERSITIES
I. Introduction
This document is designed to familiarize university faculty and administration with the issues and problems involved in conducting and funding scientific inquiry at public institutions. While relationships with industry
are becoming an increasingly popular method of funding university research, topics discussed herein are also applicable to traditionally funded research. Universities should maintain patent and.copyright policies, even in regard to
research funded solely from government sources. Legal issues may arise in many different contexts. Academic freedom influences research regardless of the source of funding. The public purpose doctrine must enter into all deci sions regarding the direction or subject matter of public university research. Although legal issues may be more likely to arise in complex
university/industry relationships, traditional university research is not immune from possible legal action.
Where close university/industry ties have been es tabl i shed, the relationships have resulted from the desire of industrial concerns for university innovation, on the one hand, and the need 'of the universities for funding on the other. For industry the time necessary for transforming
university research into commercially useful products must be short enough to warrant investment in basic research. This marriage of public and private interests has made it imperative for university faculty to become aware of the countervailing policies and interests between the university community and industry in order to avoid potential problems and tensions.
When a private company makes an investment, it expects to realize a benefit in proportion to that investment. An expenditure of funds is a
business risk, and the greater the investment, the more substantial is the expectation of return. In contrast the university community does not operate strictly on a cost/benefit basis. Many ethical and moral concerns, as well as long term academic considerations, are considered in the conduct of the public university system. These concerns often override the opportunity for
privately sponsored research arrangements. Ethics and policy will also vary from one institution to another. Although public universities must serve
primarily the general interests of society, individual state laws andregulations must be studied prior to negotiating industry ties. Many f orces influence the development of university/industry cooperation, and each situation involves careful consideration of the value standards of the parties involved.
The. direction and conduct of inquiry at a public university is guided by the policy objectives of the particular university. Generally, public
universities are establ-ished to serve the populace through free discovery and open dissemination of information. Although specific details of this broad policy differ from system to system, the public purpose doctrine, concepts of academic freedom, and conflict of interest rules shape the policies which influence directions of research. State universities, as institutions
supported by public funds, must carry out their objectives in line with the
5




public purpose doctrine, i.e., in the interest of the public welfare. Academic freedom helps shape the policy of the university by promoting openness of discovery and freedom to communicate. Rules against conflicts of interest guide public university policy by discouraging unwarranted or unfair
private influence on university research objectives and fostering trust and confidence in university professors as public servants. Private contributions
to university research must be managed in accordance with the ideals of open and free inquiry.
The ongoing debates over the ownership of intellectual property--e. g., patents, copyrights, and trade secrets--provides strong incentive to learn the basic legal issues involved. Do patents belong exclusively to the inventor or
to the entity that provided the money for the inventor's work? Are patent rights to be shared among various parties? To what extent may each of the parties exploit those rights, and what control may the other parties retain? The answers to these questions generally can be resolved through contract agreements. Without specific, signed agreements complex legal disputes can arise. There is a multitude of views concerning the exploitation of intellectual property, who should retain ownership of discoveries, and whether and how long information should remain confidential.
Attention to the legal aspects of research arrangements is becoming increasingly important to the university community. Professors at public
institutions must account for their official actions to an informed and curious citizenry. The work of university researchers has been brought into the public eye by tremendous advances in technology. These advances have been
prominent in many areas, but hold unusual potential in biotechnology and in the genetic sciences, because of their application in alleviating immediate human needs and problems. The prospects of new technologies have also led to innovative schemes to fund research, and close ties with private industry have
resulted from the need for monetary support in the face limited federal government aid. The potential for significant advances in science and
technology, coupled with new relationships between the private sector and public universities, have focused concern on legal issues which previously remained in the background.
II. The Public Purpose Doctrine
A major guide for the conduct of government and the expenditure of public
funds is the public purpose doctrine. The influence of the public purpose doctrine upon public university research may appear to be attenuated because of the general freedom of university professors in conducting research.
However, the public purpose doctrine is applicable to the use of research moneys. The public purpose doctrine must be considered a significant factor in any research proposal at a public research institution.
The public purpose doctrine exists as a basic limitation on the use of governmental funds. The essence of the doctrine is that the actions of
governing bodies should be carried out for the benefit of the general public. At the heart of the public purpose doctrine is the states' duty to act on behalf of the general welfare of the people.1 Because the public purpose
doctrine is based on the concept of the general welfare, there is no single definition that applies to all cases. The notion of general welfare changes continually with the particular needs and pressures of the times.2 The parameters of the public purpose doctrine are not defined clearly,3 and every
6




decision of public purpose should be examined in light of the facts of each situation. 4
Public purpose encompasses the goal for which governmental action is performed; the legislature then chooses the method by which that goal is accomplished.5 The discretion of the legislature in choosing that method is extremely broad, and an act of the legislature will be invalidated by a court only with a clear demonstration that the public interest is not being served.6
Challenges based on the public purpose doctrine usually revolve around state constitutional provisions that restrict the giving or lending of a state's credit7and that prohibit the taking of private land except for a public
purpose and with full compensation.8 The aim of the constitutional and statutory provisions that restrict the use of public funds is to prevent taxpayers from becoming responsible for debts and obligations of private commercial enterpri sesP
The public purpose doctrine originated from a common practice by municipalities in the nineteenth century of appropriating funds to aid private
companies in the development of American railroads. Challenges to these
expenditures generally failed, because the courts ruled that there was sufficient benefit to the public from the development of railroads to justify public monetary support. Abuses of public credit by municipal governments led
to changes in attitudes of courts and the public. This change caused the
promulgation of state constitutional amendments to limit these activities.
Application of the public purpose doctrine to public universities differs from state to state, because of the universities' differing origins. Many
state universities have been created directly by state constitutions,'0whereas others were formed by statutory enactment of legislatures." A constitutionally created university is a semi-autonomous part of state government, while a
statutorily established university is subject to direct control by the legislature through a statutory scheme and allocations of money. It is
important to examine the state constitutions and statutes when scrutinizing the acts of a particular university. Still, the public purpose doctrine is similar in each case, and all state university research projects must be devoted to subjects which further the public welfare.
Traditionally, research at state universities has been funded either from
various federal government sources or from appropriations of state legislatures. Individual researchers have possessed a large degree of freedom to choose and direct research projects, as long as the general purposes of
appropriations legislation have been met. The only immediate accountability of researchers in the state university setting has been directed to administrative superiors and peer groups within the particular research areas. With the advent of shorter periods of time required to bring new research technologies out of the laboratory and into the commercial world, private industry has become increasingly interested in the developments of the university laboratory. A significant amount of private money supports
research in public universities. These developments have led to questions over who now controls the direction and disposition of research in public universities. Increased involvement of private entities has exposed many research projects to scrutiny under the public purpose doctrine.
7




The concept of public purpose is quite easy to state: public funds are to
-be utilized only for the benefit of the general, public. However," when this idea is applied to particular situations, the dividing line between public benefit and private benefit becomes very hazy. Private individuals or
associations always benefit from a public expenditure or improvement, and this
reality does not necessarily detract from the public nature of the government action, where there is substantial benefit to the public.'2 The proscription inherent in the public purpose doctrine is against ri ing public money or credit for the primary benefit of private parties. Again, the words
describing the doctrine are easy to state, but the meaning and application of those words are difficult to define and describe.
Heightened involvement of the industrial sector in university research programs has led to a variety of funding relationships, some simple and others extremely intricate. They range from elementary consulting agreements between university professors and private companies to detailed and lengthy cooperative research arrangements which sometimes involve multiple institutions and firms. Questions of public purpose arise concerning not only the relationships of professors with private companies, but also the disposition of rights to intellectual property, the utilization of university facilities, and the maintenance of secrecy for certain information. It is far easier to conjure up potential conflicts relating to the public purpose doctrine than it is to formulate solutions. The answers also depend upon
specific provisions of state constitutions and statutes, as well as upon judicial interpretation. The ideal of public purpose is not hard to define, but opinions of the application and definition of relevent terms--e.g., significantt 11public benefit," "incidental private benefit," "public character," "primarily public nature," etc.--are subject to myriad interpretations.
III. Academic Freedom and Scientific Inquiry
Public university professors enjoy academic freedom,1 which is the freedom to choose research topics and publish research results. However, there are
certain legal and ethical limitations and responsibilities which accompany the
exercise of academic freedom. There are not only many views of the exact scope and definition of academic freedom, but the concept of academic freedom changes with perceptions of ethics and morality throughout time. The
components of academic freedom are embodied in the free speech ideals of the First Amendment to the United States Constitution. The First Amendment
freedoms of open inquiry and publication foster academic progress and the goals of a democratic nation. 2 Inherent in academic freedom is unrestricted dissent and expression of conflicting points of view, which also promote progress. Academic freedom helps maintain the character and strength of the Nation by facilitating the quest for new knowledge and .truth.3 In its pure form, academic freedom knows no bounds, but it is necessarily limited by public policy and changing mores.
Colleges and universities represent a major vehicle for the acquisition of new knowledge and its communication to society." Without the freedom to explore the unknown, to exchange ideas, and to criticize differing thoughts, the academic community cannot perform its essential function as a conduit of knowledge for society. Research at public institutions is tied closely to the general welfare and goals of the governing bodies. While academic freedom in
8




any setting must give way to the power of the state to protect the general health, safety, and welfare of the people, academic freedom in a public
university is also shaped by notions of the public purpose doctrine and the power of the purse. Public institutions must carry out their research and teaching for the benefit of the public. The government may direct research or teaching efforts through the allocation and control of finances. Academic
freedom is always delimited directly or indirectly by principles of ethics and policy.
The policies that limit academic freedom apply to the actions of faculty members within the scope of their employment. For example, the state
legislature may set policy by appropriating funds only for particular areas of research. Private funding agencies also may restrict areas of inquiry by agreement with the institution. Likewise, the general mission of a research institution may prescribe boundaries for the scope of inquiry of the research staff. Conditions of employment of a faculty member often describe the area of research associated with the specific position. Appointments in a State
Agricultural Experiment Station may carry specific research responsibilities. .Within the general mission of the research component of the university--as limited by the conditions of employment of the faculty member and by the explicit expectations of funding agencies--faculty members are insured freedom
of inquiry in selecting areas of research, in conducting project activities, in publishing results, and in communicating by other means.
The United States Supreme Court has recognized academic freedom as an important value in First Amendment jurisprudence.5 However, the breadth of
academic freedom is not certain. Academic freedom has been involved in the protection of the right of political expression,6 but there is no clear legal
mandate for a constitutionally guaranteed freedom of scientific inquiry. Ideas of serious social importance and controversial expressions are generally protected and encouraged in our society.7 Along with the expression of ideas,
the concomitant right to gather information is clearly protected by the First Amendment. 8 It would follow that the research necessary for the publication and expression of scientific thought would be protected as well. Even though free expression and information-gathering are guaranteed by the First Amendment, these rights must yield to important state interests.
State or federal governments may legitimately limit scientific inquiry and experimentation, even if it is clearly protected by the First Amendment. The police power--the power to protect the health, safety, and welfare of the populace--often overrides First Amendment rights. The clearest examples of
police power intrusion on scientific inquiry would be the protection of human or animal subjects in experiments and of laboratory workers. Adequate
precautions and safety measures can be required before any experimentation is performed. The police power can also be invoked to protect the morals of the public. This could be a most serious constraint upon research, because of the subjectivity of the decision to be made by the governing body. When the
perception of danger to the health, safety, or welfare of the public outweighs the right of discovery or expression, academic freedom can be restricted, and certain lines of inquiry could be halted.
The state interests which justify the curbing of scientific inquiry must
be directed at legitimate public concerns, not specifically at the inquiry itself. In other words, the stifling of scientific inquiry is not a
9




legitimate state interest, but the safety of laboratory subjects, the working conditions of laboratories, and the health of citizens are legitimate state concerns that may justify constraining scientific research. The interest in
favor of full freedom for research is strongest: (1) to the extent the
research is essential to the formulation of new ideas or theories; (2) to the extent the inquiry is essential in teaching, learning, and communication; and
(3) to the extent the study is fundamental or basic, providing the state with the opportunity to protect against dangers that are perceived at a later time.9
Government interests in limiting or controlling research are most convincing where there are established public safety or health concerns with the consequences of certain research work.
Academic freedom in its broadest sense encompasses unrestricted discretion in the choice and performance of research and scientific expression. To the extent legitimate state concerns are not infringed, the communicating of ideas is protected by the First Amendment. Logically, any
gathering of information or research necessary for communicating ideas is also part of First Amendment rights and privileges. Academic freedom can be
limited by public policy, the public purpose doctrine, the power of the purse, and the police power. The limitations of free expression are not only legal but are also moral and ethical in their concerns. Academic freedom knows no
permanent boundaries, as its parameters change within an organic society.
IV. Conflict of Interest
The law regarding conflict of interest is rooted in the age old notion that one should not serve two masters at one time. Conflicts of interest
evolve in a variety of contexts, e.g., securities dealing, attorney/client relationships, and ordinary employment situations, and the basic idea is the same. A conflict of interest exists where the regard for one duty leads to the disregard for other responsibilities.' Implicit in an employment contract is faithfulness to the interests of the employer. Conflict of interest in the
public setting refers to a clash between the public welfare and the private interests of the individual involved. 2 Laws and policies forbidding conflicts of interest and promoting disclosure of potential conflicts in public employment are aimed at: (1) upholding the public's right to know the
relevant investment, management, and contract interests of government officials; (2) deterring corruption in government; (3) creating public confidence in government; and (4) detecting and prosecuting violations.
Conflict of interest in the public employment situation, as pursued by federal conflict of interest statutes,3 is aimed at preventing potential,
rather than actual, wrongdoing or loss.4 When applied to a university,
potentials for conflicts of interest arise where professors act as corpo .rate consultants or officers, where professors own stock or other equity in corporations, and where corporate funds finance research projects. At public universities, research properly may be undertaken only for a public purpose. The purpose of a public university is generally recognized as the pursuit of basic knowledge and its free and open dissemination. When corporate interests
influence research or limit publication of laboratory findings, potential conflict of interest arises. The interests of the public and the university
must be paramount when scientists choose research topics and proceed with research projects.
10




State universities exist to protect and promote free inquiry, advancement of knowledge, and open exchange of ideas. The maintenance of such an
environment depends upon public trust, as does the proper conduct of public institutions in general. University faculties should recognize their public duty and maintain their commitment to the general mission of the university.5
While both university-based research and industry-based research
ultimately may serve the general welfare of society, their methods and shortterm goals differ.6 Much university research is guided by an interest in fundamental knowledge which has many potential applications. Industry
research is directed toward applications of knowledge to the marketplace and the production of profits. A reasonable expectation for return on investment or other material reward must accompany a research project in order for private industry to pursue it. Industry's drive for the production of
monetary returns often imposes secrecy with reference to ideas or inventions. It is here that the conflict with university ideals is most intense. Secrecy is discordant with public university aims. Immediate profit is not viewed by public universities as a dominant criterion in pursuing research.
Where there is adequate disclosure of interests, potential conflict of interest situations that develop are more likely to be compatible with the public university setting. Disclosure allows for a proper review of the potential for conflict and promotes confidence that is necessary for all public servants. Where consulting or other industry relationships influence university research to a greater extent than permitted by traditional university goals and ideals, these methods of cooperation should be closely examined and reevaluated. The public must be assured that, in the conduct of research, university interests are protected and responsibilities are met. Professors might be required to choose between finding alternate sources of funds for their projects and severing or limiting certain ties with corporations. A professor might take a leave of absence when faced with an unacceptable conflict.7 The university researcher may be forced to choose between a tenured faculty position and a private industry post if the conflict
is especially pronounced.8 When industry ties discourage open inquiry and free communication of knowledge, a conflict of interest may occur. If the
conflict is so great that university policies and goals no longer dominate decisions concerning research projects, those university/industry
relationships must be altered.
V. Protection of Intellectual Property
Intellectual property, the tangible embodiment of ideas or innovation, is the stock-in-trade of a university scientist. A university/industry cooperative effort can compromise scientists' efforts, because industry looks
upon intellectual property as an avenue'for profits. A strong influence in
the advancement of a university professor's career is the ability to publish meaningful research results. On the other hand, the ability to keep
innovation secret provides a private firm with the opportunity to maintain a competitive advantage and produce additional profit. These countervailing
interests--publication and secrecy--can be reconciled by the utilization of the patent system, since research results are published and freely available,
with limited exclusive rights to the use of the innovation provided to the patent owner. The knowledge is disseminated by the publication, and the company can still gain a competitive advantage through ownership of the




exclusive rights. The patent system, therefore, can be utilized as an instrumentality to foster mutually beneficial relationships between industry and academia. While the patent system does offer a balancing of the
publication and secrecy issues, conflicts over the appropriate degree of control may still arise.
A. Patents and Certificates of Plant Variety Protection
1. Introduction
The United States Constitution grants Congress the power to make laws "To
promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."' Congress responded 2 to this Constitutional authorization with the enactment of the patent laws. Before the promulgation of patent laws, the only method for inventors to protect ideas and discoveries from commercial exploitation by others was through secrecy. The patent laws grant qualified inventors the exclusive right to make, use, and sell their inventions 3 in return for the public disclosure of the formulae that led to the inventions. This scheme permits inventors to receive appropriate remuneration for inventions while allowing others to learn from and build upon the
knowledge that has been revealed. The United States patent system provides the Nation with a storehouse of knowledge upon which progress in the arts and sciences can be advanced.
The utilization of the patent system is extremely important because of the tremendous advances in technology, the increasing numbers of patentable discoveries, and the commercial value of patents. Major new technological advances have been accomplished in the field of recombinant DNA. The decision
4
of the United States Supreme Court in.Diamond v. Chakrabarty, which
authorized the use of patents for manmade living organisms, has spurred much activity in patent applications. Industry is keenly aware of the importance of obtaining patents in order to reap profit, and industrial firms have
established strict procedures for preserving their patents and any pertinent information that may lead to a patent. Patents serve a different purpose in the state university environment, and procedures to safeguard patent rights have not been scrupulously followed by the academic community. The importance of preserving patentable discoveries and obtaining patents is becoming more critical to land-grant colleges and state universities as more financial support is obtained from private sponsors.
In order to preserve inventions or discoveries for patent protection it is helpful to be aware of the requirements for a patent application and the circ umstances under which patent protection might be denied. A good record-keeping procedure helps insure patentability of discoveries which emanate from research projects. Researchers who are aware of the requirements of a patent application and the process of filing for a patent are more likely to produce a sound record for patent applications. This awareness should lead
to a greater understanding for the necessity of an adequate and complete record-keeping system. This information is presented as pertinent background
material and should be utilized in the context of existing institutional rules, regulations, and protocols.
12




Patentable subject matter is described in the Patent Code as "any new and
useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof."5 All "utility" patents must fall into one of these categories of patentable subject matter. Separate provisions of the
Patent Code cover patents for designs8 and patents for plants. 7 Design
patents are granted for new, original, or ornamental designs of articles of manufacture. Plant patents are issued for new varieties of asexually reproduced plants. New varieites of sexually reproduced plants are afforded protection similar to patents by the United States Department of Agriculture through certificates of plant variety protection.8 The exact-requirements for
the issuance of a patent (or certificate of plant variety protection) depend upon the particular type of patent that is being sought.
2. Utility Patents
Patentable subject matter includes both proeses (methods or means of
producing a certain result) and products (mac&hinies, manufactures, and compositions of matter). The United States Supreme Court has stated that a discovery is patentable as long as it is the result of human intervention, i.e., as long as it is manmade.' This includes living organisms.
After it is determined that the invention constitutes patentable subject matter, the invention must demonstrate utility, novelty, and nonobviousness. The standard for the demonstration of util-ity (or usefulness) is nominal. An invention is useful if it can be used beneficially for its intended purpose. The invention must not be harmful or frivolous.
The requirement that an invention be novel, or new, is included in the Patent Code to insure that articles already in use by the public will remain in the public domain free from any exclusive rights to their use. An
invention is novel unless it was known or used by others before application for a patent or was made public more than one year prior to the date of the application.10 An invention is considered to have been known or used by others when all elements of the invention are found in the prior art. In order to
defeat the novelty requirement in a patent application, a prior invention must
be a complete invention which has been reduced to practice. If a process or
product is in the public domain prior to the applicant's invention, the
invention is "anticipated" by the prior art and does not meet the novelty test. To grant a patent on a discovery which is in the public domain--to give someone a monopoly on its manufacture, use, and sale--would defeat the purposes of the patent system.
Nonobviousness is a finer degree of novelty. A patent application must demonstrate that the subject matter sought to be patented is so different from the prior art that it would not have been obvious to a person having ordinary skill in the art to which it pertains at the time the invention was made.1' Patent monopolies are granted only to those who in fact advance the state of the art. To receive a patent, an invention must provide a new solution or idea which is beyond the knowledge of the ordinary technician who maintains a full understanding of the relevant prior art.
13




3. Design Patents
Design patents are granted to protect new, original, or ornamental designs of articles of manufacture. The intent is to protect the appearance of useful objects. The purpose for including design patents in the Patent Code is to encourage ornamentation and beautification in the manufactured arts
in order to increase the saleability of articles and satisfy the aesthetic sense of the public. If the characteristics of a design have a useful function, a utility patent should be sought.
4. Plant Patents
The requirements for plant patents differ from those for utility patents. Only new varieties of plants which are asexually reproduced, i.e., propagated
by grafting, budding, cutting, layering, cloning, etc., are subjects for patenting.12 In place of utility, a plant must demonstrate distinctness13 in
order to receive patent protection. The application for a plant patent must also evidence novelty and nonobviousness. A plant is distinct when, considering the aggregate of-its characteristics, it differs from all other varieties of plants. The difference might refer to suitability to a
particular environment or special milling, grinding, or other qualities. A person who breeds a plant variety which has been asexually reproduced, and which is distinct, novel, and nonobvious may be granted a patent for such variety.
5. Certificates of Plant Variety Protection
Protection for new varieties of sexually reproduced plants is provided by the United States Department of Agriculture. The Department of Agriculture issues certificates of plant variety protection for sexually reproduced plants
which are distinct, uniform, and stable.14 A certificate of plant variety protection affords similar protection to a patent in that its owner may exclude others from producing, using, and selling the certified plant. A
certificate of plant variety protection lasts for 18 years.
A sexually reproduced plant demonstrates distinctness when one of its aggregate of characteristics displays an advantage or difference over all existing varieties. A new variety is distinct when it clearly differs by one
or more identifiable, morphological, physiological, or other characteristics from all other varieties of plants in the public domain.
Uniformity and stability are shown through the experimental results of production of the new variety over three generations. To be uniform, the new variety must show variations that are describable, predictable, and commercially acceptable. A new variety satisfies the stability test when it remains unchanged with regard to its essential and distinct characteristics when sexually reproduced.
6. Persons Entitled to Receive Patents
Only the original inventor is entitled to receive a patent for an invention.15 To qualify as an original inventor, one must conceive the new idea which forms the basis of the invention. The status as original inventor is not lost by adopting suggestions made by another during the course of
14




developing an invention. The threshold question is whether the invention or discovery is the product of the inventor's own ingenuity and skill.
When an original idea is developed by more than one inventor independently, only the one who developed the idea first is entitled to the patent. The time of formulation of the idea (referred to as conception) is controlling, as long as the inventor is reasonably diligent in reducing the invention to practice.'6 Conception of the invention is the mental formulation
of the invention in every detail, while reduction to practice refers to actual physical construction and testing of the invention that fulfills the contemplated utility. Therefore, an original inventor who is the first to conceive a patentable idea is entitled to a patent on the resulting invention even though another original inventor may reduce it to practice first. The
requirement is that the first to conceive the idea exercise reasonable diligence in reducing the invention to practice.'7 These rules differ for patents originating outside the United States.
If individuals act jointly, there may be more than one first and original inventor. In such a case, no single inventor may apply for a patent alone; all joint inventors must apply together. Joint invention is the product of collaboration of the inventive endeavors of two or more persons working toward the same goal. It is not necessary that the entire inventive concept occur at
once or that the joint inventors physically work together; the process may occur step-by-step. One is not considered a joint inventor who merely carries out instructions of an inventor, who makes suggestions to an inventor, or who contributes to minor features of an invention. "Joint inventorship" suggests
united efforts of more than one individual in the conception of the main idea in the creation of an invention or discovery.
7. Loss of Patent Rights
* Despite completion of the requirements f 'or proper subject matter and original inventorship, the right to receive a patent may be lost because of certain statutory bars or procedural safeguards. After an invention becomes public, the inventor must apply for a patent within one year, or the right of a patent is lost. An invention can become public through a written article which describes-the invention.18 Any public use of an- invention starts the one year period running. However, public research and experimentation before the
invention functions satisfactorily does not start the one year period. Experimental use is determined by the intent of the inventor and whether the inventor parts with dominion and control of the embodiments of the invention.
An inventor makes an invention public through attempts to exploit the invention connercially.'9
Although United States law grants inventors one year following public disclosure of an invention to file a patent application, this is generally not
the case in foreign countries. However, the filing of an application for a United States patent usually allows the inventor one year to file for foreign patents.
A first and original inventor may also lose the right to a patent by abandoning, suppressing, or concealing the invention.20 Loss of the right to receive a patent may be avoided by filing a patent application within a
reasonable time of completion of an invention. What is a reasonable time is decided in light of the facts of each case.
15




The purpose of the statutory bars is to require inventors to employ due diligence in asserting rights to patents. The goal of the patent system is public disclosure, and delays in disclosure hinder the process. Thus, even
where one has developed a useful, new, and nonobvious process, machine, manufacture, or composition of matter, the right to a patent monopoly may be lost where proper procedures are not followed in applying for a patent.
8. Mechanics and Procedures
After an inventor has developed a patentable invention, patentability must be proved to the Patent and Trademark Office. The application for a
patent consists of a petition, a specification of the invention with claims for a patent, drawings where necessary, an oath, and the filing fee.T--2 h petition is merely a requirement of the Pate-nt and Trademar Oice-that the applicant formally request consideration of the application. The
specification is a detailed description of the invention.22 Drawings are
included, when helpful, depending upon the particular subject matter.3 The
oath that is required is simply a declaration that the applicant believes himself or herself to be the original and first inventor.24 Filing of the
application becomes final upon receipt in the Patent and Trademark Office, and the entire application is held inconfidence until issuance of the patent.
The specification must fulfill the requirement for adequate disclosure. Disclosure is the consideration the public receives in return for the patent monopoly from the government. The specification must set forth and describe
(1) the invention, (2) the manner and process of making and using the invention (the "enablement" requirement), and (3) the most efficient manner of carrying out the invention that the inventor contemplates (the "best mode" requirement). The Patent Code states that the invention shall be set forth "in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains...to make and use... said invention."25 The conclusion of the specification must include one or more claims which particularly and distinctly describe the subject matter which qualifies for a patent.
The claim or claims define the invention for two purposes. 26 The first is to demonstrate application of the conditions of patentability: proper
subject matter, utility, novelty, nonobviousness, freedom from statutory bars, and adequate disclosure. The second purpose is for determining infringement. The claims are included in order to show that the invention is a patentable means of performing a function and not to recite the structure and how to construct or use the invention. Those are described by the specification. The claims are to be particular and distinct in order to facilitate the
determination of patentability and to provide appropriate warning to potential infringers.
Drawings should be included with the application if they 'facilitate either the specification or the claim(s).27 The Patent and Trademark Office has wide discretion over this requirement. Drawings might be required by the patent examiner during the review of the application. Models or specimens may also be required to exhibit more clearly the invention.28
The entire patent application is kept secret by the patent examiners until the patent is issued. No information concerning the application is
16




revealed without the approval of the applicant.29 Once the patent is issued, all papers relating to the case in the patent file are open to inspection by the general public.
9. Examination and Prosecution
Once application is made to the Patent and Trademark Office, the Application Division assigns the application to an examining group according to subject matter. The actual examination is conducted by an individual examiner within the particular group. The examiner studies the application to determine compliance with the statutes and rules. The examiner searches the prior art in the particular field in order to determine novelty and
nonobviousness. Following the study of the application and search of the prior art, the examiner notifies the applicant of the findings and reasons for those findings. The examiner may reject or object to any or all claims or make further requirements to the applicant regarding the application.30
The applicant may then reply to the examiner's findings and request reexamination. An applicant who responds within six months of the examiner's action to each ground of objection and/or rejection is entitled to a reexamination.31 The applicant may then amend, add, or drop claims; amend the specification; present evidence to support the application; or abandon the process. An interview with the examiner may be requested by the applicant to discuss the disposition of the application.
The examiner reexamines the application after the reply is received. The reexamination is made with reference to any additional information or material that is provided by the applicant. Notification of acceptance or adverse decision by the examiner is made to the applicant. The process of action and response may continue until the examiner indicates rejection is final. Rejection is final once a clear issue is developed between the examiner and the applicant. Activity following final action of the Patent and Trademark Office is limited to: (1) appeal or cancellation of rejected claims or
(2) compliance with all requirements and objections, or petition to the Commissioner of Patents for further consideration.
Amendment of the application is permitted after filing, but the introduction of new matter is prohibited. Departure from or addition to the original disclosure may be made only by filing a "continuation-in-part." The purpose of amendments is to clarify or complete information which was disclosed or suggested in the original application.
Appeal of final rejections may be made to the Board of Appeals of the Patent and Trademark Office.32 The Board of Appeals can affirm or reverse the examiner's action. If the Board affirms a rejection, it is permitted to rely on a different ground than the examiner. The jurisdiction of the Board of Appeals of the Patent and Trademark Office is limited to adverse decisions in rejecting claims; it has no jurisdiction to review allowed claims.
From an adverse decision of the Board of Appeals of the Patent and Trademark Office, a dissatisfied applicant may either appeal the decision to the United States Court of Appeals for the Federal Circuit33 or file a civil action-againstth Commissioner 3.f Patentsin the Uni ted States District Court for the District of Columbia. Appeals to the Cout-F-ppeals for-i-e
17




Federal Circuit are limited to the evidence that has been produced before the Patent and Trademark Office. 35 Civil action in the District Court, on the other hand, is de novo, and evidence may be admitted which had not been produced to the Patent and Trademark Office in the original examination of the patent appl ication.
After allowance of a patent application, the Patent and Trademark Office
mails the appropriate notice to the applicant. Upon payment of the issuing
fee, 36 the patent is granted, giving the owner the right to exclude all others TFrin making, using, or selling the invention throughout the United States for 17 years.
In addition, maintenance fees must be paid during the life of the patent for United States and foreign patents in order to keep the patent in current status. The case is withdrawn from the Patent and Trademark Office after issuance of the patent except under limited circumstances. 3'
B. Trade Secrets
Trade secrets are extremely important in the commercial world. They
represent a source of competitive advantage, which in turn has the potential for reaping profits. The concept of secrecy is contrary to the basic aims of public universities to promote the open communication of thought and ideas. There may be times, however, where university faculty members are required to maintain trade secrets which have been revealed to them during the course of a research project. Those situations are not necessarily repugnant to the
public university purpose, since further knowledge can be devel oped f rom
existing trade secrets. A basic understanding of the concepts behind trade secret law helps foster smooth relations between universities and industry.
Every inventor enjoys the common law right to protect the value of an invention by keeping it secret. That is, apart from the authority of any
statute or written law, a person can maintain legal protection of ideas or innovations through secrecy. Trade secret law is enforced by the courts of the various states, and many states have codified their common law of trade secrets into statutes. In states with trade secret statutes, those laws
govern the use of trade secrets, while policies in states without such statutes derive solely from court decisions.
In general, equitable principles of law protect the owners of ideas which are embodied in trade secrets from the appropriation of those ideas by unfair means. The determination of unfair means is made by reference to generally accepted commercial standards. The policy behind trade secret law is twofold:
(1) to reward invention with a degree of control by the inventors and (2) to promote the commercial morality of good faith business dealings. Trade secret
law grants a person the right to exploit ideas. Thus, there may be an
economic advantage obtained by not divulging trade secrets.
There is no universal formula to be used to determine what kind of information can be protected by trade secret laws, although some states have attempted to standardize the determination through the enactment of trade secret laws. Unlike the strict criteria for obtaining patent protection, a trade secret need only be unique and kept secret to qualify for protection.1 This includes almost any information which has the potential for gaining a
18




commercial advantage where reasonable efforts are made to maintain secrecy.2 The know-how or information that is the subject of a trade secret should:
(1) be used in a business, (2) provide economic value based on the fact that others in similar businesses do not know or use the information, and 3(3) be kept secret by means which are reasonable under the circumstances. Any
formula, pattern, design, device, or compilation of information used in a business that allows the owner to derive potential or actual advantage over competition may be maintained by trade secret policies.
A trade secret, as well as any royalties for its use, can exist in perpetuity. There is no established term for trade secret protection similar to that in patent law. On the other hand, a trade secret can be appropriated legally without consent of the owner when it is discovered by fair means. 5 Similarly, a trade secret ceases to exist when it enters the public domain.5 The independent discovery of trade secret information entitles another to legitimate use of information which had been under the exclusive control of a trade secret owner.6 One may legally obtain trade secret information through the reverse engineering of a product which is manufactured by a secret formula.7 Any publication which enables a person who is competent in the relevant field of expertise to duplicate trade secret information destroys trade secret protection.8 Trade secret law only limits competition by
permitting the secrecy of inventions and know-how; no rights are created inthe information itself (as in patent law) to restrict the discovery and use by fair commercial means.
At the heart of the administration of trade secret law are commercial morality and good faith business practices.9 Trade secret law permits members
of the business community to prohibit persons in confidential relationships (be they employees, partners, joint venturers, or contracting parties) from disclosing commercially valuable information. At the same time, one cannot
claim trade secret protection for information which is generally known in a particular field. Furthermore, trade secret law does not guard against the appropriation of information for which no reasonable efforts have been made to keep the information secret.10 While the law provides redress for the
misappropriation of trade secrets, good business practices must be employed by the trade secret owner in claiming protection only for proper information and in taking adequate precautions to maintain secrecy.
Liability for the misappropriation of trade secrets is based on the breach of a confidential relationship. After the trade secret owner shows the existence and ownership of the trade secret, it must be proved that (1) trade secret information was disclosed in confidence, (2) the trade secret information was used or revealed in violation of that confidence, and
(3) injury was caused thereby."~
A confidential relationship may arise in a .ny number of situations, 12 e.g., employment, partnership, joint venture, or contract. The duty to
maintain trade secrets may be evidenced by an express or impl~ld contract or simply by the nature of the relationship between the parties. The nature
and degree of trust involved, as well as the extent of precautions taken to keep the 'information secret, are important factors in demonstrating a duty to maintain trade secret information, especially where there is no specific agreement between the parties.
19




The injury resulting from trade secret misappropriation is shown through lost profits. The amount can be measured by evidence of expected sales or by the actual profits earned by the wrongdoer. Remedies for the misappropriation of trade secrets consist of an award of damages, the imposition of
injunctions, or the rendering of an accounting. In other words, the trade
secret owner may be awarded simply an amount of money that is determined to
compensate the loss; the guilty party may be ordered to stop using the information; or the wrongdoer may be required to account for all profits made
as a result of using the trade secret.14 Where conduct is especially
egregious, punitive damages may be available in addition to the other forms of recovery.j5 Any combination of remedies may also be granted in order to fully redress the wrong and compensate the trade secret owner.
C. Copyrights
1. Introduction
Copyright law comes into play whenever a work is created in a tangible form. The rights created through copyright belong to the author unless they are assigned to another party. A copyright exists without any formal
application or registration, but certain rights are secured when the work is registered with the Copyright Office. Unless otherwise agreed copyright
belongs to the author of a work whether or not the work arose as part of a funded project. An author can contract away rights, and often faculty members sign a copyright agreement with their university for this purpose. Generally, private sponsors do not take copyrights as part of the consideration in cooperative agreements. However, a basic understanding of copyright law is quite useful in a profession whose mainstay is the publication of research results.
Authors traditionally have been entitled to the exclusive use of their writings and other creations by copyright law. United States copyright law was most recently codified in the Copyright Act of 1976.' The Copyright Act is intended to promote the constitutionally expressed values of furthering intellectual progress and free dissemination of knowledge. The goal of copyright law is to strike a proper balance between authors' rights to control
the use of their creations and the public's right to the broadest possible access to intellectual development.
Any rights protected by the Copyright Act of 1976 are governed exclusively by federal law and enforced by federal courts.2 Any state laws
which provide rights equivalent to those in the federal act are preempted.3 State law may govern rights that are not contained in the federal act as well as extraneous rights which may involve copyrights, e.g., contractual or ownership rights.4 Those state controlled rights--such as those within breach of contract, defamation, or deceptive trade concepts--are enforceable in the
courts of the various states. Likewise, works which are not "fixed in any tangible medium of expression"--such as unfilmed choreography or untaped
speeches--are outside the scope of the federal act.
2. Subject Matter
The Copyright Act of 1976 applies to all original works of authorship fixed in any tangible medium of expression. Works of authorship include
20




literary works (which include computer data bases and computer programs), musical works, dramatic works, pantomime and choreographic works, pictorial,
graphic and sculptural works, motion pictures and other audio-visual works, and sound recordings.5 Copyright law protects expression and not ideas,
processes, or discoveries.6 In other words, works of authorship are embodied in copyright only as to the tangible form of the works, not to any utility or innovation contained in the work.
Only original works of authorship are covered.7 Originality is evidence of independent creation, the fruits of one's own skill, labor, and judgment.
An original work need not be novel; new ideas are not a prerequisite to copyright protection, but the expression must be recognizable as the author's own. 8
The Copyright Act requires that the work be fixed in a tangible medium of expression from which it can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a machine or device. Fixation suggests permanence and stability to permit perception, reproduction, or communication. 10 As noted above, protection for works of authorship which are not fixed in a tangible form may still be found in state copyright law.
The Copyright Act also protects works which consist of the collection of
preexisting works or data.1? The originality requirement of the resulting compilation is satisfied where the selection, coordination, and arrangement result from the author's own skill, labor, and judgement. The final product as a whole represents an original work of authorship.12 This category of
copyrightable material is referred to as "compilations" and includes collective works, such as periodicals, anthologies, and encyclopediae. 13
Derivative works represent another category of copyrightable works which is based on preexisting materials. 14 Translations, musicals, arrangements, dramatizations, fictionalizations, motion picture versions, sound recordings, art reproductions, abridgements, and condensations are all examples of
derivative works. 15 Any recasting, transformation, or adaptation is a derivative work. Like a compilation, a derivative work must constitute an original work of authorship in order to be subject to copyright protection. Unlike compilations, however, a derivative work must be based upon copyrightable, preexisting material. (Where a work is based on preexisting, copyrightable materials, authorization must be obtained for such use.)
3. Ownership
Copyright protection arises as soon as an original work of authorship is created. 16 Creation occurs when the work is fixed in a tangible medium, e.g., when laboratory notes are written in a notebook or recorded on magnetic tape. Generally, ownership of copyright attaches to the author.17 However, in the case of a work prepared by an employee within the scope of his or her employment, copyright ownership vests in the employer, unless there is an exclusive, written agreement to the contrary.18 The author of a specially
ordered or commissioned work, i.e., an independent contractor rather than an employee, is considered the copyright owner unless there is an express, written agreement otherwise.j9 Copyright initially vests spontaneously in the author of a work upon creation, except where the work is made in the scope of one's employment.
21




Individual contributions to newspapers, periodicals, anthologies, and the like are each entitled to copyright protection distinct from the whole work.20 Absent an express transfer, the owner of a copyright in a collection is presumed to have acquired only the right to use the individual contributions as part of that collective work and any revisions.21 Copyright in a
collective work or compilation applies to the independent, original effort in collecting, selecting, and organizing the work to produce an original work.
Works prepared by two or more people with the intent that their efforts will merge into one inseparable and independent production become co-owners of the copyright in that work.22 A joint work may result either from the
collaboration of two or more authors or from contributions of various authors, as long as their separate labors are aimed at a common purpose.
Copyright protects a particular expression, not the material object in which that expression is fixed.23 Thus, an author who sells a book, cannot prevent the buyer from reselling the book.2+ On the other hand, by selling the book, the author does not sell the copyright. The author's authorization is still necessary for anyone to copy the work. A specific, written
instrument is required to sell or otherwise transfer rights of copyright ownership. 25
4. Exclusive Rights of Copyright
Ownership of copyright entitles one to control the reproduction,
adaptation, publication, performance, or display of the copyrighted materials. While these rights have a broad scope, they are subject to complex and detailed limitations and exceptions.
The exclusive right of reproduction includes the right to copy or record. The owner of a copyright has the exclusive right to duplicate, transcribe, imitate, or simulate the underlying work.2 Reproduction is the fixation of a
work in tangible form which is sufficiently stable to permit perception or other further communication.
A copyright owner also has the exclusive right to prepare derivative works.2 (See discussion of derivative works above.) This is the adaptation right, which is the incorporation of a copyrighted work into another form.28 Adaptation does not require fixation, but may be accomplished without the embodiment in a tangible form. Thus, the production of a copyrighted work as a ballet, pantomime, or improvised performance may constitute an adaptation.
Publication, or the right to distribute, also is encompassed within a copyright owner's exclusive rights. 29 This right is limited to public
distribution, which includes selling, renting, leasing, or lending. A copyright owner maintains no rights under the copyright act to particular copies once ownership is transferred.
Copyright owners enjoy the exclusive right to perform30 or display3' their works publicly.32 This includes the performance or display at a place open to the public or where a substantial number of persons other than one's family or social guests are gathered. Public performance or display is
extended to the transmission or communication by any means, either in one place or where people may view the work in separate places or at separate times.3 3 The public display right extends to originals as well as copies of ori gi nal s.
22




5. Notice, Deposit, and Registration
Whenever a copyrighted work is published, it must bear notice of
copyright in order to receive protection under the Copyright Act.34 Notice
consists of: (1) the symbol c (the letter c in a circle), the word "copyright", or the abbreviation "copr.;" (2) the year the work was first published; and (3) the name of the copyright owner.35 The positioning of the notice must be in such a manner and location to give reasonable notice of the copyright claim.36 Where notice has been omitted and not corrected, a published work enters the public domain and may be used by anyone.
Copyright in individual contributions to collective works is distinct from that in the whole work.37 Rights in the separate contributions to a
periodical, anthology, encyclopedia, or like work rest in each individual author, but as long as the whole work bears a proper copyright notice, separate notice for each work is unnecessary.38 The better practice, however,
is to include separate notice of copyright on an individual contribution to a collective work.
Omission of copyright notice does not invalidate protection under the Copyright Act if: (1) the omission only occurred on a small number of copies;
(2) registration of copyright has been made within five years of publication, and a reasonable effort has been made to add notice; or (3) notice was omitted
in violation of an express, written agreement that nice was a condition of the copyright owner s authorization to publicly distribute the work.39 Innocent infringers who have been misled by the omission of copyright notice incur no liability until they have received actual notice of copyright. 40
The owner of a copyright in a work which is published in the United
States is required to deposit two complete copies of the best edition with the Copyright Office for use by the Library of Congress."' The deposit should be accomplished within three months after publication.42 If the Register of
Copyrights makes a written demand for the required deposit, and the deposit is
not made within three months after the demand, the copyright owner must pay certain fines. 43 These deposit requirements are not, however, conditions for copyright protection. 4
The registration of copyrighted materials is not mandatory under the copyright act and is not a condition of copyright protection.s5 However,
registration must be effected prior to suing for infringement, and registration is a prerequisite to certain remedies under the act.46 Two
copies of a work published in the United States must accompany registration.47 Unpublished works and those first published abroad only need one copy.48 For
contributions to collective works, the deposit of the collective work for registration is sufficient.49 A special provision in the Act allows a single registration for a series of works by one author which are to be included in a periodical within a twelve month period.50 Registration of any work is
accomplished by the deposit of the specified number of copies in the Copyright Office together with the appropriate application and fee. 51
After the Register of Copyrights determines that the material deposited constitutes copyrightable subject matter under the Copyright Act, the copyright claim is registered, and a certificate is issued to the claimant.52 The registration and certificate provide a record of the copyright and the
23




information that was included in the application. The certificate of
registration constitutes a presumption in any judicial proceeding that the copyright and facts stated in the certificate are true, as long as registration is effected within five years of first publication of the work.53
No suit for copyright infringement may be instituted until registration of the copyright has been made.A4 If registration has been refused after
proper application, an infringement action may nevertheless be pursued if notice of suit is served on the Register of Copyrights, allowing the Register of Copyrights to become a party to the action55 Statutory damages and
attorneys' fees cannot be awarded: (1) for infringement of copyright in an unpublished work before the effective date of registration;56 or (2) for
infringement of copyright after the first publication of the work and before the effective date of registration unless registration is made within three months after the first publication.
Registration of copyright, while not mandatory, is the prudent course of action for all but the most trivial works of authorship. The procedure is not complicated or overly burdensome, and registration could help to avoid significant problems in the future. Also, registration of copyright provides a lasting and reliable record of a publication or other work.
6. Infringement
Infringement of copyright is defined as the violation of any of the exclusive rights of the copyright owner.58 However, the exclusive rights--the
right to reproduce, to adapt, to publish, to display, and to perform--are subject to limitations, exceptions, and exclusions (illustrated below) that may excuse an apparent act of infringement. The right to sue for copyright
infringement belongs to the owner of an exclusive right under a copyright.59
Any documents of transfer must be recorded in the Copyright Office,60 and the copyright must be registered before an infringement suit may be heard in
court. 61 One must prove ownership of the copyright, copying or other infringing act of the copyrighted work, and damages in order to prevail in a legal action for copyright infringement.62
The importance of prompt copyright registration becomes apparent when suing for infringement. As noted above, proper introduction into',evidence of the certificate of registration raises a presumption that the copyright is valid, and all the information contained in it is true.63 Therefore, proof
must be brought forward by the accused infringer to rebut the inference that the plaintiff is the copyright owner, that the work is original and copyrightable, that the registration and deposit requirements have been
fulfilled, and that the copyright is valid. Prompt registration of copyright is satisfied where the certificate of registration is issued before or within five years after the first publication of the work.64 Thus, by registering a copyright early, one element of proof in a subsequent infringement action is already presumptively established.
Copying is proved by showing that the defendant had access to the copyrighted material and that the alleged infringing material is substantially similar to the copyrighted work.65 Access can be shown by proving actual
viewing, the reasonable opportunity to see or hear the copyrighted work, or that the alleged infringing work is so similar as to preclude the conclusion of independent creation. 66
24




The crucial issue in an infringement case is whether the alleged infringing work is substantially similar. Where there has been a verbatim
copying, infringement is clear; where there is insubstantial similarity,
independent creation may be apparent. However, an infinite number of cases falls between the two extremes. Substantial similarity is present where an ordinary observer would recognize the copy as having been taken or appropriated from the copyrighted work.67 In deciding substantial similarity, the overall impression or appearance of the work is studied.68 Both the
quantity and quality of the copied material must be examined against the totality of the copyrighted work. Where the amount of copying is substantial in relation to the copyrighted work as a whole, a finding of infringement is likely. Also, where the nature of the copy is material to the copyrighted work, a conclusion of infringement is likely. Infringement exists where the manner of expression of a copyrighted work is materially or substantially copied.
An infringer of copyright is liable to the copyright owner for any actual damages and for any additional profits of the infringer.69 The copyright
owner must prove damages as well as profits of the infringer that are not taken into account by the computation of actual damages.70 The copyright owner has the option of choosing statutory damages where the copyright was registered before the infringement.71 In that case, the court has the
discretion to award between $250 and $10,000 to the copyright owner.72 Where the infringement was committed willfully, the court may award up to $50,000.73 The court may reduce the award to $100 where the infringer was not aware and had no reason to believe that his or her acts constituted copyright infringement.74 The award of damages is designed to compensate the wronged party and to prevent any unfair benefit to the infringer.
The court also has the discretion to award costs and attorneys' fees.75 However, as with statutory damages, costs and attorneys' fees are only
available to the copyright owner where the copyright was registered prior to the infringement.76 The court's discretion also includes the power to grant injunctions and authorizes the impounding and destruction77 of infringing articles to prevent unauthorized uses of materials. 78
7. Limitations on Exclusive Rights
There are many and detailed exceptions to the exclusive rights enjoyed by copyright owners. That is, there are instances where the use of copyrighted material is permitted without authorization from the copyright owner. The
broadest limitation on copyright is the fair use doctrine.79 Other exceptions involve library and archival uses of copy'ghte-d works and certain educational uses. 80
No prescribed formula exists to determine whether a reproduction of a copyrighted work is a fair use. Congress contemplated that fair use would
include instances such as: quotes of experts in review or criticism for illustration or comment; quotes of short passages in scholarly or technical works for illustration or clarification of the author's observations; and
summaries of addresses or articles with brief quotes in news reports.8' Four factors are to be considered to determine whether uses for purposes such as criticism, comment, news reporting, teaching, scholarship, or research are fair uses under the Copyright Act: (1) the purpose and character of the use,
25




(2) the nature of the copyrighted work, (3) the amount and substantiality of the portion used, and (4) the effect of the use on the potential market or ,value of the copyrighted work. 82 There is no generally applicable definition, and each case must be decided on its own facts.
Uses for noncommercial or nonprofit educational purposes weigh -on the side of fair use. 83This would include literary or cinematic reviews of copyrighted works. The commercial or educational nature is 11~l but one factor to be considered in making the fair use determination. Protected
commercial speech and other communications protected by the First Amendment to
the United States Constitution may weigh in favor of a determination of fair use.
Certain copyrighted works tend to encourage permissible uses, and greater
latitude is given in copying such works. For example, the utility of form
books relies on their being copied; they are not generally read as literature.
The determination of the amount and substantiality of the portion used in
relation to the copyrighted work as a whole bears heavily on the fair use decision. As the amount and/or substantiality of the portion used increases, the likelihood of a positive fair use determination decreases. 85This is a quantitative determination as well as a qualitative determination. A very
small portion of a work indeed may be substantial when compared to the subject matter of the copyrighted work as a whole.
The effect of a use on the value of a work or its6 potential market pertains directly to the damages of the copyright owner.3 Where the work
tends to decrease the demand for the copyrighted work or serve as a substitute, the use looks more like infringement than fair use. 87 The effect on the market may go a long way toward proving damages, which is the third item necessary for an infringement claim.
The fair use doctrine is an equitable rule of reason that has been developed by the courts. 88 The Copyright Act offers only the factors to be considered in making the fair use determination. There is no statutory
formula that may be used to decide whether a particular use of copyrighted work is permissible and not an infringement.
There are certain circumstances under which libraries, archives, and their employees may make a reproduction of a copyrighted work.8 Thec
must be without any purpose of direct or indirect commercial advantage, 9?and the copy must bear a proper copyright notice.91 Only libraries open to the
public or to persons performing research in a specialized field are eligible for this exception.92 This exception applies only to single, isolated and
unrelated instances under certain circumstances: (1) solely for purposes of preservation and security; 93 (2) solely for the purpose of replacement of damaged, deteriorating, lost, or stolen works if reasonable efforts are made 9 to determine that an unused replacement cannot be obtained at a fair price;9 and (3) on request, a copy of no more than one article or other contribution to a collection or small part of another work may be made if the copy becomes the property of the user, and the library has no notice that thl copy would be used other than for private study, scholarship, or research. Permissip
library or archive copying is only allowed in isolated, unrelated instances.
26




Instructors or pupils are exempt from the exclusive rights of display or performance in limited instances.97 In the course of face-to-face teaching
activities in a non-profit educational institution, the display or performance of copyrighted materials may be carried out in a classroom or similar place devoted to instruction without infringing copyright.98 The exemption for
educational display or performance applies only to teaching situations, not to performances or displays for the general public.99
8. Duration and Renewal
Copyright in a work created on or after January 1, 1978 (the effective date of the Copyright Act of 1976) endures for the life of the author plus fifty years. 100 The copyright term for a joint work lasts for the lifetime of the last surviving author plus fifty years. 101 In the case of an anonymous work, a pseudonymous work, or a work made for hire, the copyright endures for the shorter of seventy-five years from the date of publication or one hundred years from creation of the work.'02 The Copyright Act of 1976 also extends
copyright terms which were created under the old Copyright Act.
Under the Copyright Act of 1909, a copyright endured for twenty-eight years, at which time the copyright owner could renew the copyright for one more twenty-eight year period. Copyrights which are in their first term on' January 1, 1978 may still renew their copyright, but the renewal term is for forty-seven years, making the total term seventy-five years.'03 The terms of
those copyrights which have been renewed before January 1, 1978 are
automatically extended to endure for a term of seventy-five years from the date the copyright was originally secured. 104
D. Record-keeping
The record-keeping procedure outlined below is designed to provide an accurate and detailed record that can be established properly in court. It
represents an ideal that, if followed, will minimize problems which may be encountered if a controversy develops concerning patent ownership. Good
record-keeping practices are essential for securing and maintaining patent rights. The creation and preservation of clear and accurate laboratory notes allow a potential patent owner to avoid many problems which may arise in obtaining and maintaining a patent. This holds true whether the patent owner
be an individual, a university, or a private corporation. The most crucial
aspects of record-keeping are showing that the notes and diagrams are those of
the inventor and that they were recorded at the time the research was performed. The maintenance of a record-keeping system should be an integral part of good laboratory procedures.
Whether a state university plans to pursue patent protection on its own or to utilize the assistance of private financing, the process of securing patent protection or other protection of rights to intellectual property is facilitated by the maintenance of accurate and detailed research records. Good records also prove useful for future research and publications. To the
individual researcher, the maintenance of legally sufficient notebooks may seem unduly burdensome, but once an efficient record-keeping system is established, the process is relatively simple to maintain. The following is
offered as a suggestion for the systematic recordation and preservation of research information. It can be modified to fit the needs of the particular institution.
27




1. Use bound notebooks.
Bound notebooks provide security for research notes, making them superior to looseleaf or spiral bound notebooks. Each book should be titled and
numbered to aid in the security of research information. A formal system of recording and maintaining research information provides greater assurance that proof offered in support of a patent application will not be challenged.
2. Number each page consecutively.
In the interest of proving the elements of the research record with certainty, pages should be numbered consecutively. If both sides of the page
are used, each side should be numbered, and this practice should continue throughout the book.
3. Handwrite all entries in ink.
M aking notebook entries in the usual script of the researcher allows the notebook entries to be identified easily and provides a permanent record. Hand-printed notes should only be utilized if that is the researcher's usual method of writing. Typewritten notes may present problems of proof even though they are complete and accurate.
4. Write on the entire page.
To avoid a challenge that the research record was developed or augmented at a later time, the researcher should leave no room for extraneous or additional entries for any particular day of notes. If there are any blank spaces, line through them.
5. Date each entry on the line immediately below the last line of that entry.
This is to insure that there is no question as to which entry belongs to which date. Do not skip any space for an idle day. Either start the next entry immediately below the last one, or make an entry stating that no work was done on that particular day.
6. Sign and date.each page or entry.
Each investigator should sign notebook entries. It is often helpful for support personnel to maintain separate notebooks from the researchers.
7. Affix all attachments permanently.
Attachments should be affixed permanently to notebook pages; staples and paper clips- are more vulnerable to challenge. Material that cannot be
incorporated into the notebook should be keyed or referenced clearly to an entry. Unincorporated material might consist of computer printouts, oversized diagrams, or models.
8. Cross out errors with a single line.
Mistaken entries should remain readable. Rather than obliterate entries or erase, erroneous entries should be lined through and initialed. Pages
should not be torn out or defaced other than to line out errors. The goal of
28,




maintaining a complete notebook record is to provide an accurate account of what occurred in the laboratory.
9. Corroborate notebook entries.
It is helpful in proving a research record for a technically knowledgeable person to read and corroborate notebook entries periodically. This person
should be one who understands the subject matter of the investigation and, preferably, knows the investigator(s) in the laboratory. Below the last entry the corroborative witness reads, it should be indicated that the material was understood. The corroborator should then sign and date the page. The
corroborative witness should not be a co-investigator. Such witnessing should be frequent. The witnessing is especially important immediately after a
researcher feels patentable subject matter or a patentable idea has been conceived.
10. Keep a separate notebook for each project.
Keeping a separate set of records for each research project provides a much clearer and more definite record, which is especially valuable when patentable subject matter results.
11. Keep all research notebooks in a secure location.
The location of research notebooks is important for purposes of security. Often, notebooks are kept in a central location and checked in and out by the researchers. This procedure adds reliability to the record and minimizes the chance of tampering or altering notebook entries after research is performed. Keeping research notebooks in a secure location helps insure that notebooks are used only for research purposes.
The maintenance of accurate research notebooks is important after the research is completed for purposes of securing patent rights or other legal protection of intellectual property. Good records become especially important immediately after patentable inventions are recognized, and a specific notebook entry should describe the invention in detail. It is helpful to have
such entries corroborated as soon as possible following the discovery. Permanent and accurate research notebooks help to avoid unnecessary and costly
delays in obtaining and maintaining patent protection and in providing reference for publication and related investigations. If the researcher sets
aside time for making notebook entries, a routine develops that provides an appropriate record. Also, by making prior arrangements with colleagues to serve as corroborators, the record is properly witnessed.
VI. Financing
A. Introduction
The financing of public university research takes many forms. State
appropriations are typically supplemented with funds from various sources, both governmental and private, in order for public universities to fulfill their missions. An array of grants and aid programs supports many phases of university research. The National Science Foundation, the United States Department of Agriculture, and the Environmental Protection Agency are major
29




agencies providing monetary support for scientific inquiry. In addition to
federal and state government support, many nonprofit foundations make funds available for public university research. In the private sector, numerous
corporations aid university research both through grants and more involved relationships. As a rule, the private benefactors expect consideration for their investment either in the form of tax benefits or potential ownership of rights to intellectual property or both. The difficulty in obtaining adequate financial support for university research necessitates the use of novel legal approaches for support.
Outside funding provided for university research in a variety of forms.
The particular nature of the funding arrangement can be classified by the de gree of control the sponsor exerts over the conduct of the research. An outright gift for research provides the greatest freedom for the recipient in that there is no specific objective which must be obtained. A grant usually contains stated objectives, and formal reports on the progress of the research are generally required by the sponsor. A research contract is often employed
where the funding agency--either governmental or industrial --wishes to fund and achieve specific, defined objectives. Outside funding also includes
fellowships and scholarships, where money is provided to support the education
of students or scholars in a particular field of research. The purpose of
this section is to highlight issues and considerations involved in some of the more innovative forms of private financing.
Major incentives to private sponsors of university research are provided by the Internal Revenue Code. The capital gains provisions offer the
opportunity for favorable disposition of rights to intellectual property at considerable savings. Tax deductions and credits also provide advantages to the industrial entity. Congress has recognized the importance of research and
experimentation in the physical and biological sciences and has provided tax benefits to encourage private investments in scientific endeavors.
B. Tax Considerations
1. TaxTreatment of Transfers of Patents
Section 1235 of the Internal Revenue Code permits individual inventors and
certain individual investors to receive long-term capital gains tax treatment upon the transfer of patents to others.' The general requirements for
long-term capital gains tax treatment are relaxed by section 1235 to provide incentive to individuals to produce inventions.2 The use of section 1235 in
the university setting is limited by the usual practice of researchers assigning their patent rights to the university. A researcher cannot receive capital gains treatment on payments for a patent when it is transferred to the employer. A corporate sponsor cannot utilize section 1235, because only individuals are eligible for section 1235 treatment. Any sponsors of
university research which are partnerships (and therefore able to utilize section 1235, since the members are taxed individually) would have difficulty employing this favorable tax section, because an investor can only qualify by receiving an interest in the patent directly from the creator. It is still
possible, however, to devise a scheme whereby the sponsor could acquire an interest in patents directly from the researcher in order to utilize section 1235 of the Internal Revenue Code. This scenario would involve revision in the patent policies of some state universities and land-grant colleges.
30




Those eligible to receive the benefits of section 1235 of the Internal Revenue Code are called holders. A holder is either the individual who created the patented article3 or an individual who has acquired an interest in
the patent before its reduction to practice. The employer of the creator and the members of the creator's family (other than a brother or sister) cannot qualify as holders.5
As long as all substantial rights in a patent are transferred, the transaction qualifies for long-term capital gains treatment under section 1235 of the Internal Revenue Code. "All substantial rights to a patent" means all rights of value at the time of the transfer. 6 All substantial rights to a patent are generally the rights to make, use, and sell the patented invention. Other rights considered to be substantial include:
- the right to make, use, and sell the patented invention in all
trades or industries;
- the right to make, use, and sell the patented invention within the
entire country of issuance; and
- the right to terminate the transfer agreement, 7
These rights are not exclusive, and the determination that a transfer of a
patent is of all substantial rights is made according to the circumstances of each transfer. A transfer of an undivided interest of all substantial rights
also leads to capital gains tax treatment as long ag the same fractional share of each and every substantial right is transferred.
Taxpayers who fail to qualify under section 1235 of the Internal Revenue Code may be able to utilize sections 1221 and 1231 of the Code to receive long-term capital gains tax treatment on patent transfers. As for section 1235, a taxpayer must transfer all st~stantial rights to a patent in order to qualify for capital gains treatment. In addition, it must be shown that the
taxpayer was not in the business of inventing or employed for the purpose of inventing.10 For those in the business of inventing, the transfers are taxed as ordinary income from business sales. Finally, the taxpayer must hold the patent for more than one year before long-term capital gains tax treatment may be claimed on the sale or exchange of the patent. 11
2. Tax Deduction For Research and Experiment Expenditures
Tax deductions and credits make university research attractive for private investments. Deductions allow a taxpayer to subtract amounts from gross income in computing taxable income; tax credits provide a reduction of a taxpayer's actual tax bill as computed after taking deductions into account. University/industry cooperative agreements should be negotiated with the benefits of tax deductions and credits in mind.
Section 174 of the Internal Revenue Code allows taxpayers to deduct expenditures for research and experimentation which are incurred in connection with a trade or business. Deductible expenses include costs for experimental
and laboratory work, particularly costs "incident to the development of an experimental or pilot model, a plant process, a product, a formula, an
invention, or similar property, and the improvement" of such property which
31




already exists. 12 The costs of obtaining a patent, including attorneys' fees, which are expended in perfecting a patent application, qualify for the section
174 deduction. 13 Taxpayers may also deduct amounts paid for research and experimentation -performed by another on behal f of the taxpayer. 14Z
Ordinary testing and inspection of materials and products of the taxpayer's trade or business are excluded from section 174 of the Internal Revenue Code. 15 Section 174 may not be used to deduct the cost of acquiring or
improving land or depreciable, property that is to be used in connection with research and experimentation.1 The research and experimentation deduction is
likewise inapplicable to the costs of acquiring another's patent, model, production, or process. 17
The value of section 174 of the Internal Revenue Code is enhanced because the deduction is subject to fewer limitations than ordinary business deductions. As long as the research and experimentation for which deductions are claimed are being performed in connection with the activity for which the
business operates, the taxpayer may deduct the expenses under section 174 of the Internal Revenue Code.'8 For university research projects a sponsor not only may be able to deduct payments made for actual research but also payments
for research equipment or construction of research facilities as long as the university acquires title to the property. 19
3. Tax Credit for Increase in Research and Experimental Expenses
Congress included section 44F in the Internal Revenue Code in order to induce industry to invest more in research and experimentation. Taxpayers are allowed a 25 percent tax credit for increasing research expenses in any taxable year. The credit is computed by taking 25 percent of the amount by which research expenses in the taxable year exceed the average research
expenses over the past three years. Research expenses consist of wages and payments for supplies for experimental and laboratory research.2 Research expenses also consist of 65 percent of amounts paid by taxpayer to anyone 2 other than the taxpayer's employee for the performance of qualified research.1 Unlike section 174, the research credit only applies to expenses incurred "in carrying on" the taxpayer's trade or business. This is a stricter requirement than the "in connection with" test of section 174 of the Internal Revenue Code.
Section 44F of the Internal Revenue Code also entitles crorations to include in the computation of their credit 65 percent of payments mad to colleges, universities, scientific research organizations, and research
foundations for basic research.22 In order to qualify, the payments by the corporation must be for basic research (original investigation without a specific commercial objective) and made to a qualified organization. 2
4. Tax Deduction for Contributions of Scientific Equipment
The Economic Recovery Tax Act of 1981 created an incentive for manufacturers of scientific equipment to contribute new equipment to educational institutions.24 The amount allowed as a deduction is more! than that for other contributions of ordinary income property.2 To be eligible for the deduction, the property must be donated to an institution of higher learning26 and used by the institution for research purposes.27 This deduction
32




is designed to encourage manufacturers to donate state-of-the-art equipment to the Nation's' universities.
1.There aretseveral requirements for contributions of research equipment to
qualify for the deduction:
- the property must be tangible personal property which would be included in the donor's inventory or held for sale in the donor's ordinary course of busi ness; Z
- the equipment must be constructed by the donor 29_ the donor must adhere to certain qualifications of the Internal Revenue Code in order for the equipment to be considered "constructed by the donor;" 30
-the contribution must be made by the donor within two years after the property is substantially completed; 31
-substantially all of the recipient's use of the property must be for research and experimentation; 32
- the equipment must be used in the United States for research and experimentation in the physical and biological sciences;
- the college or university receiving the property must be the original user of the property; 34f
- the donee must be an educational organization which normally maintains a regular faculty and curriculum and has a regularly enrolled body of students attendance; and 35
- the donor must obtain from the donee institution a written statement representing -- (1) that substantially all of the use of the equipment will be, for research or experimentation or research training in the physical or
biological sciences and (2) that the property 3 ,ill not be transferred in exchange for money, other property, or services.
C. Research and Development Limited Partnerships
The research and development limited partnership has been used to finance the development of patentable inventions and other discoveries. Such limited
partnerships typically are designed to provide capital for the research necessary to develop a marketable product and to arrange manufacturing and marketing activities and outlets. Often, an inventor or promoter transfers rights in an invention or discovery to a limited partnership in exchange for an interest as a general partner. Investors contribute capital in exchange for
interests as limited partners, and the limited partnership is established to develop, manufacture, and market the invention or discovery.
In a limited partnership, the general partners control all decision making and management. The general partners are also completely liable for all obligations and liabilities of the partnership. The liability of the
limited partners is limited to the amount of their individual contributions. The role of limited partners is essentially passive; they do not participate in the control or management of the limited partnership's business activities.




After the partnership is formed, arrangements are often made with other organizations--e.g., private research organizations or universities--to
conduct further research, experimentation, and development to produce a marketable product. Once the research is completed, the limited partnership generally transfers the product or patent rights to another entity for manufacture and marketing. Research and development limited partnerships
often carry out the research, manufacture, and marketing through contracts with other firms.
Under the present tax structure, limited partnership is a preferred organizational device for research and development activities. Al though any form of business organization can be utilized, investors and inventors select the limited partnership for several reasons. The potential for tax advantages is greater in the limited partnership than other business forms, e.g. corporation, trust, general partnership, sole proprietorship.
The limited partnership arrangement allows the partners, both limited and general, to individually utilize various tax deductions and credits. A
corporation must deduct losses and appropriate expenses at the corporate level; the shareholders may not take advantage of such benefits individually. Corporations of less than 36 sharehol ders, designated SubchapterS Corporations, may utilize tax benefits like a partnership, but the limited number of investors restricts the amount of capital that can be raised. A
general partnership can utilize the Internal Revenue Code provisions like the
limited partnership, but the unlimited liability of each of the partners discourages its use for research and development activities.
A significant advantage of the limited partnership (as well as general partnerships and Subchapter S Corporations) over the corporate form of business is that income is earned by each of the partners and taxed only to them. In the corporation, income is taxed once as it is earned by the corporation and again as it is passed to the shareholders, in the form of dividends.
Another advantage over the corporate form is that favorable capital gains tax treatment benefits each of the partners. A corporation can utilize the preferential capital gains tax, but distribution of corporate income as dividends is taxed to the stockholders as ordinary income. Furthermore, since
the limited partnership is taxed not as an entity but as a group of individuals, the partners can utilize Internal Revenue Code section 1235 to receive capital gains treatment on patent transfers. Only individuals qualify for section 1235 treatment.
Limited partnerships offer many practical advantages in managing research and development. Research and development limited partnerships often deal in) high risk investments with no guarantee of success. A corporation could
establish a limited partnership in order to avoid including such a high risk investment in its daily activities and distorting the corporate balance sheet.
Investments in a research and development limited partnership are not readily traded, but the opportunity for tax deductions and credits as well as the potential for a high rate of return offset this illiquidity. Large sums of
capital can be raised through the limited partnership device, while traditional funding sources might not be available because of the higher risks entailed. Management is efficient in the limited partnership, since it is concentrated in an expert individual or small group acting as general partner.
34




Both financial and managem ent advantages have made the limited partnership a popular vehicle for research and development activities in recent years.
Limited partnership arrangements, unless used properly, may provoke challenges by the Internal Revenue Service under the provisions of the Tax, Equity and Fiscal Responsibility Act of 1982, which provides penalties for abusive tax shelters. These penalties can be either civil or criminal.
VII. Liability
A. Introduction
Liability is the broad legal term which describes the responsibility of one party for loss or damage suffered by another person. Legal responsibility for another's loss can arise in many different contexts. I n the area of
criminal law, liability results from the breach of the standard of conduct citizens owe to the public at large. In the realm of civil law--torts and contracts as opposed to crimes--liability arises from the breach of a duty owed to other individuals. Where tort law is involved, the civil duty is owed to persons generally, either as groups or individuals. In breach of contract
actions, the duty is owed to particular individuals as parties to an
-agreement. This discussion is concerned with the civil side of liability, the
standards of conduct which guide members of society in their relations and. actions with their fellow citizens.
B. Tort Law
Tort law is devoted to private wrongs related to persons or property, except when involving a breach of contract. The main concern of this
discussion is with the unintentional or negligent torts. Intentional
torts--e.g., battery, assault, conversion, and trespass--do not belong within this framework, as it is assumed that university research would not be aimed at the intentional infliction of harm.
C. Negligence
Negligence is considered generally with reference to the following elements: (1) a duty recognized by law requiring, people to conform to a standard of conduct for the protection of others against unreasonable risks,
(2) a breach of that duty, and (3) actual injury or loss that is proximately caused by the breach. Everyone is expected to refrain from actions which would place another person in a position of. recognizable danger. The law of negligence is aimed at preventing unreasonable risk, i.e., risk that is great
enough to lead a reasonable person to avoid it. In short, society has placed the duty on people to act reasonably given the particular circumstances of the situation. The "reasonableness standard is judged on the basis of a theoretical ordinary and prudent person. This concept is intended to provide a uniform standard of objectivity in light of the facts of each case. Superior knowledge, skill, and intelligence of the actor are taken into
account in examining reasonableness. In other words, an expert--e.g., a
chemist, doctor, lawyer, or engineer--is judged according to the minimum standards of the particular profession or area of specialty involved. After the duty is established, in order to prevail in a negligence action it must be shown that a real injury was directly sustained by the breach of that dut.




0., Strict Liability
In many situations, a party may be held responsible for an injury or-loss to another regardless of the breach of a reasonable standard of care. This is
called strict liability, which has resulted from 'a social policy that' allocates risk in situations of abnormally dangerous conditions or activity. A party generally is held strictly liable where unusual, but nevertheless intentional, behavior leads to a danger of exposing the community to great harm. Strict liability is applied to abnormally dangerous things or activities--e.g., operations dealing with explosives, maintenance of hazardous
materials, or the storage of substances which, if allowed to escape, would cause sub istantial harm--which cause undue danger to the community in which they are maintained. The judgement with reference to strict liability is made
in light of the particular location and surroundings. That is, the keeping of an elephant may be appropriate to a community in Burma, whereas it might be unreasonably dangerous in New York City. Likewise, the operation of an
explosives plant in an uninhabited area would not be viewed with the same scrutiny as an explosives plant located in a large metropolitan area. Social policy has dictated that certain activities should demand a greater responsibility for possible consequences, irrespective of the attendant care or precautions taken.
E.- Government Immunity
The law has conferred an immunity from tort liability upon governmental entities, which is commonly known as sovereign immunity. This notion has been derived from the divine right of kings and the theory that "the King can do no wrong. This concept continues in varying degrees throughout American jurisdictions. The federal government passed the Federal Tort Claims Act which waived its inherent immunity from tort liability, and many states have followed suit with statutes that mirror the federal law. There are broad
exemptions in which the government's consent to be sued does not apply. The most important and broadly applicable exception provides that the government is not liable for acts which are a discretionary function of a federal agency.
This exception is employed to maintain the separation of powers of the governmental branches. In application the actual delineation of the exceptionis not well-defined, but the policy is stated by distinguishing between planningg or policy" level decisions and '"operational" level decisions. For the former, the government is immune from liability; for the latter, tort immunity is waived. Thus, governmental decisions to construct or maintain services such as fire protection, hospitals, or air traffic control are policy decisions immune from suit, but the negligent operation of those facilities is
actionable in a court of law. The application of the distinction 'between
planning and operating is not definitive and, therefore, is decided according to the facts-of each case.
As a rule, a public university, as an agent of the state, can only be sued for tort actions to the extent authorized by statute. The university is
responsible for the actions of its employees if they are carried out within the scope of their employment unless they amount to willfull or. malicious breach of the prevailing standard of care. The decisions made in choosing research projects appear to be planning decisions, since they are made by the
university as an agent of the state legislature (or as an autonomous body of government in the case of a university that has been created by the 'state
36




constitution). However, where the actual conduct of research causes injury, the university would be subject to a tort action by an injured party claiming the breach of a reasonable standard of care. Public university decisions are
judged by the same criteria -as other government entities; these criteria differ in detail according to the specific provisions of state constitutions and statutes.
The waiver of tort immunity for government entities is in harmony with the democratic form of government. The monarchistic doctrine that "the King can do no wrong" does not fit a Nation which was built upon a belligerent reaction to a strong monarchy. However, in order to preserve the
constitutional principle of separation of powers, exceptions to the waiver of immunity are necessary. Discretionary government functions which are inherent to the act of governing are immune from a tort suit. The distinction between planning and operational activities may be blurred at times, but the policy behind it is necessary for the preservation of an essential constitutional principle, the separation of powers.
VIII. Summary and Conclusion
The advent of new technologies and innovative relationships between private industries and public universities has attracted attention to basic legal implications and their attendant complexities. Major advances in biotechnology and genetic research have intensified the attention and curiosity of the general public, as well as the industrial and academic communities. New methods of manipulating genetic material are particularly sensitive areas of interest to the greater public audience. These new
capacities to change inheritable characteristics also have magnified industry involvement and interest in the biological sciences as the likelihood of creating original proprietary information is enhanced. This heightened
interest in biotechnology has prompted industry to increase its capabilities and to seek outside expertise in the biological sciences.
Researchers at public universities by definition are responsible to serve
the interests of the general populace. Legal concepts such as the public
purpose doctrine, academic freedom, and conflict of interest usually have been
interpreted to uphold the interests of the public. Funds emanating from
governmental sources must be spent primarily to benefit the public. Therefore, public university research must be directed toward supporting public ends. The public interest in free and open dissemination of information is inherent in the notion of academic freedom. This freedom in a
particular university setting may be qualified by the general university mission, goals of funding institutions or specific job descriptions. Conflict of interest ethics have evolved in the public arena to prevent undue intrusion
of private interests in the activities of public employees. Awareness of
these concepts and the ultimate goal of upholding the public interest fosters confidence in the public university community by the public and helps avoid legal disputes and entanglements.
Since the United States Supreme Court upheld the patent on a living, manmade bacterium in Diamond v.'Chakrabarty, private industry of necessity has strengthened its relation-sKips with universities in order to tap a patent pool of information. University/industry relations also have been fostered by tax advantages for supporting research and experimentation and by original schemes
37




to exploit those inherent tax savings. The research and development limited partnership and other tax shelters have been very popular strategies for the utilization of tax benefits. Consequently, advantages, coupled with the
,possibility of future profits, have spurred new industry relations with university research. These new relationships offer promise of a better
quality of life for many people.
New technologies and innovative business relationships also pose
important questions of liability and accountability for possible adverse effects. Who is responsible for possible harmful consequences of
experimentation where public university projects are funded privately? How is
accountability under public purpose shown where experimentation proceeds to the creation of a viable commercial product? Does the doctrine of legal
liability operate differently where funding is limited to governmental sources? What are the parameters and boundaries beyond which individual researchers become liable? Even when the possibilities of harmful results are
perceived as being very remote, these chances must be recognized and explored early in the research and development procedure.
Tremendous possibilities for the creation of beneficial products and processes are being developed through biotechnological research. These
advances can be spurred on by an influx of private financing, especially when government funding is limited. However, with innovation also come additional responsibilities which must be addressed prior to any impending litigation.
The academic community must become aware of the possible legal and social
impacts of scientific innovation. Knowledge of potential areas of public concern helps to lessen, if not avoid, serious controversy.
38




Footnotes
LEGAL FRAMEWORK FOR SCIENTIFIC INQUIRY AT PUBLIC UNIVERSITIES
I. Public Purpose Doctrine
1Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 514 (1937).
2Helvering v. Davis, 301 U.S. 619, 641 (1937).
3Burnett v. Greene, 122 So. 570, 577 (Fla. 1929).
4Fallbrook Irrigation District v. Bradley, 164 U.S. 112, 159-160 (1896).
5Carmichael, 301 U.S. at 514-515.
61d. at 515; Milheim v. Moffatt Tunnel Improvement District, 262 U.S. 710, 721 (1923); Green v. Frazier, 253 U.S. 233, 239 (1920); and Spencer v. Merchant, 125 U.S. 345, 353 (1888).
7See, e.g., Fla. Const. art. VII, 10; Cal. Const. art, XV, 6.
8See, e.g., Fla. Const. art. X, 6; Cal. Const. art. I, 14.
9See State v. Miami Beach Development Agency, 392 So.2d 875, 885 (Fla.
1980); Bannon v. Port of Palm BeachUistrict, 246 So.2d 737, 741 (Fla. 1971); Bailey v. City of Tampa, 111So. 119, T 2--Fla. 1926).
10Horowitz, The Autonomy of the University of California Under the State Constitution, 25UCLA UL. Rev. 23, 24, fn. 1 (1977-. Californa, -6-C rado,
Georgia, Idaho, Michigan, Minnesota, Montana, and Oklahoma are noted as states with constitutionally created universities.
11See, e.g., Fla. Stat. ch. 240.
12See Miami Beach Redevelopment Agency, 392 So.2d at 886; State v. Board of Control, 66 So.2d 209, 210-211 (Fla. 1953); City of Downey v. Board of Administration, 47 Cal. App. 3d 621, 629 (2d Dist. Ct. ApP7. 9 ; and Central Basin Municipal Water District v. Fossette, 235 Cal. App. 2d 689, 702 (2d Dist. Ct. App. 1965).
13See Miami Beach Redevelopment Agency, 392 So.2d at 886-887 and State v. Town of North Miami, 59 So.2d 779, 785 (Fla. 1952).
II. Academic Freedom and Scientific Inquiry 1"Academic Freedom and Tenure, 1940 Statement of Principles and 1970 Interpretive Comments," AAUP Bulletin vol. 60, no. 2, Summer, 1974, pp. 269-272.




2See Sweezy v. New Hampshire, 354 U.S. 234, 250 (1957).
3 See Keyishan v. Board of Regents, 385 U.S. 589, 603 (1967).
4"Academic Freedom and Tenure in the Quest for National Security," AAUP Bulletin vol. 42, no. 1, Spring, 1956, pp. 54-61.
5Keyishan, 385 U.S. at 603.
6Sweezy, 354 U.S. 234. The court recognized freedom in the academic
community as essential and vital in a democracy. The case was decided on due process grounds.
7The right of governmental restraint upon public expression is very
limited. Prior restraints are warranted only in the cases of the national security, obscene language, and words which provoke violence. Near v. Minnesota, 283 U.S. 697, 716-717 (1931).
8Branzburg v. Hayes, 408 U.S. 665, 681-682 (1972). See also, Lamont v. Postmaster General, 381U.S. 301, 308 (1965). The Bill of Rights also ro tecfstse personal rights necessary to make the expression of the express
guarantees fully meaningful.
9Delgado and Millen, God, Galileo, and Government: Toward Constitutional Protection for Scientific Inquiry, 53 Wash. L. Rev. 349, 403 (1978).
III. Conflict of Interest
1United States v. Miller, 463 F.2d 600, 602 (1st Cir. 1972).
2Gardner v. Nashville Housing Authority, 514 F.2d 38, 41 (6th Cir. 1975).
3See 18 U.S.C.208, 216, 281, 283, 284, 434.
4Glazer v. Commission on Ethics, 431 So. 2d 753, 756 (La. 1983).
5Giamatti, The University, Industry, and Cooperative Research, 218 Science 1278 (1982).
61d.
71d. at 1279
8See New York Times, Feb. 8, 1983.
IV. Patents and Certificates of Plant Variety Protection
1U.S. Const. art. I, 8, cl. 8.
235 U.S.C. 101 et seq.
40




335 U.S.C. 101.
4447 U.S. 303 (1980).
535 U.S.C. 101.
635 U.S.C. 171.
735 U.S.C. 161.
87 U.*S.C. 2321 et seq.
9Diamond v. Chakrabarty, 447 U.S. 303, 313 (1980).
1035 U.S.C. 102.
1135 U.S.C 103.
12Plant reproduced by seed are not eligible for patent protection. See below on certificates of plant variety protection.
1335 U.S.C. 161.
147 U.S.C. 2321 et seq.
1535 U.S.C. 102. Only individuals may be granted a patent. Individuals may assign patents to corporate entities or others.
16See Marconi Wireless Tel. Co. v. United States, 320 U.S. 1, 34 (1942).
17See Application of Nelson, 420 F.2d 1079, 1081 (C.C.P.A. 1970); Gould v. Schawlow, 363 F.2d 908, (C.C.P.A. 1966).
1835 U.S.C. 102(b). The publication or article must describe the
invention clearly and completely to start the one year limit. It is not enough merely to refer to the invention vaguely or generally.
19Sale of the invention or offers to sell make the invention public. See Akron Brass Co. v. Elkhart Brass Mfg., 353 F.2d 704, 709 (7th Cir. 1965) Piet v.- Uited States, 2 8 F.2d 6939th Cir. 1960).
2035 U.S.C. 102(c).
2135 U.S.C. 111.
2235 U.S.C. 112.
2335 U.S.C. 113.
2435 U.S.C. 115.
2535 U.S.C. 112.
261d.
41




2735 U.S.C. 113.
2835 U.S.C. 114.
2935 U.S.C. 122.
30
3035 U.S.C. 132.
31
Id.; 35 U.S.C. 133.
3235 U.S.C. 134.
3335 U.S.C. 141.
3435 U.S.C. 145.
3535 U.S.C. 144.
3635 U.S.C. 41.
37Reexamination may occur where examples of the prior art are discovered subsequently either by the Commissioner of Patents or by others.
V. Trade Secrets
1Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1974).
2Smith v. Dravo Corp., 203 F.2d 369, 373 (7th Cir. 1953)
3First Restatement of Torts Comment(b) of 757
4
Smith, 203 F.2d at 375; Greenberg v. Croydon Plastics Co., Inc., 378 F. Supp.7U 812 (U.S.D.C.E.D. Penn. 19/4).
5Perma rim Products v. U.S. Mat & Rubber Co., 489 F. Supp. 108, 112
(U.S.D.C.E.b. Penn. 1980)
6
Kewanee, 416 U.S. at 476.
7Smith, 203 F.2d at 375.
81d., at 374; A. 0. Smith Corporation v. Petroleum Iron Works Co., 73 F.2d 531, 538 (6th Cir. 1934).
9Kewanee, 416 U.S. at 481.
10Greenberg v. Croydon Plastics Co. Inc., 378 F. Supp. 806, 812
(U.S.D.C.E.D. Penn. 194).
11Smith, 203 F.2d at 373; Greenberg, 378 F. Supp. at 811.
12Greenberg, 378 F. Supp. at 814.
42




13Kewanee, 416 U.S. at 475.
14Smith, 203 F.2d at 377-378.
15W. R. Grace & Co. v. Hargadine, 392 F.2d 9, 16 (6th Cir. 1968).
VI. Copyrights
117 U.S.C. 101 et seq. (1976).
217 U.S.C. 301(a).
31d.
417 U.S.C. 301(b).
517 U.S.C. 102(a).
617 U.S.C. 102(b).
7Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 908-909 (2d Cir. 1980).
8R. Dakin & Co. v. Charles Offset Co., Inc., 441 F. Supp. 434, 438 (S.D.N.Y. 1977).
917 U.S.C. 101.
10Id.
11Id.
1217 U.S.C. 103.
1317 U.S.C. 101.
141d.
151d.
16
16Letter Edged In Black v. Public Bldg. Commission, 320 F. Supp. 1303, 1308 (N.T. 1T. 197).
1717 U.S.C. 201(a).
1817 U.S.C. 201(b).
1917 U.S.C. 101.
2017 U.S.C. 201(c).
21
Id.
43




2217 U.S.C. 101. 2317 U.S.C. 202. 2417 U.S.C. 109(a). 2517 U.S.C. 204(a). 2617 U.S.C. 106. 2717 U.S.C. 106(2). 2817 U.S.C. 101.
29
217 U.S.C. 106 (3). 3017 U.S.C. 101. 31Id.
3217 U.S.C. 106(5).
33
3317 U.S.C.101. 3417 U.S.C. 401(a). 3517 U.S.C, 401(b). 317 U.S.C. 401(c). 3717 U.S.C. 404(a). 38d.
39Id7 U.S.C. 405(a). 317 U.S.C. 405(a). 4017 U.S.C. 405(b). 4117 U.S.C. 407(a). 421d
4317 U.S.C. 407(d). 4417 U.S.C. 407(a). 45Id.; 17 U.S.C. 408(a). 4617 U.S.C. 411. 4717 U.S.C. 408(b)(2).
4817 U.S.C. 408(b)(1)(3).
44




5017 U.S.C. 408(b)(4).
5017 U.S.C. 408(c)(2).
5117 U.S.C. 408(a).
5217 U.S.C. 410(a).
5317 U.S.C. 410(c).
5417 U.S.C. 411(a).
551d.
5617 U.S.C. 412(1).
5717 U.S.C. 412(2).
5817 U.S.C. 501(a).
5917 U.S.C. 501(b).
6017 U.S.C. 205(d).
6117 U.S.C. 441(a).
62Atari, Inc. v. North American, Etc., 672 F.2d 607, 614 (7th Cir. 1982); Ferguson v. National Broadcasting Co., Inc., 584 F.2d 111, 113 (5th Cir. 1978); Novelty Textile Mills, Inc. v. Joan Fabrics Corp., 558 F.2d 1090, 1092 (2d Cir. 1977).
6317 U.S.C. 410(c).
641d
65Warren Bros v. American Broadcasting Companies, 654 F.2d 204, 209 (2d Cir. 1981); Noelty, 558 F.2d at 1092.
66Fergusen, 584 F.2d at 113; Testa v. Janssen, 492 F. Supp. 198, 202 (W. D. Penn 1980).
67
67Novelty 558 F.2d at 1093; Ideal Toy Corp. v. Fab-Lu Ltd., 360 F.2d 1021, 1023 (1966).
68Atari, 672 F.2d at 619.
6917 U.S.C. 504(a)(1).
7017 U.S.C. 504 (b).
7117 U.S.C. 504(a)(2), 412.
7217 U.S.C. 504(c)(1).
45




7.317 U.S.C. 5504(c)(2).
74Id.
7517 U.S.C. 505.
7617 U.S.C. 412.
7717 U.S.C. 502(a).
7817 U.S.C. 503.
7917 U.S.C. 107.
8017 U.S.C. 108.
8117 U.S.C. 107.
821d.
83Marcus v. Rowley, 695 F.2d 1171, 1175 (9th Cir. 1983).
84id
84Id.
85Marvin Worth Productions v. Superior Films Corp., 319 F. Supp. 1269
(S.D.NL.Y. 1970).
86Meeropol v. Nizer, 560 F.2d 1061, 1069-1070 (2d Cir. 1977).
87Id. at 1070.
88Time Incorporated v. Bernard Geis Associates, 293 F. Supp. 130 (S.D.N.Y. 1968).
8917 U.S.C. 108.
9017 U.S.C. 108(a)(1).
9117 U.S.C. 108(a)(3).
9217 U.S.C. 108(a)(2).
9317 U.S.C. 108(b).
9317 U.S.C. 108(b).
9417 U.S.C. S<108(c).
17 U.S.C. 108(d)(e).
9617 U.S.C. 108(g).
9717 U.S.C. S110.
9817 U.S.C. 110(1).
46




1017 U.S.C. 110(2)(c).
10017 U.S.C. 302(a).
10117 U.S.C. 302(b).
10217 U.S.C. 302(c).
10317 U.S.C. 304(a).
10417 U.S.C. 304(b).
VII. Financing
1Long term capital gains tax treatment allows individuals a 60 percent deduction from the amount of net capital gain. Long term capital gains are taxed at a maximum of 28 percent for corporations.
2Taxpayers who qualify for section 1235 treatment under the Internal
Revenue Code are not required to hold the patent (the capital asset) for the requisite time period; one may qualify who is in the business of inventing and selling patents; and periodic payments do not defeat capital gains treatment.
3By "individual whose efforts created the patent," Congress meant the "first and original" inventor as described in the Patent Code. S. Rep. No. 1622, 82d Cong. 2d Sess. (1954), reprinted in [1954] U.S. Code Cong. & Ad. News 5082.
4I.R.C. 1235 (b)(2)(A)(B). Bills have been introduced in Congress (H.R. 6167 and S. 2257) which would allow as holders of a patent those who have acquired an interest in a patent from a qualified institutional employer. A qualified institutional employer includes universities and similar institutions (as defined in I.R.C. 44F(e)(2)), which by virtue of the creator's employment or affiliation claim rights in the property. The bill also defines "patent" to include Certificates of Plant Variety Protection.
51.R.C. 267(b) provides that related persons include spouses, lineal descendants, ancestors, 50 percent owned corporations, and various trust relationships. Section 1235(d) changes 50 percent to 25 percent for purposes of section 1235 of the Code.
6Treas. Reg. 1.1235-2.
71d.
8 Id.
9See P.P.G. Industries, Inc., 55 T.C. 928, 1012 (1970); T.C. Pickren v. United States, 378 F.2d 595, 599 (5th Cir. 1967).
47




10See Ward v.. United States, 456. F.2d 354, 356, (6th Cir.. 1972); Spencev. United States, 156 F. Supp. 556, 559-560 (Ct. Cl. 1957); Beausoleil, 66 T.W. 244, 46 T1T6.
11I.R.C. 1222(3) I.R.C.
12Treas. Reg. 1.174-2(a)(1). To qualify under section 174 of the Code, the research and experimentation must be scientific in the laboratory sense; literary and historical projects are excluded.
13Id.
14Treas. Reg. 1.174-2(a)(2); Rev. Rul. 73-20, 1973-1 C.B. 133.
15Treas. Reg. 1.174-2(a)(1).
16I.R.C. 174(c).
17Treas. Reg. 1.174-2(a)(1).
18See Snow v. Commissioner, 416 U.S. 500, 537 (1974).
19Treas. Reg. 1.174-2(a)(2)(3).
201.R.C. 44F(d) states that "qualified research" has the same meaning as "research and experimental" in I.R.C. 5174.
21I.R.C. 44F(b)(1)(b) and (b)(3).
221.R.C. 44F(e).
23Treas. Reg. 1.44F-5(b).
241.R.C. 170(e)(4).
25The deduction allowed is equal to the sum of the taxpayer's income tax basis in the property and one half of the unrealized appreciation in the roperty, but the deduction may not exceed twice the income tax basis. I.R.C. 170(e)(4)(a).
26.R.C. 170(e)(4)(B)(i).
27I.R.C. 170(e)(4)(B)(v). Research purposes under this section are the same as defined under I.R.C. 174 for research and experimentation.
28I.R.C. 170(e)(4)(B). Qualified property is described in I.R.C. 1221(1).
291.R.C. 170(e)(4)(B)(ii).
30.R.C. 170(e)(4)(C).
311.R.C. 170(e)(4)(B)(iii).
48




321.R.C. 170(e)(4)(B)(v). Research and experimentation is used as in I.R.C. 174. The test of "substantial use" is satisfied if the property is used at least 80 percent of the time for research and experimentation. Comm. Rpt. P.L. 97-34.
33Id.
341.R.C. 170(e)(4)(B)(iv).
351.R.C. 170(b)(1)(A)(ii). The donee must also be an "institution of
higher education," which requires that--(1) those admitted as regular students be high school graduates or the equivalent, (2) the institution has legal authority under state law to offer a program of study leading to a bachelor's or higher degree or a program which prepares students for gainful employment, and (3) it is a public or other nonprofit institution.
361.R.C. 170(e)(4)(B)(vii).
49




CHAPTER 3
GUIDELINES FOR DEVELOPMENT OF UNIVERSITY/INDUSTRY RESEARCH CONTRACT
I. Introduction
This document was originally included in the 1983 Progress Report. The amended "Guidelines" are made part of this report in order to reflect responses and queries from thirty-five land-grant institutions. The resulting changes do not alter the basic format or substance of the document. The
changes do extend the discussion in several areas. Of particular note are
additional comments on research projects funded by multiple sources and on the law governing the interpretation of a research agreement involved in possible litigation or arbitration.
This guide for the development of a contract is intended to provide the basis for negotiating a cooperative project between a research university and
an industrial sponsor. A contract between a university and an industrial sponsor presents many unique policy issues which must be addressed during the initial stages of negotiations in order to arrive at a successful agreement. A university/industry research contract--like any contract--involves the exchange of consideration, i.e., the promise of the sponsor to provide funding or facilities in exchange for the university's promise to use its best efforts to fulfill a research plan. This guide presents sample contract sections with
appropriate comments following each section to highlight the most important policy issues and problems and to suggest alternatives. The current tax
incentives of the Internal Revenue Code for contributions to research are reflected in the commentary. All universities and all sponsors will not be able to utilize every provision contained in this guide. A contract of thi s nature is intended as a guide which must be form-fitted to attain individual objectives and policies of the contracting parties.
The development of a knowledgeable citizenry and improved levels of living is a goal for whic 'h both private and public entities generally strive.
The research that is performed by college and university scientists is a valuable tool in attaining the important ends of human development. Although the short-term objectives of private business firms and higher education may differ, the long-term purposes of technological advance and betterment of society are shared. In many cases, the technical skills and knowledge of colleges and universities is brought closer to society as it is transferred to industry and transformed into commercial products. Efforts to expedite
research within colleges and universities and thus reduce the time necessary to transfer such knowledge to industry clearly should be viewed in the national interest.
Research opportunities in colleges and universities are highly dependent upon their monetary source. These times of declining government funding and increased involvement of private industry in basic research have begun to foster close working relationships between universities and industry. These efforts have taken the forms of consulting arrangements, research consortia, cooperative research efforts, and collaborative agreements, among others. These relationships necessitate a balancing of sometimes competing interests.
The nonproprietary, basic research aims of the university differ from the commercial, profit-making ideals of private industry. The ideals of open
50




communication and free dissemination of information in the university setting
conflict with concepts of trade secrets and competitive advantage in the industrial world. Formulation of close relationships between universities and
industry demands careful attention to the integrity of universities as institutions of higher education.
II. Memorandum of Agreement
This memorandum of agreement is entered into on
between______ Universitand
__________________________________the Sponsor) for the
establishment of a research project entitled,__________________________________, to be conducted from ________to ___________at a total estimated cost of______COMMENTS-THE MEMORANDUM OF AGREEMENT SHOULD SET FORTH CLEARLY THE DATES DURING WHICH THE PROJECT SHALL TAKE PLACE. THE
PARTIES MAY WISH TO STIPULATE THAT THE DURATION OF THE PROJECT SHALL BE NEGOTIATED AT A LATER DATE. CONDITIONS UNDER WHICH THE PROJECT WILL TERMINATE MIGHT BE INCLUDED ALSO. ONE SUCH CONDITION COULD BE DEATH OF THE PRINCIPAL INVESTIGATOR AND THE INABILITY TO FIND A MUTUALLY
ACCEPTABLE REPLACEMENT.
III. General University Purpose
Whereas the University is a publicly supported institution, the parties to
this agreement must recognize the paramount importance for this project to benefit the general public. The Sponsor should be rewarded from the results
of the research, but it should not be provided a financial advantage through privileged use of information that is wholly or partly derived from the use of public funds. It is essential that the University promote the free flow of information at all stages of research. The University exists for the
advancement of science and technology and for the enrichment of education; the
research project under this agreement should not be permitted to compromise the purpose of the University in an unreasonable manner.
IV. General Purpose of the Sponsor
The parties to the agreement must recognize that the primary objectives of the Sponsor are commercial. The Sponsor's purpose as a commercial entity is
to develop products, processes, and services for the generation of profits. On the other hand, it must be emphasized herein that the Sponsor (as well as Industry in general) provides intellectual stimulation and interpretation of research that is valuable to the University and to the public in general. This agreement should not be allowed to hinder unreasonably the Sponsor's interest in protecting and exploiting intellectual property rights which either have originated with the Sponsor or which originate from the Research Project itself.
51




COMMENTS--SECTIONS III AND IV
SECTIONS III AND IV ARE INCLUDED AT THE OUTSET OF THE CONTRACT IN ORDER TO EMPHASIZE THAT THIS IS A UNIQUE AGREEMENT. THERE ARE IMPORTANT POLICY CONSIDERATIONS THAT SHOULD BE EVALUATED BY BOTH PARTIES BEFORE ENTERING INTO THIS TYPE OF RESEARCH PROJECT. THESE CONSIDERATIONS
ARE NECESSARILY CONFLICTING AND MUST BE COMPROMISED TO SOME EXTENT BY EACH SIDE. ALL THE TERMS OF THIS TYPE OF AGREEMENT SHOULD BE SPECIFICALLY TAILORED TO THE PARTICULAR NEEDS AND DESIRES OF THE PARTIES INVOLVED. A SIGNIFICANT AMOUNT OF VARIATION WILL OCCUR DEPENDING UPON
THE VARIOUS POLICIES OF THE UNIVERSITY AND THE SPONSOR.
IF THE DIFFERENCES BETWEEN THE PARTIES ARE RECOGNIZED AND ADDRESSED DURING NEGOTIATIONS, MORE EFFECTIVE
COLLABORATION CAN TAKE PLACE.
AN AGREEMENT OF THIS NATURE MIGHT BE UTILIZED TO FUND AN ENTIRE RESEARCH PROGRAM, WHICH INCLUDES MANY DIFFERENT
PROJECTS.
V. Scope of ,the Research Project
The research project under this agreement is to consist of
COMMENTS-~
THIS SECTION CAN BE EITHER VERY BROAD OR VERY DETAILED, DEPENDING UPON THE PARTICULAR PROJECT AND THE DESIRES OF THE -PARTIES. THE UNIVERSITY MAY NOT WISH TO DIVULGE GREAT DETAIL WITHOUT SUFFICIENT ASSURANCES THAT THE SPONSOR WILL MAKE PAYMENTS. A CLAUSE FOR MINIMUM
PAYMENTS OR FOR PAYMENTS OVER A MINIMUM PERIOD OF TIME MIGHT PROVIDE A WORKABLE SAFEGUARD. THE SPONSOR MAY WISH
TO BE INFORMED OF THE EXACT SCOPE AND PARAMETERS OF THE PROJECT IN ORDER TO MEET ITS NEEDS AND TO ASSURE THAT ITS
FUNDS ARE NOT DIRECTED TOWARD NEEDLESS OR FRIVOLOUS
INVESTIGATIONS.
WHERE THE SPONSOR IS GRANTED BROAD OR DIRECT RIGHTS TO INTELLECTUAL PROPERTY WHICH IS DERIVED FROM THE RESEARCH PROJECT, OR WHERE EXCLUSIVE FUNDING CLAUSES ARE INVOLVED,
IT IS DESIRABLE TO DESCRIBE THE RESEARCH PROJECT IN AN ATTACHMENT TO THE BASIC AGREEMENT. IN THIS CASE, A
SUGGESTED SCHEME WOULD BE TO DEFINE THE RESEARCH PROJECT AS NARROWLY AS POSSIBLE AND PROVIDE A FRAMEWORK BY WHICH TO REVISE THE DIRECTION OF THE RESEARCH BY MUTUAL CONSENT
OF THE PARTIES. THESE REVISIONS SHOULD BE DESIGNED TO LEAVE THE TERMS OF THE BASIC AGREEMENT INTACT. IN THE
EVENT A PATENT OR OTHER PRODUCT OF RESEARCH RESULTS FROM MORE THAN ONE SOURCE OF FUNDING--EITHER BECAUSE OF SUCCESSIVE OR OVERLAPPING PROJECTS--A DETAILED AND
52




SPECIFIC DESCRIPTION OF THE RESEARCH TO BE CARRIED OUT UNDER THE AGREEMENT WILL HELP TO AVOID ANY CONFLICTING CLAIMS TO SUCH PROPERTY. PROGRESS OF THE RESEARCH SHOULD
BE REVIEWED PERIODICALLY, ALLOWING BOTH THE UNIVERSITY AND THE SPONSOR TO RECOMMEND CHANGES IN THE SCOPE OF THE PROJECT. JOINT DETERMINATION OF ANY CHANGES SHOULD BE
MADE IN AN APPROPRIATE MODIFICATION OF THE ATTACHMENT.
VI. Duties of the University
The primary obligation of the University is to exercise its best efforts to achieve the desired results of the project within the estimated costs. The University will appoint a Principal Investigator, subject to approval from the Sponsor. The duties of the Principal Investigator will be to direct the research project. The Principal Investigator will insure that periodic reports on the progress of the project are transmitted to the Sponsor. These reports shall include research results, projections of future research
objectives, prior notice of publications concerning the research, and an accounting of disbursements of project moneys.
The University will provide the Sponsor with prompt notice of its intention to pursue patent protection for research results. The University will undertake application and prosecution of patents with the necessary cooperation and aid from the Sponsor. in the event the University does not wish to pursue patent protection, the Sponsor may do so at its expense' and with University cooperation.
The University cannot insure either that any patentable items will result from the project or that, if such discoveries do occur, they will yield income.
COMMENTS~
THE DETAILS OF SECTION VI WILL DEPEND MAINLY UPON THE SPECIFIC POLICIES OF THE UNIVERSITY. THAT THE UNIVERSITY HAVE EXCLUSIVE CONTROL OVER THE MANAGEMENT OF THE PROJECTS IS AN IMPORTANT CONSIDERATION TO AID THE UNIVERSITY IN SAFEGUARDING THE PUBLIC GOOD. IT MAY BE DESIRABLE TO HAVE SOME MANAGEMENT INPUT FROM THE SPONSOR,
ESPECIALLY IF THE SPONSOR HAS BEEN ENGAGED IN RELATED RESEARCH OR IF IT OWNS PATENTS OR OTHER INTELLECTUAL PROPERTY CONCERNING THE PARTICULAR FIELD OF RESEARCH. IT
MAY PROVE BENEFICIAL TO INCLUDE A STATEMENT THAT THE UNIVERSITY IS ACTING AS AN INDEPENDENT CONTRACTOR, AND NOT AS AN AGENT, JOINT VENTURER, OR PARTNER OF THE SPONSOR. HOWEVER, IN CERTAIN SITUATIONS UNIVERSITY POLICY MAY BE AMENABLE TO JOINT VENTURES OR PARTNERSHIPS
IN ORDER FOR THE SPONSOR TO TAKE ADVANTAGE OF CERTAIN
INCOME TAX PROVISIONS SUCH AS THE CAPITAL GAINS TAX.
THE UNIVERSITY MAY CHOOSE TO STATE THAT IT MAKES NO WAR.RANTIES REGARDING THE OUTCOME OF THE RESEARCH.
RESPONSIBILITY FOR ANY PRODUCTS OF THE RESEARCH IS TO REMAIN THE SPONSOR'S, PARTICULARLY REGARDING SAFETY,
MARKETABILITY, EFFECTIVENESS, ETC.
53




REASONABLE PRECAUTIONS TO PROTECT THE SPONSOR'S TRADE SECRETS ~SHOULD BE DELINEATED, OR SAFEGUARDS MIGHT BE LIMITED TO DISCLOSURE OF POSSIBLE CONFLICTS OF INTEREST, THE SIGNING OF OATHS OF CONFIDENTIALITY, AND ADEQUATE
RECORD-KEEPING.
GENERALLY THE UNIVERSITY RETAINS OWNERSHIP OF PATENTS FOR THE RESULTS OF ITS RESEARCH. IT WOULD BE QUITE BENEFICIAL IN MANY CASES TO HAVE THE SPONSOR PAY FOR PATENT
APPLICATIONS. A LIMITED EXCLUSIVE LICENSE COULD BE GIVEN TO THE SPONSOR IN EXCHANGE FOR FINANCING OF PATENT APPLICATIONS. IN SUCH CASES THE UNIVERSITY WOULD RETAIN THE RIGHT TO TAKE OVER THE LICENSE WHERE THE SPONSOR FAILED PROPERLY TO EXPLOIT PATENTS. THE MAJOR UNIVERSITY OBJECTIVE IN THE ADVANCEMENT OF KNOWLEDGE WOULD STILL BE UPHELD, AND THE UNIVERSITY THEN WOULD BE ABLE TO SAVE THE MONEY THAT WOULD NORMALLY BE SPENT ON THE RISING COSTS OF PATENT APPLICATIONS. THIS OBJECTIVE HAS BEEN MET IN MANY
UNIVERSITY/INDUSTRY COOPERATIVE RESEARCH EFFORTS.
THE UNIVERSITY MAY WISH TO RETAIN THE RIGHT TO REPLACE THE PRINCIPAL INVESTIGATOR. IN SUCH CASES SPONSOR APPROVAL IS GENERALLY REQUIRED. A SEPARATE SECTION
OUTLINING THE SPECIFIC DUTIES OF THE PRINCIPAL INVESTIGATOR IS OFTEN INCLUDED IN UNIVERSITY/INDUSTRY
CONTRACTS.
VII. Duties of the Sponsor
The Sponsor shall provide all funding for this research project in advance of actual disbursement by the University for research. Funding will be provided according to the attached schedule which has been developed by the parties to this agreement. The Sponsor will provide to the Principal
Investigator and the University any knowledge or intellectual property rights which relate to the subject of this research project which are in its possession prior to the inception of this agreement and which it may acquire thereafter. This will include adequate rights to patents in order to allow the University to use the Sponsor's preexistent expertise in conducting the research.
COMMENTS-ESPECIALLY IMPORTANT IN SECTION VII IS THAT FUNDS WILL BE PROVIDED TO THE UNIVERSITY IN ADVANCE. GENERALLY, A
UNIVERSITY IS UNABLE TO ADVANCE MONEY FOR SUCH A PROJECT.
IT WOULD ALSO BE USEFUL TO INCLUDE SPECIFICALLY FOR WHAT 'THE MONEYS WILLBE SPENT, E.G., ONLY FOR WAGES, SUPPLIES, AND EQUIPMENT, OR INCLUDING OVERHEAD SUCH AS MAINTENANCE AND UTILITIES. ALSO, "PROMPT NOTICE" SHOULD BE SPECIFIC,
E.G., WITHIN TWO MONTHS.
SOME UNIVERSITY/INDUSTRY AGREEMENTS HAVE PROVIDED FOR OWNERSHIP OF PATENTS TO BE HELD BY THE SPONSOR. IN SUCH CASES, THE SPONSOR SHOULD BE REQUIRED TO PROVIDE THE
54




UNIVERSITY WITH PROMPT NOTICE OF ITS DESIRES TO PURSUE PATENT PROTECTION FOR RESEARCH RESULTS. THE UNIVERSITY SHOULD THEN PROVIDE COOPERATION AND AID AND BE ENTITLED TO PURSUE PATENTS WHERE THE SPONSOR DOES -NOT WISH TO DO
SO.
VIII. Publication, Copyrights, and Trade Secrets
Publication and dissemination of information are integral to the purpose of the University. Therefore, the University shall be the sole judge of what
it will publish and shall have the exclusive right to publish any and all results of this research project, subject only to such rights of the Sponsor to protect trade secrets. There shall be no publicity or disclosure of
information about the project without prior notice to the Sponsor. If the
decision is made to publish the results of project research, patent rights shall be preserved with respect to research discussed in publications. A copy
of any papers or presentations shall be submitted to the Sponsor for any comments or suggestions before publication. The University shall have the exclusive right to all copyrights which result from the research project.
All publications shall give proper credit to appropriate parties to this agreement.
. While free dissemination of information strongly underlies the purpose of
the University, certain information and documentation must remain confidential
for the protection of the Sponsor. Any trade secrets which the Sponsor has disclosed for the purposes of this project shall be kept in strict confidence,
absent the express, written consent of the Sponsor. All confidential
information shall be conspicuously marked, and all who work on the project shall agree to protect all confidential information. Information that is
developed during the scope of this project shall not be required to be kept confidential beyond the time necessary to perfect patent rights, except to the extent that it involves the sponsor's basic interest in trade secrets.
COMMENTSIT MAY ALSO BE DESIRABLE OR USEFUL TO INCLUDE LIMITATION PERIODS IN SECTION VIII WHICH STATE HOW LONG CONFIDENTIAL INFORMATION MUST REMAIN SECRET. PROVISIONS MIGHT ALSO BE ADDED FOR CERTAIN INFORMATION THAT EMANATES FROM THE PROJECT TO BE KEPT SECRET AT THE REQUEST OF THE SPONSOR.
PROVISIONS MIGHT BE INCLUDED TO REFLECT UNIVERSITY AND SPONSOR POLICIES REGARDING THE USE OF THEIR NAMES IN PUBLICATIONS. UNIVERSITIES GENERALLY PROHIBIT THE USE OF
THEIR NAMES IN COMMERCIAL ADVERTISING. IT IS IMPORTANT TO EXAMINE CONSTITUTIONAL AND LEGISLATIVE PROVISIONS IN CONNECTION WITH THE DOCTRINE OF PUBLIC PURPOSE IN
RELATION TO THIS CLAUSE.
IN CASES WHERE THE SPONSOR RETAINS OWNERSHIP RIGHTS IN PATENTS, SPECIFIC TIME PERIODS SHOULD BE INCLUDED FOR THE
DELAY OF PUBLICATIONS TO ALLOW TIME TO SUBMIT PATENT APPLICATIONS. A 60-DAY PERIOD WOULD BE REASONABLE FOR
BOTH PARTIES.
55




IX. Press Releases
Statements, concerning the research project conducted under this agreement shall not be made or released to any medium of public communication by the Sponsor, except with the prior,, written consent of the University, or by the University, except with the prior, written consent of the Sponsor. Exception is made hereunder to the regular reports of the University, which may include the name of the Principal Investigator, the title of the project, the name of the Sponsorand the amount of funding provided.
COMMENTSTHIS SECTION IS INCLUDED IN ORDER TO PROTECT THE SPONSOR
FROM PREMATURE DISCLOSURE OF VITAL INFORMATION AFFECTING PATENT RIGHTS AND OTHER PROTECTION OF INTELLECTUAL
PROPERTY.
X. Patent Rights
The University shall maintain title to all patents which are derived from this research project. The Sponsor shall receive a right of first refusal to
a license in such patents in return for a reasonable royalty based on the gross receipts from products manufactured under such patents. The Sponsor is
obliged to exercise all reasonable diligence to create and 'promote a public and commercial demand for products which are developed under license granted by this agreement. In the event the Sponsor does not fulfill its obligation to exploit patent rights, such patent rights shall revert to the University to be used in accordance with its policies. In any event, the right to use the
patents for scientific pursuit and education shall remain in the University. All rights of researchers to any patents shall be governed by the internal policy of the University.
COMMENTSTHE PATENT SECTION OF THE CONTRACT IS AN IMPORTANT CONSIDERATION FOR THE SPONSOR, BECAUSE PATENTS PROVIDE
DIRECT ACCESS TO PROFITS.
THE SECTION OF THE CONTRACT CONCERNING PATENT RIGHTS WILL
VARY SIGNIFICANTLY DEPENDING ON THE POLICIES OF THE UNIVERSITY AND THE SPONSOR. TRADITIONALLY LICENSE TERMS WOULD BE NEGOTIATED ONLY AFTER BOTH PARTIES KNOW EXACTLY WHAT IS BEING LICENSED. HOWEVER, SUCH TERMS MAY BE
INCLUDED IN THE ACTUAL CONTRACT AS AN INDUCEMENT FOR PRIVATE SPONSORS TO ENGAGE IN COLLABORATIVE RESEARCH EFFORTS WITH THE UNIVERSITY. GENERALLY, THE UNIVERSITY WILL WISH TO RETAIN TITLE TO THE PATENT. SINCE IT IS
IMPORTANT TO THE UNIVERSITY'S FUNCTION TO MAINTAIN MAXIMUM UTILIZATION AND AVAILABILITY OF THE PATENT TO THE
PUBLIC, A CLAUSE SHOULD BE INSERTED THAT REQUIRES THE SPONSOR TO EXERCISE DUE DILIGENCE IN EXPLOITING AND MARKETING THE PATENT. THE UNIVERSITY MAY WISH TO OBTAIN SOME DEGREE OF CONTROL OVER LICENSING AND SUBLICENSING BY THE SPONSOR IN ORDER TO PROTECT THE PUBLIC PURPOSE OF THE
UNIVERSITY.
56




MANY UNIVERSITY/INDUSTRY AGREEMENTS GRANT GENEROUS PATENT
RIGHTS TO THE SPONSOR IN ORDER TO RECEIVE SUBSTANTIAL FUNDING. OFTEN THE SPONSOR IS GRANTED "ALL SUBSTANTIAL RIGHTS" IN PROJECT PATENTS. THIS IS QUITE USEFUL IN THE
UTILIZATION OF CAPITAL GAINS TAX PROVISIONS.
THE UNIVERSITY MAY BE REQUIRED BY POLICY TO RETAIN ALL SUBSTANTIAL RIGHTS IN THE PATENTS AND ISSUE EXCLUSIVE AND/OR NON-EXCLUSIVE LICENSES TO THE SPONSOR. ALSO, THE
INCOME THAT THE UNIVERSITY RECEIVES FROM THE USE OF THE LICENSE MAY TAKE ON VARIOUS FORMS, SUCH AS, A PERCENTAGE OF THE SELLING PRICE, A FIXED COMMISSION, A PERCENTAGE OF
NET SALES, A SET ASSIGNMENT FEE, ETC.
THE CONTRACT MIGHT CALL FOR A DISTRIBUTION OF PATENT RIGHTS BETWEEN THE SPONSOR AND THE UNIVERSITY. IN THAT CASE, EACH PARTY WOULD RECEIVE AN UNDIVIDED INTEREST IN ALL SUBSTANTIAL RIGHTS TO THE PATENT. THERE ARE
DIFFICULTIES IN UTILIZING UNDIVIDED INTERESTS, DUE TO UNCERTAINTY IN REGARD TO TAX STATUS WITH INTERNAL REVENUE RULES AND REGULATIONS. CAREFUL ATTENTION SHOULD BE
DIRECTED TO THE APPROPRIATE PROVISIONS OF SECTIONS 1221, 1231, and 1235 OF THE INTERNAL REVENUE CODE WHEN EMPLOYING CONTRACT TERMS WHICH PI ACE ALL SUBSTANTIAL
RIGHTS IN PATENTS INTO UNDIVIDED INTERESTS.
THE UNIVERSITY SHOULD BE CAREFUL NOT TO GRANT PATENT RIGHTS TO INVENTIONS THAT HAVE BEEN DEVELOPED IN PART OR IN WHOLE BY FUNDS OUTSIDE OF THE AGREEMENT. ONE
REASONABLE SAFEGUARD IS TO ALLOW THE GRANTING OF RIGHTS ONLY TO PATENTS WHICH BOTH HAVE BEEN CONCEIVED AND
REDUCED TO PRACTICE UNDER THE SCOPE OF THE AGREEMENT.
XI. Project Assets
All assets which are acquired with funds distributed under this agreement shall remain the property of the University.
COMMENTS~
THIS SECTION IS INCLUDED BOTH FOR THE BENEFIT OF THE UNIVERSITY IN OBTAINING CERTAIN PROPERTY AND FOR THE
PROTECTION OF THE SPONSOR'S RIGHT TO TAX DEDUCTIONS FOR
RESEARCH AND EXPERIMENTATION.
XII. Mutual Cooperation and Modification of the Agreement
Both parties agree to assist and cooperate with each other, especially regarding their respective rights to publication and patent rights. The
parties shall meet at the end of each year to discuss the continued feasibility of the project and any modifications in funding or scope that may be necessary or desirable. Any and all modifications shall be in writing and
signed by both parties.
57




COMMENTS-~
THIS SECTION- IS INCLUDED TO EMPHASIZE THE DIVERGENT.
INTERESTS OF: THE PARTIES AND THE NECESSITY TO WORK CLOSELY TOGETHER IN NEGOTIATIONS. ALSO, MANY PROJECTS WILL CHANGE COMPLEXION OVER THE TERM OF THE CONTRACT, AND
ADJUSTMENTS MAY BE NECESSARY' EITHER WITH RESPECT TO
FUNDING OR SCOPE OF THE RESEARCH.
XIII. Termination Rights
In the event the Sponsor is not satisfied with the progress of the
research' project, the Sponsor may terminate the agreement upon reasonable notice. The Untiversity may terminate the agreement upon proper notice if conditions beyond its control preclude continuation of the project. If termination occurs, the Principal Investigator shall direct the conclusion of the project, issue a final report, and return all unexpended funds. The disposition of equipment and research material involved with or generated by the research project shall be decided by mutual assent to the extent not specified herein.
COMMENTS-"THIS SECTION IS EXTREMELY USEFUL IN THE BARGAINING PROCESS. DEPENDING UPON THE SIGNIFICANCE AND MAGNITUDE OF RIGHTS OR BENEFITS GIVEN TO THE SPONSOR AND UPON THE LIKELIHOOD OF SUCCESS OF THE PROJECT, THE SPONSOR OR THE UNIVERSITY MAY WISH TO GRANT OR RECEIVE TERMINATION RIGHTS. TERMINATION ON THE PART OF THE SPONSOR SHOULD ALWAYS BE SUBJECT TO A MINIMUM PAYMENT PROVISION, SO THE SPONSOR WILL NOT BE ENRICHED UNJUSTLY BY INFORMATION THAT
HAS BEEN PROVIDED AND TO PROTECT ANY SALARIES AND LONG TERM COMMITMENTS THAT ARE BEING PAID WITH PROJECT FUNDS.
THE UNIVERSITY MAY DESIRE THE RIGHT TO TERMINATE IF IT APPEARS THERE WILL BE LITTLE BENEFIT TO THE UNIVERSITY PROGRAMS OR TO THE PUBLIC. THE RIGHTS TO TERMINATE MIGHT
BE VERY NARROW OR VERY BROAD, I.E., THERE MAY BE MANY CONDITIONS PRECEDENT OR ONLY FEW, DEPENDING UPON THE
CIRCUMSTANCES OF THE AGREEMENT.
XIV. Arbitration
In the event of the inability to resolve a dispute between the Sponsor and
the University concerning the terms or conditions of the agreement, said dispute shall be settled by arbitration before a single arbitrator in accordance with the prevailing rules of the American Arbitration Society, and judgement upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The arbitrator shall be appointed by mutual consent.
COMMENTS-~
AN ARBITRATION CLAUSE SHOULD BE INCLUDED IN ORDER TO AVERT LENGTHY AND COSTLY DISPUTES. THE ARBITRATION
58




CLAUSE MAY BE MODIFIED IF THE PARTIES SO DESIRE. ONE
SUGGESTED CHANGE WOULD BE TO USE THREE ARBITRATORS
INSTEAD OF ONE. EACH ADVERSE PARTY WOULD APPOINT ONE ARBITRATOR; THE ARBITRATORS SO APPOINTED WOULD THEN
APPOINT A THIRD IMPARTIAL ARBITRATOR BY MUTUAL CONSENT.
BINDING ARBITRATION MAY BE IMPOSSIBLE FOR MANY STATE UNIVERSITIES DUE TO EITHER CONSTITUTIONAL OR STATUTORY RESTRAINTS. IN THE EVENT OF DISPUTES, THE CONTRACT MAY REQUIRE TERMINATION IF A REASONABLE SOLUTION CANNOT BE
FOUND.
THE SITE OF THE ARBITRATION PROCEEDINGS SHOULD BE SPECIFIED AS THE STATE IN WHICH THE UNIVERSITY IS LOCATED. THE UNIVERSITY SHOULD NOT BE REQUIRED TO INCUR THE EXPENSES OF HIRING OUT-OF-STATE COUNSEL AND TRAVELING
TO AN OUT-OF-STATE LOCATION.XV. Exclusivity of Funding
All funding for this project shall be provided by the Sponsor.
COMMENTS~
UNIVERSITY POLICY MAY PROHIBIT AN EXCLUSIVE FUNDING PROVISION. FURTHERMORE, THE UNIVERSITY MAY NOT WISH TO LIMIT ITSELF TO THE SPONSOR'S FINANCING. THE NEED AND/OR OPPORTUNITY MAY ARISE FOR ADDITIONAL FUNDING OF WHICH T14E UNIVERSITY WOULD WISH TO AVAIL ITSELF. HOWEVER, THE
SPONSOR MAY BE HESITANT TO PROVIDE FUNDS WHICH WILL BE COMBINED WITH OTHERS, SINCE THE SOURCE OF EXPENDED FUNDS MAY NOT BE DETAILED SUFFICIENTLY FOR PURPOSES OF TAX
DEDUCTIONS AND RIGHTS TO RESULTING DISCOVERIES.
THE UNIVERSITY WILL OFTEN PAY THE SALARY OF THE PRINCIPAL INVESTIGATOR AND/OR OTHER RESEARCHERS, IN WHICH CASE THIS
SECTION SHOULD BE ADAPTED ACCORDINGLY.
XVI. Assignment
Either party may assign its rights, remedies, obligations, or liabilities arising under this agreement provided prior, express, and written consent is obtained from the other party. The assignee must assume all responsibilities under the agreement and agree to be bound thereby.
COMMENTS~
THE UNIVERSITY SHOULD RECEIVE PRIOR APPROVAL OF
ASSIGNMENT TO PROTECT ITS PUBLIC PURPOSE RESPONSIBILITY.
THE UNIVERSITY SHOULD BE ASSURED THAT THE ASSIGNEE WILL CONTINUE TO PROVIDE SUPPORT AND ASPIRE TO THE GOALS OF THE ORIGINAL SPONSOR. THE SPONSOR, ON THE OTHER HAND, MUST BE SURE THAT THE WORK CAN BE CONTINUED ADEQUATELY BY
AN ASSIGNEE.
59




XVII. Insurance and Liability
The University shall be responsible for maintaining all- facilities that are used for performing. work on the research project. The University shall
maintain adequate workers3' compensation insurance for its employees working on the research project. The Sponsor shall maintain adequate products liability and third party liability insurance in respect to the project. The Sponsor
shall indemnify the University against the claims of third parties in regard to the specific, utilization of any marketed research results.
COMMENTS-~
THIS~ SECTION IS IMPORTANT TO DEFINE MORE COMPLETELY THE RESPONSIBILITIES OF THE, PARTIES AND PROTECT THEIR RESPECTIVE INTERESTS. BY MAINTAINING PROPER INSURANCE TO
COVER RESEARCH- FACILITIES AND WORKERS, THE UNIVERSITY IS DEMONSTRATING:ITS EXCLUSIVE RESPONSIBILITY FOR MANAGEMENT OF, THE' RESEARCH PROJECT. THE SPONSOR'S MAINTENANCE OF ADEQUATE PRODUCTS LIABILITY AND THIRD PARTY LIABILITY PROTECTION IS IMPORTANT IN UPHOLDING THE UNIVERSITY'S
PUBLIC PURPOSE RESPONSIBILITIES.
WHERE THE UNIVERSITY IS A SELF-INSURER AND WILL NOT MAINTAIN OUTSIDE INSURANCE, IT- SHOULD BE' REQUIRED TO INDEMNIFY THE SPONSOR AGAINST- WORKERS' COMPENSATION CLAIMS- WITHIN THE, SCOPE OF THE. PROJECT., WHERE THERE IS INSURANCE, INDEMNITY SHOULD BE LIMITED TO THE AMOUNT OF
INSURANCE COVERAGE.
IT" IS RECOGNIZED THAT RESEARCH ACTIVITY, PRODUCT DEVELOPMENT, AND PRODUCT USE MAY ALL GIVE RISE TO LOSSES OR COSTS FROM, UNEXPECTED OUTCOMES. SOME LOSSES MAY BE IMMEDIATELY OBVIOUS, AND OTHERS MAY ONLY BECOME APPARENT YEARS LATER. THE QUESTION OF WHETHER THE PARTIES TO A RESEARCH AGREEMENT, THE USER OF THE PRODUCT, OR SOCIETY GENERALLY SHOULD BEAR THE COSTS IS UNDER STUDY BY THE COMMITTEE. THE RESEARCH CONTRACT CAN BE USED TO ASCERTAIN THE INTENT OF THE PARTIES WITH REFERENCE TO THE
ALLOCATION OF FINANCIAL RESPONSIBILITY AND LIABILITY.
XVIII. Notices
All notices and communications pertaining to this agreement shall be in writing. They shall be delivered personally or sent by first class mail to the following:
a) to the Sponsor-b) to the University-~___________________60




COMMENTS-BOTH THE PERSON(S) AND PLACE(S) FOR NOTICE SHOULD BE
SPECIFIED. FOR THE SPONSOR IT MAY BE THE PRESIDENT OR OTHER EXECUTIVE OF THE COMPANY AT ITS PRINCIPAL OFFICE.
THE UNIVERSITY MAY REQUIRE THAT NOTICE BE DELIVERED TO THE PRINCIPAL INVESTIGATOR, THE PRESIDENT, OR PERHAPS THE DEAN FOR RESEARCH. TIME PERIODS IN WHICH NOTICE MUST BE RECEIVED SHOULD BE INCLUDED AS WELL AS WHEN SUCH PERIODS SHOULD BEGIN AND END, E.G., UPON RECEIPT, UPON DELIVERY,
UPON MAILING, ETC.
XIX. Integration, Severability, Headings, and Contract Terms
This agreement and attached appendices and exhibits constitute the entire
agreement between ________ ___ ______ (the University) and
_____Ttfie SP-onsorT-with respect to the research pr t T7 _____ e__ _____All mdfications shall be inin TV e.
All agreements and covenants contained herein are severable, except those establ ishi ng the research project and those regarding protection of confidential information, publication rights, and patent rights. If any agreements or covenants, apart from the named exceptions, are held invalid by a court of appropriate jurisdiction, this agreement shall be interpreted as if such agreements or covenants were not included.
The headings in this agreement are intended only for convenience of reference and shall be given no legal effect in construction or interpretation.
The waiver by either party hereto of any right hereunder or failure to perform or breach by the other party shall not be deemed as a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. The failure of either, party to
enforce at any time the provisions of this agreement, or any rights in respect thereto, or to exercise any election herein provided, shall in rio way affect the validity of this agreement. The exercise by either party of any of its
rights herein or any of its elections under the terms or covenants herein shall not preclude or prejudice either party from exercising the same or any other right it may have under this agreement, irrespective of any previous action or proceeding taken by either party hereunder.
COMMENTS-AN INTEGRATION CLAUSE IS INCLUDED TO INSURE THAT EXTRANEOUS OR UNOFFICIAL DOCUMENTS OR AGREEMENTS ARE NOT INTRODUCED TO IMPLY ADDED CONDITIONS TO THE AGREEMENT.
IT IS UNDERSTOOD THAT THE ENTIRE AGREEMENT IS EMBODIED IN ONE DOCUMENT UNLESS ADDITIONS OR MODIFICATIONS OCCUR LATER BY PRESCRIBED METHOD. IT IS ALSO DESIRABLE TO MEET THE LEGAL REQUIREMENTS FOR SEVERABILITY. IN THE EVENT
THAT INDIVIDUAL SECTIONS OF THE AGREEMENT ARE FOUND
61




INVALID BY AN APPROPRIATE COURT, THOSE SECTIONS MAY BE DELETED FROM THE AGREEMENT WITH THE REMAINING PARTS LEFT
INTACT.
XX. Governing Laws
This agreement shall be governed by and construed in accordance with the laws of
COMMENTS-THE GOVERNING LAWS SECTION IS INCLUDED MERELY TO PRECLUDE ANY JURISDICTIONAL PROBLEMS OR CHALLENGES SHOULD THE
AGREEMENT BECOME SUBJECT TO CONTROVERSY OR LITIGATION.
LOCAL STATUTES AND LIMITING FACTORS IN RELATION TO
GOVERNING LAWS SHOULD BE CONSULTED.
GENERALLY THE LAWS OF THE STATE IN WHICH THE UNIVERSITY IS LOCATED SHOULD CONTROL. IT IS NOT REASONABLE TO
EXPECT THE UNIVERSITY TO HIRE OUT-OF-STATE COUNSEL IN THE
EVENT OF A DISPUTE IN COURT.
XXI. Definitions
"All substantial rights" to a patent means all rights of value at the time the patent is transferred, which are generally the rights to make, use, and sell the patented subject matter. An undivided interest in all substantial rights is an equal percentage of eac--n-d- every su-tantial right. All
substantial rights does not include patent rights that are restricted to particular industries or territories unless the patent is useful only in those industries or territories.
"Best efforts" means with diligence that reasonably is due an important research pojet.
"Intellectual property rghts" include all patents and applications for
patents or certificates oT plahtvariety protection as well as trade secrets, copyrights, and trademarks.
A "license" of a patent is the grant of anything less than all substantial rights. It conveys a covenant by the patent owner not to sue for the manufacture, use, or sale of that which is covered by the patent.
"Memorandum of agreement" or "agreement" means this agreement between
-theUniversity) and
(Tth-eSponsor) dated for the
project entitled,
, a 1-al- attached appends anhbits
"Patent rights" shall include all patents issued under Title 35 of the United States-ode, all foreign patents, as well as Certificates of Plant Variety Protection issued under Title 7, Sections 2321 et seq. of the United States Code.
62




"Principal Investigator" is the project leader and coordinator who is designated by the University with the approval of the Sponsor. All management
of the project is directed by the Principal Investigator.
"Project assets" are all articles of tangible property which are purchased with project Turi-d-sfo r use by the researchers in performance of the project.
"Project funds" are all moneys advanced to the University by the Sponsor for use in the project.
'Researchers" are all University employees including the Principal InvstgatrWho have been assigned to work on the project and who have signed a research agreement.
"Research project" or "the Project" is the work entitled,
agreement.--ad i h ujc f ti
"Trade Secrets" are any formulae, patterns, devices, or compilations of information which are used in the Sponsor's business, provide the Sponsor a competitive advantage, and are marked "trade secret" and "confidential."
XXII. Research Agreement
In consideration of my selection to participate in the research project
entitled, ________________ ,and funded
by (the____ S____ T ~onorl),- f d'mentsde under the
agreement, I flereby agree:
1. to abide by all terms of the agreement;
2. to communicate all research results promptly and fully;
3. to keep accurate, witnessed, daily records of the research;
4. to assist the University and the Sponsor in any way to pursue patent
rights;
5. to maintain in strict confidence all trade secrets that are disclosed
by the Sponsor for use in this project;
6. to reveal any conflicts of interest or potential conflicts of interest,
which I may have, due to either private consulting arrangements or
other associations which may be related in subject matter to the attached
agreement;
7. to disclose all patents or certificates of plant variety protection
that have been issued in my name or that I have assigned to another
which relate to the project;
8. to seek no outside funds from either a public or private
Sponsor for the work to be performed pursuant to this agreement; and
9. that all rights to inventions and project assets in connection with
this research project belong to the University as described in the
agreement.
COMMENTS-THE RESEARCH AGREEMENT MAY OR MAY NOT BE ATTACHED. IT
SHOULD BE SIGNED BY EACH RESEARCHER, OR SEPARATE AGREEMENTS SHOULD BE SIGNED BY EACH RESEARCHER. THE




PURPOSE OF THE RESEARCH AGREEMENT IS TO APPRISE EACH PARTICIPANT IN THE PROJECT OF THE FACTS -SURROUNDING THE ARRANGEMENT. EACH RESEARCHER SHOULD BE AWARE OF THE UNIQUE ISSUES INVOLVED IN THIS UNIVERSITY/INDUSTRY
COOPERATIVE EFFORT. BY VIRTUE OF SIGNING A RESEARCH
AGREEMENT, THE RESEARCHERS WILL BE BOUND TO THE TERMS OF THE AGREEMENT BETWEEN THE SPONSOR AND THE UNIVERSITY.
THIS IS ESPECIALLY IMPORTANT CONCERNING THE TREATMENT OF
INTELLECTUAL PROPERTY.
DUE REGARD SHOULD BE PAID TO THE RELATIONSHIPS AMONG GRADUATE STUDENTS, PROFESSORS, THE UNIVERSITY, AND THE
SPONSOR IN THE FORMULATION OF CONTRACTUAL OBLIGATIONS.
THE RESEARCHERS MIGHT RECEIVE DIRECT PAYMENTS FROM THE SPONSOR IF UNIVERSITY POLICY DOES NOT PROHIBIT IT.
OTHERWISE ALL PAYMENTS SHALL BE MADE THROUGH APPROPRIATE
UNIVERSITY CHANNELS.
IN CONNECTION WITH RECOMBINANT DNA RESEARCH, IT IS
INCUMBENT THAT THE RESEARCHERS STRICTLY ADHERE TO THE GUIDELINES PROMULGATED BY THE NATIONAL INSTITUTES OF HEALTH (VOL. 48 FEDERAL REGISTER, P. 24556, JUNE 1,
1983).
ADEQUATE PRECAUTIONS MIGHT BE ADDED TO THE RESEARCH AGREEMENT TO PROTECT ALL FORMS OF INFORMATION WHICH ARE DERIVED FROM THIS PROJECT. THE NEED FOR SUCH PROTECTION
MIGHT ARISE WHEN A RESEARCHER LEAVES THE EMPLOY OF THE CONTRACTING INSTITUTION FOR A NEW POSITION. AN
APPROPRIATE SAFEGUARD WOULD BE TO PROHIBIT ANY USE OUTSIDE THE PROJECT OF ANY INFORMATION DERIVED FROM THE PROJECT DURING ITS TERM AND FOR A SPECIFIC TIME PERIOD
FOLLOWING ITS CONCLUSION.
XXIII. Funding Arrangements
$ shall' be paid to the University on the date the project is to
beg i n T _ shall be paid on the first of each month thereafter, beginning ________ until the date the project is scheduled to be
completed.COMMENTS-THE FUNDING ARRANGEMENTS MAY TAKE MANY FORMS. MONTHLY
PAYMENTS MAY NOT BE PRACTICAL, SO PROVISION FOR QUARTERLY OR SEMI-ANNUAL PAYMENTS MIGHT BE MADE. PAYMENTS MIGHT BE
MADE AS NEEDS ARISE OR AS DETERMINED WHILE THE RESEARCH PROGRESSES. FUNDING SHOULD BE RECEIVED BY THE UNIVERSITY
IN ADVANCE IN ORDER TO INSURE THE PROPER CONTINUATION OF THE RESEARCH.- IN ALL CASES, THE FUNDING SCHEDULE SHOULD
BE DEFINITE AND SPECIFIC.
64




THE AGREEMENT MIGHT INCLUDE PROVISIONS FOR BONUS PAYMENTS FOR INTERIM ACCOMPLISHMENTS OF THE RESEARCHERS. SUCH
ARRANGEMENTS SHOULD BE SET FORTH IN SPECIFIC AND DEFINITE TERMS.
65




CHAPTER 4
EFFECTS OF DEVELOPMENTS IN BIOTECHNOLOGY ON SOCIETY
I. Introduction
A variety of effects will accompany the introduction of developments in biotechnology--effects upon individuals, firms, communities, and the natural environment.. The precise effects will vary with the particular developments
that are introduced. Also, the external impact of biotechnological research products will be similar to that of technologies derived through traditional research activities. The influx of new technology into agriculture is commonplace, but introductions of new biotechnology may be distinguished by three features.
- First, there is more time to study and plan responses to this new technology before it is introduced on a broad scale. This time should be
spent anticipating all of the possible effects--economic, social, environmental, and others.
- Second, biotechnology holds the potential for major technological change across a broad front, and agriculture promises to be the object of some of the most significant developments.
- Third, because the potential payoff for developments in biotechnology may be very large, there is a significant demand on the pool of trained scientists from universities.
A discussion of the effects of developments in biotechnology can be divided into three categories: (1) effects expected to come within the normal functioning of the price or market system, (2) environmental effects which are
anticipated to become manifest outside the price or market system, and (3) social effects upon individuals, groups, and communities.
II. Effects Within the Price or Market System
A major question is, who ultimately benefits from new technology, such as increased capacities for nitrogen fixation or frost tolerance--farmers, consumers, input suppliers, output processors? New technologies are generally cost decreasing, output increasing, or both. In many instances, consumers tend to be the major beneficiaries in the long run with more output at a lower price. In a market characterized by highly elastic demand or by a rapid
growth in demand, producers may retain a relatively large share of the gain from technical change. However, in a market characterized by relatively inelastic demand and by slow growth in demand, as is typically the case with food in high income countries, most of the gains from technical change are passed along to consumers in the form of lower product prices. Only early adopters gain under competitive market conditions.
One likely result of research in the biotechnologies in agriculture is an increase in production from a given amount of inputs. Thus, the level of utilization of some inputs might decline, use might be made of lower quality inputs, or the level of inputs could remain constant with production levels
66




increasing. The adjustment process promises to be particularly dramatic for land as a production input. With increases in productivity from developments in biotechnology, continuing pressure on land values appears highly probable.
Marginal lands for uses impacted by biotechnology would be expected to shift to lower uses on the value scale. If the societal interest is in maintaining a level of agricultural output, attention would be expected to focus on
reductions in levels of inputs used in production or use of lower quality inputs in production. This could permit some easing of concern about soil conservation, for example, if an increase in production per acre of land under
cultivation were to occur as a result of developments in the biotechnology area. If the national interest is in maintaining a particular level of
production, the public interest would seem to be well served with investment in research in biotechnology with the potential for reducing the utilization level for inputs of greater present value than the present value of the research investment. Research will be needed on the trade-offs between expenditures of funds for research and development work in the new biotechnologies and expenditures of funds to maintain the productivity of inputs such as land. Throughout much of the cornbelt, for example, a great deal of policy concern already exists over highly erosive soils. These soils have moved increasingly into the production of intertilled crops and away from
livestock production as more attention to enterprise accounting has made it increasingly clear that livestock production with high levels of forage
utilization is not an economically viable enterprise. With an expectation
that developments in biotechnology will increase productivity both in areas of
animal production and in areas of plant production, problems of land use at the margin and problems of land values are likely to draw research and extension attention over the next several years.
In some instances, long-range effects may be felt on the structure of agriculture, depending upon the benefits from the new technology by size and type of firm. Some developments may be structure- neutral. Others may come with significant scale economies and benefit larger firms. The new technologies may also affect risk and uncertainty with important implications
for investment decision-making and risk-sharing arrangements. For example, the risks of loss of plants or plant production from freezing could be reduced
with development of more tolerant varieties as could the loss of animals or animal production from disease.
New technology may affect price and quality competition for products internationally. This is one compelling reason for pressing ahead
relentlessly with research in this area. Viewed from the standpoint of the developing countries, the prospects for breakthroughs in the biotechnologies hold both threats and promise. The matter of limited capability to carry on research in this area, the limited capability of industry in developing countries to exploit biotechnological developments, and the question of access
to biotechnological breakthroughs in developed countries pose substantial obstacles to the developing countries. Moreover, adjustment problems in the developing countries could be substantial. Anticipating the effects of new biotechnology is especially important in that developments are likely to have a direct impact on more economic sectors than the Green Revolution. Yetbiotechnology offers hope for meeting nutritional needs in developing
countries where 90 percent of the population increase is likely to come. While much recent technology such as the computer revolution has largely bypassed developing countries, biotechnology relates directly to food and
67




fiber 'production, disease con trol and other universal needs of the human family. *.For all ozf these effects, domestic -as -welil as international, market forces will be activated as new technology is introduced and disseminated.
111 Environmental Effects
The second category of effects from the introduction of new biotechnological developments involves the various dimensions of the environment. Under this rubric are: (1) effects on human health, (2) effects
on animal health, (3) effects on the natural environment (air,, soil, and water), and (4) effects on property and other features of the environment (apart from humans, animals, and the natural environment). Assurance is
necessary that the environment will not be damaged irreparably.
In dealing with the environmental effects outside of the price or market system, efforts should be concentrated on preassessment, monitoring, and compensation.
Effective preassessment of human health and environmental effects is necessary before developments in biotechnology are released for field trials and for general use. Monitoring of those effects should continue as
developments continue in general use. (A system is currently in place and
functioning to provide a review of proposed research in biotechnology.)
Assessment of the economic and social results should commence as soon as possible after a development has a reasonable probability of introduction.
Compensation may be appropriate for those experiencing losses from resource adjustment. Those costs may be lessensed by the development of new technologies and other means to neutralize or to reduce the impact of negative effects.
With respect to the preassessment function, a system is already in place
to provide a review of proposed research biotechnology. The centerpiece of
that system, the recombinant DNA Advisory Committee (RAC), of the National Institutes of Health, focuses primarily on anticipated effects that reasonably
would be expected to have an adverse effect on health. This committee, has
developed a proposal for a national biological assessment system (see Chapter 6) which involves an ongoing process to meet perceivable needs in biotechnological developments for agriculture. This monitoring effort would assure continuing and effective surveillance of the effects of biotechnological developments from field trials and commercial uses.
It is vital that the review functions be conducted in such a manner as to
maintain the highest level of confidence possible on the part of the public. As part of that objective, the review effort should involve the most capable and knowledgeable individuals from the disciplines and subdisciplines within the review jurisdiction. Wide consultation should take place before
genetically engineered organisms are released into the environment. Involvement of scientific- representation from the environmental disciplines is vital to assure a thorough and complete review.
68




IV. Social Effects
Viewed globally, biotechnology offers additional hope for addressing problems of world hunger. The potential exists for reducing the cost of food
and increasing food supplies in deficit-food areas. At the same time, the potential is high for substantial and far reaching social adjustments from developments in biotechnology. Some of the adjustments may relate directly to biological features of the development; others will involve the social effects
of adjustments from change in economic relationships. The list of possible impacts might include effects on individuals, families, firms, and groups of firms, as well as communities including input suppliers and output processors.
The introduction of new developments in biotechnology will likely pose many of the traditional questions relating to adoption of new technology and diffusion throughout society or a sector or subsector. A substantial body of literature has emerged in this area over the past three or four decades. For this category of effects, the major contributions may be in anticipating the social effects and assisting those affected in adjusting to changed conditions.
69




CHAPTER 5
LEGAL CHALLENGE TO THE DELIBERATE RELEASE OF GENETICALLY ENGINEERED ORGANISMS, FOUNDATION ON ECONOMIC TRENDS, ET AL. V. MARGARET HECKLER, ET AL.
The following is a chronology and brief outline of an important legal action (Foundation on Economic Trends, et al. v. Margaret Heckler, et al.) involving the deliberate release into the environment of genetically engineered organisms. Several environmental and public interest groups have challenged not only the first such release, but also the only existing review procedures. The major challenges involve compliance with the National Environmental Policy Act and the requirements for Environmental Impact Statements. This suit has caused significant delays in research which is viewed as essential to worldwide agriculture.
7 September 1983
Civil Action No. 83-2714 was filed in the United States District Court
for the District of Columbia, entitled:
The Foundation on Economic Trends, Jeremy Rifkin, Michael W.
Fox, EnvironmentalAction, Inc., and Environmental Task Force
ga r de ei7TF iT
official c-p--- -- ---- 1re o e- o-t
Tel-t-h--(NT -and a-crFl4. 1--ase, -T capaty
as-TD t6F.-a-fi 1-W-6 -aTIu-t-u6f-All irg and-T-f RiT-cu-s
Diseases.
The action is a complaint for a declaratory judgment and injunctive relief. The plaintiffs are requesting the court to declare unlawful and enjoin the actions of the defendants and those acting under their authority approving, authorizing, or carrying out experiments which
involve the deliberate release of any organism containing recombinant DNA into the environment pursuant to the National Institutes of Health Guidelines for Research Involving Recombinant DNA Molecules. The plaintiffs
further request that the court declare such Guidelines unlawful.
The plaintiffs claim that the National Institutes of Health violated the
National Environmental Policy Act (NEPA) by not preparing either an Environmental Impact Statement (EIS) or an Environmental Assessment (EA) when the Guidelines were revised in 1982 and 1983 to permit the deliberate release of recombinant DNA organisms into the environment.
The plaintiffs further claim that the defendants' procedure for granting
approvals of experiments which involve the release of recombinant DNA into the environment constitutes arbitrary agency action in violation of the Administrative Procedures Act. The plaintiffs form this conclusion because they claim the defendants failed to consider fully the alternative of developing adequate scientific protocols for environmental
risk assessment before approving such experiments.
70




Finally, the plaintiffs claim that the actions of the defendants constitute a federal cormmon law nuisance in creating an unnecessary and substantial, albeit unquantifled, risk to the environment.
16 September 1983
Plaintiffs moved for a Temporary Restraining Order and/or Preliminary Injuction to enjoin the Recombinant DNA Advisory Committee (RAC) of the National Institutes of Health (NIH) from hearing, reviewing, debating, evaluating, and making a recommendation to defendant Wyngaarden on two proposed experiments involving the deliberate release of recombinant DNA organisms at a closed portion of the Committee's meeting scheduled for 19
September 1983.
The plaintiffs claimed the meeting either should have been open to the
public, or none of the matters should have been discussed.
19 September 1983
Judge Sirica of the United States District Court for the District of Columbia denied plaintiffs' motion for a temporary restraining order.
Plaintiffs filed the first amended complaint which adds a fourth cause of
action based on the Federal Advisory Committee Act (FACA) concerning the
treatment of confidential information.
18 November 1983
Defendants filed an answer to the first amended complaint. Defendants
denied each cause of action.
6 February 1984
Plaintiffs filed a motion for a temporary restraining order asking the United States District Court for the District of Columbia to enjoin temporarily a portion of the 6 February 1984 meeting of the Recombinant DNA Advisory Committee. The plaintiffs argued that defendants' intention to close part of the meeting violated the Federal Advisory Committee Act
and that defendants violated the notice requirements required prior to closing the meeting from the public. The matters to which the plaintiffs
objected concerned proposed experiments in the field concerning the deliberate releases of recombinant bacteria into the environment.
The motion was denied by the District Court, but on appeal to the United States Court of Appeals for the District of Columbia, the decision was reversed. The Court of Appeals granted the injunction on the ground that
the notice given by NIH in the Federal Register was inadequate.
13 April 1984
The plaintiffs amended the complaint in order to add David Brower (of Berkeley, California and the Friends of the Earth) and William Turnage (of Reston, Virginia and the Wilderness Society) as plaintiffs to the action. Plaintiffs also added the Regents of the University of
California as defendants in the case.
71




14 April 1984
Plaintiffs requested a preliminary injunction: (1) ordering NIH to vacate, rescind, and/or suspend any and all approvals for experiments involving the deliberate release of recombinant DNA organisms into the environment, (2) ordering the particular rescission or suspension of the approval of the Lindow/Panopoulos experiment, and (3) prohibiting NIH from any further review, approval, or authorization of any experiments involving the deliberate release of recombinant DNA organisms into the environment. Plaintiffs claim that before such activity can continue or proceed, an Environmental Assessment or Environmental Impact Statement is necessary for each deliberate release experiment, and an Environmental Impact Statement is necessary because of certain changes in the NIH Guidelines. These statements are required by the National Environmental Policy Act according to the plaintiffs. Plaintiffs claim that before
such experiments can be undertaken scientific standards and protocols must be promulgated in order to assess the environmental risks of
releases of recombinant organisms into the environment.
The National Institutes of Health requested the Court to dismiss the third count of plaintiffs' complaint (federal common law nuisance) and to
grant summary judgment on the first and second counts [claims under NEPA and the Administrative Procedures Act (APA)]. As to the third count, NIH
asserts that the Court does not possess the proper jurisdiction to hear such claim. Concerning the motion for summary judgment, NIH claims that, admitting the facts in a light most favorable to the plaintiffs, the only
reasonable conclusion is that NIH has upheld the policies of NEPA and APA. The NIH maintains that its procedures for review and approval of the proposed experiment constituted an adequate Environmental Assessment of the risks involved. Furthermore, the Environmental Impact Statement for the original guidelines in 1977 and the two Environmental Assessments
accompanying the 1978 amendments constituted adequate compliance with NEPA mandates. In the same document the NIH opposed the plaintiff's
motion for preliminary injunction.
4 May 1984
The Regents of the University of California filed their opposition to the
plaintiffs' motion for preliminary injunction. The Regents' arguments
essentially mirror those of the NIH in their opposition and motions for
dismissal and partial summary judgment.
16 May 1984
The United States District Court for the District of Columbia granted plaintiffs' motion for preliminary injunction. The Court concluded
(1) that the plaintiffs are likely to prevail when the merits of the case are decided at trial, (2) that the plaintiffs would be irreparably harmed
if the injunction did not issue, (3) that the defendants would be harmed relatively little, and (4) that the public interest favors granting a preliminary injunction. The Court concluded that the decisions of the NIH Director (1) not to issue an environmental impact statement for the 1978 revision of the NIH Guidelines, (2) not to issue a broad, programmatic environmental impact statement addressing general environmental
72




issues presented by deliberate release experiments, and (3) not to issue either an environmental assessment or an environmental impact statement addressing specific environmental issues associated with the Lindow!
Panopoulos experiment constituted arbitrary actions in abuse of his discretion. In sum, the NIH Directors' actions constituted the lack of the required "hard look" inquiry for such federal agency action. The
decision of the District Court seems to hinge on the fact that specific environmental documents were lacking to form the appropriate record for
the Court's review.
18 May 1984
The Regents of the University of California filed an emergency request to the United States Court of Appeals for the District of Columbia to vacate the preliminary injunction against the Regents. The Regents claimed that
the District Court failed to follow and apply the governing law in granting the preliminary injunction against the experiment. Specifically, it was asserted (1) that the Court improperly allowed the plaintiffs
to raise for the first time in court objections that they had failed to raise before NIH during its proceedings and (2) that the Court improperly
reached beyond NEPA to impose standards for the agency's decisional criteria and process. The Regents claimed that the first point is
compelled by well-settled notions of fairness, orderly procedure, and good administration. On the second point, the Regents felt the District Court erred by failing to apply the "arbitrary and capricious" standard and by ignoring the agency's standards for decision-making. The
arbitraryy and capricious" standard compels the overturning of a federal agency's action only where it has exceeded good reason to the point of being arbitrary or capricious. The Regents maintained that, if the injunction is not vacated, the University, its research programs, and its
research faculty will be irreparably harmed in the areas of recruitment and retention of faculty and researchers and of research funding.
Furthermore, the plaintiffs can allege only remote, speculative harm.
Finally, the Regents argued that the public interest will be
substantially and irreparably harmed by the loss of responsible and
valuable scientific research.
The plaintiffs countered the Regents' motion by claiming that the public notices for the deliberation of the experiments at NIH were inadequate and that little harm would result if the experiment is further delayed.
The Foundation points out that nowhere is it explained how or why the NIH concluded that no EIS or EA was necessary. The Foundation's argument is
mainly that the District Court's action in granting the preliminary
injunction was the correct one.
23 May 1984
The American Council on Education filed an amicus curiae memorandum with the Circuit Court in support of the Regent mege appeal. The
thrust of the Council's memorandum was unless the order of the District Court was vacated, trust and confidence in the scientific community would
be harmed irreparably. The Council claimed that unless the experiment proceeds, the entire area of recombinant DNA research will be affected dramatically and adversely. Stressed in the memorandum is the fact that
73




the academic community has been acting in reliance on the NIH guidelines while conducting recombinant DNA research. Researchers have been aware that their experiments which pose significant risk to human health or the' environment may rnot be conducted. The scientific community has been very cautious and responsible in their regulation of recombinant DNA experimentation. Careful and reasoned attention has been directed to every potential risk which has reasonable scientific basis. The Council now
fears that the conclusion to be made from this judicial result is that all recombinant DNA experiments must be preceded by an Environmental Impact Statement. That conclusion raises an inference that the particular experiment to be conducted will cause a significant risk to the environment, and that a finding of "no risk" is thereby precluded. Then it would follow that no experiments could be approved under the Guidelines, since the Guidelines prohibit experiments which pose significant risk to human health or the environment. The public interest will only be served
by this injunction if environmental harm will result from the experiment or if NIH failed to address the appropriate environmental factors.
Neither is true according to the American Council on Education. The
Council concludes that the District Court has diminished the trust and confidence the scientific community has established with the public in
the area of recombinant DNA research over the past ten years.
25 May 1984
The Circuit Court denied the Regents' emergency appeal of the preliminary injunction. In light of the significant amount of time involved and the small likelihood of success, the Regents did not file a certiorari motion
to the United States Supreme Court in opposition to the Circuit Court's
deci sion.
1 June 1984
The NIH Recombinant DNA Advisory Committee recommended approval of an experiment by Advanced Genetics Sciences, Inc. (AGS) to field test
genetically engineered Pseudomonas strains.
The plaintiffs filed a motion in the District Court for Summary Enforcement of the Circuit Court Order of February 6, 1984 or, in the alternative, for a Preliminary Injunction against the AGS experiment. The
Circuit Court Order involved the prohibition of discussion or action on
the AGS experiment at the February 6 meeting of the NIH RAC.
20 August 1984
Both Regents of the University of Californi a and the National Institutes
of Health filed briefs appealing the May 16 injunction issued by the United States District Court for the District of Columbia. The American Council on Education and the National Association of State Universities and Land-Grant Colleges filed an amici curiae brief in support of
defendant-appellant Regents.
The Regents' brief raises three major objections to the District Court's decision: (1) the court erred in issuing the injunction against the University experiment, (2) the court erred in requiring a programmatic
74




approach by NIH in its review of deliberate release experiments, and
(3) the court erred by broadly tailoring the injunction to halt the Lindow experiments. The experiments are necessary in order to develop
the generic standards desired by the court. In the Regents view, this
thwarts the very objectives that the court is trying to attain.
The NIH brief covers three major areas in its objection to the issuance of the preliminary injunction: (1) the NIH determination that an EIS was not required for the 1978 revisions to the NIH guidelines was reasonable and adequately supported by the record; (2) NEPA does not require NIH to
prepare a programmatic EIS; and (3) the balance of equities between the
parties clearly weighs against the issuance of a preliminary injunction.
The amici curiae brief concentrates on the harm that would allegedly resuft--fom--the-preliminary injunction. The amici curiae claim that substantial harm will result to the progress of recombinant DNA research, and that trust and confidence in the scientific community will be irreparably harmed.
24 September 1984
Plaintiffs filed a brief in opposition to the defendants appeal of the May 16 injunction. The plaintiffs maintain that the District Court correctly found that an EIS was required for the 1978 revisions of the guidelines, that a programmatic EIS is necessary for deliberate release experiments in general, and that NIH failed to prepare an Environmental
Assessment for the Lindow experiment.
9 October 1984
Defendents filed reply to plaintiffs opposition appeal of the May 16 injunction. Oral argument is set for the November-December session of
the Circuit Court.
75




CHAPTER 6
PROPOSAL FOR A NATIONAL BIOLOGICAL IMPACT ASSESSMENT PROGRAM
I. Introduction
The agricultural community continuously assesses the impact of plant,. animal and microbial biota within a wide range of cropping and animal production systems. These assessments are made to not only assure agricultural stability but also to assure the protection and preservation of our environment. Particular care is taken with proposed introductions of new or genetically altered plants, animals and microbes. Any new material is carefully
assessed to determine if it is beneficial from an agricultural point of view without imposing any threat to our environment. In the case of all major
crops, a wide range of processes are presently used in each state in which new
forms, varieties and species are assessed for their impact. It is proposed
that we build on our existing systems which have a long and successful history to create a National Biological Impact Assessment Program (NBIAP).
Under the system envisioned in the National Biological Impact Assessment
Program, performance protocols will be developed on current model system research projects to build into our existing protocols the capabilities of successfully assessing the impact of materials produced using modern biotechnological research. This system would include those materials produced by genetic engineering research including recombinant DNA (R-DNA) methodologies. NBIAP would involve an orderly, step-wise assessment prior to release into the environment and a monitorings process for assessing impact over time in limited release systems.
NBIAP will be developed as a research based system built upon the experience gained from our existing assessment practices to benefit both production
agriculture and society as a whole while continuously protecting our envi ronment.
II. Concepts in Biological Change
Biological evolution is due primarily to a gradual flow of successive changes resulting in organisms better adapted to the environment. However,
discontinuous and unpredictable events may also be important contributors to the total evolutionary process. Few cases of natural speciation are understood reasonably well; the origin of common wheat is an exception. It is
thought to have originated naturally about 2500 B.C. in the area now known as Northeastern Turkey or perhaps an adjacent area of the Soviet Union. it
occurred as the result of a chance genetic combination of a 14-chromosome wild grass with a 7-chromosome wild grass to form a 21-chromosome hexaploid that subsequently became domesticated as bread wheat. Similar spontaneous genetic
changes are offered as explanations for the sudden formation of new types of organisms and the rapid genetic dynamics that sometimes occur in natural ecosystems.
In agricultural research systems the use of artificial selection for the improvement of plant and animal types has caused dramatic increases in food and fiber production. For instance, in the past 50 years, virtually all
76




varieties of crops have been replaced with improved selections. As a result this Nation's yields of wheat, rice, sugarcane, soybeans, and potatoes have been doubled. During the same period, United States yields have tripled for corn,.grain sorghum, peanuts and processing tomatoes.
Most crop yield improvements are the direct result of genetic manipulation of the crop species by conventional genetic research methods. For the past half century, considerable research efforts have been devoted to unlocking the natural barriers that define species. Penetrating these barriers allows for the synthesis of new species. Some success has been accomplished with man-made crops such as Triticale which was developed by fusion of the wheat and rye genomes. Many other desirable recombinations between species
have not been possible because of strong genetically and immunologicallly incompatible systems that block the interspecific exchange of genetic material. These barriers have greatly limited conventional breeding programs, forcing research programs to deal with gene pools of very limited size.
New biotechnological research capabilities may overcome many of these barriers. These discoveries include the development of immunosuppressant drugs that permit fertilization between distant species, the fusion of protoplasts of different species and the transfer of specific genes from one
species to another. Still to come will be methods to synthesize specific genes for insertion into organisms. This new genetic technology combined with
the use of cell and tissue culture systems provides opportunities for the exploration and development of new genetic combinations.
Changes and/or improvements in animals have been produced by traditional breeding techniques for as long or longer than in plants. Fewer species have been involved in the domestication of animals and efforts have been confined primarily to cattle, swine, sheep, poultry, goats, and horses. Most activity has been confined to intra-species crosses. Notable exceptions of interspecies crosses occurred in such animals as the mule and beefalo. In recent years, there has been a variety of "new breeds" of cattle developed such as Brangus, Beefmaster, Simbrah, Brahmasin, Gelbray, and Santa Gertrudis that depend on crossing closely related species of the same genus (Bos taurus x Bos indicus). In addition, several synthetic strains of cattle, swineian sheep invoTvTing the crossing of two or more existing breeds are currently being developed at USDA research stations and State Agricultural Experiment Stations. From an industry standpoint, the establishment of new breeds has become more an administrative activity than a biological one.
Induced genetic changes in animals, i.e., transferring genes from one
species to another species in the egg, zygote, or embryo, has been accomplished only recently. The classic case involved transferring the genome for growth hormone production from a rat to a mouse.
III. Assessment of Biological Change
For decades a reliable, distributed network of agricultural scientists has successfully undertaken the task of monitoring and measuring the products of conventional genetic improvement programs. This pluralistic and
geographically distributed research system has been a key factor in the ever
successful agricultural production of the United States. It is this network of scientists which provides the information needed to make intelligent
77




decisions over the release of new'cultivars, the introduction of new breeds of animals, and the utilization of new microbial strains.
All discoveries of improved organisms are based on information collected by a research protocol acceptable, to the agricultural scientists and
protective of the environment. Current methods have been refined through years of experimentation. "Rod-row" cultivar tests, "calf-performance"
testing and other procedures have been designed to measure the significant and to judge the worthwhile. Statistical conventions, common experimental
designs, and standards for comparison have been generally accepted by the entire agricultural scientific community. These protocols have and will
continue to serve American agricultural scientists and society well in the assessment of the impact of products of conventional genetic improvement programs. These protocols have been utilized over the last fifty years by American agricultural scientists in the successful release of over 7,500 new varieties, cultivars, and lines of germplasm. These releases have played a major role in the development of our American agricultural system.
Thus, staggering quantities of DNA are deliberately released in agricultural practices. These releases are carefully designed through results from scientific research and tested under controlled systems for assessment for their potential impact over time. Risk and benefit assessments are both intensive and extensive prior to broad release into the environment. This not
only includes assessment of impact within components of the agricultural system but also its potential impact on the environment broadly. Individual states have specific protocols for the release of new crop varieties and biological control agents. Appendices A and B are included as examples of such state protocols.
A most important feature of this intricate national system for assessing
biological change is that of measuring change over time following extensive and expansive release into the environment. Although this aspect of post
release impact assessment has been developed in an organized fashion for a half century it has become a very sophisticated system in the last two decades with the advent of new tools and techniques. Molecular ecologists have
designed indicators that measure the "symptoms" of genes; genetic gardens with
continuous monitoring, gene traps and genetic marker systems, and probes designed to measure genetic flow and shifts in populations.
Not only is the post-release impact assessment essential to verify predicted performance but it is equally essential because of changing climactic and edaphic factors, mass population effects over time, spontaneous genetic events, gene "wearing" in a system, and other factors. Thus a continuing,
research based impact assessment system is essential to a total assessment of biological change in this nation.
Although the food, feed and fiber base of the nation is derived in large measure from only seven animal species and 38 plant species, the resulting array of biologics released in the environment over time, exposing the consequences of specifically designed DNA molecules, is of major concern in the impact assessment process.
Although based on relatively few species American agriculture is of major
significance in the total physical and biological environment of the nation.
78




Of the 1,973,000,000 acres of land within the United States, approximately 1,438,000,000 acres are directly used in food, feed, and fiber production. The relative distribution of areas planted among our major domestic crops is constantly changing (Table 1) as is the case with our major domestic animal populations (Table 2). Although we do not usually describe crops on the basis of numbers of individuals it is of interest to note the numbers of genetically
altered corn and wheat varieties released into our agricultural environment (Table 3).
TABLE NO. 1 Distribution of Area Among Major DoTP-st'c Plant Production Crops between 1932 & 1982
Crops 1932 1942 1952 1962 1972 1982
Acres (000)
Grain 227,558 197,039 200,708 147,460 130,739 175,634
Fruits 4,970 3,848 3,125 2,775 3,204 3,559
Vegetables 2,410 3,777 3,772 3,415 3,233 2,176
Cotton 35,891 22,602 25,921 15,569 12,984 9,729
Other Crops --- --- --- --- --- 1,287,000
Total 270,829 227,266 233,526 169,219 150,160 1,478,098
1 USDA Agriculture Statistics Reports, 1978 and 1983.
79




TABLE NO. 2 Distribution of Major Domestic Animal Production Populations between 1932 & 1932
---------1932 1942 1952 1962 1972 1982
Number of Animals (000,000)
Cattle 66 75 88 100 118 116
Swine 59 61 62 57 60 54
Sheep 54 57 32 31 19 12
Poultry 459 508 489 469 633 444
Total 638 701 671 657 830 626
TABLE NO. 3 Number of Plants Planted and Area Covered by Genetically Altered
Corn and Wheat Varieties Released in the Environment in 1982
Species Acres Plants
Corn 110,577,000 193 x 10 10
Wheat 51,851,000 3,940 x 10 10
80




In addition to the impact assessment of the billions of plants and animals illustrated in Tables 1-3, thousands of species of microbial life have also been assessed. In plant culture alone some 25,000 species of fungi, 3,000 species of nematodes, 800 species of viruses, and 600 species of bacteria may be involved at any one time with the release and maintenance in the environment of a primary plant production system. It should also be borne in mind that the entire system is dynamic. Although species structuring in the plant and animal systems is relatively stable, varieties, forms, breeds,
strains, and cultivars provide major changes in genetic conformation. In
response the microbial portion of the system is constantly shifting in genetic
conformation.
Thus, there is in place an extensive network and history of experience for dealing with the introduction of new genetic combinations of plant, animal
and microbial life into the environment. However, the introduction of new
biotechnological research capabilities often referred to as "genetic engineering," into agricultural research presents a unique set of questions for agricultural scientists. We do not know if all existing research
protocols are adequate for assessing the impact of the products of these new biotechnological research capabilities. Many existing methods may be
appropriate, others may be inadequate and additional assessment protocols are needed.
Biological assessment through the WBIAP system would not seem appropriate for the variations resulting from traditional animal breeding. These changes are usually very subtle and during the course of having to produce several replications and/or generations, the biological assessment has been well determined. Imposition of NBIAP standards would be an overkill.
On the other hand, there are at least two scenarios in which biological impact assessment is very appropriate. The first of these involves the use of
organic molecules derived from genetically engineered organisms to induce a change from the normal biological pattern. A contemporary example is the use of microbially produced growth hormone to alter the growth rate, lactation performance, or metabolite partitioning in animals. To date, the assessment
of these compounds has been rigidly controlled, but establishment of additional acceptable protocols would be appropriate.
A second case is where the genetic component of the embryo has been altered by means just now being perfected. These techniques have the potential for producing combinations of traits not now existing in nature and even new species. As a consequence, biological impact assessment standards and requirements are essential.
The genetic changes resulting from the traditional methods used in selection and crossing between existing varieties of crop plants likewise do not usually pose a risk to the environment; also this impact has been successfully monitored with existing protocols. However, the second scenario above is also
one which would require biological impact assessment of the new plant germplasm as well. In addition, plants provide a further complication in that there may be potential for the new variant to become a pest.
The scientist and the scientific cormnunit~y have assumed the responsibility for determining whether or not a given commiodity and/or food derived
81




from a plant or animal improvement program is safe or is an improvement in quality and quantity over preexisting commodities and-food sources. In
certain instances these research scientists cooperate with scientists in the Food and Drug Administration and other governmental agencies in assuring the appropriate and proper quality of foods derived from various commodities.
This system of scientist monitoring and regulation integrated into the overall plant and animal improvement research programs has been extraordinarily successful and there are few examples of hazardous foods that have emerged in the marketplace as a-result of this system. There are a few
examples of hazardous compounds being detected and thus have not presented a threat to consumers. One such instance occurred during the 1960's when a potato variety with high alkaloid content was at the point of release when it was realized that there was a potentially hazardous level of alkaloid in the variety. The variety was withdrawn and subsequent releases of potato varieties in this country have been checked for alkaloid content.
In addition to new plant and animal varieties as food sources, one must also consider food additives, their sources and the reasons for using them.
Food additives come from an array of biological and synthetic processes and they are generally added to food as a matter of maintaining flavor, to enhance
color, to prevent spoilage, to enhance shelf life, and to improve the nutritional value.
There have been problems associated with various food additives; these problems have been generally associated with the nature of the additive and not necessarily how it was produced, either synthetically or biologically. This is an important consideration when one realizes that genetic engineering
as related to food additives represents the development of new processes or the modification of older processes whereby additives are developed. Thus, genetically engineered food additives would be no more or less hazardous to the consumer than additives derived by other processes.
IV. Proposal For a National Biological Impact Assessment Program
This document sets out a plan for a national program to utilize existing scientists, research networks, and protocols to assess and monitor biological changes in agricultural and related ecosystems. We recognize that not all questions can be answered now. We stress the urgency of beginning now to delineate appropriate and acceptable scientific methods for the assessment of the products of biotechnological research.
It is proposed, both for economic reasons and to better capture the benefits of existing experience, that NBIAP be established within the U. S. Department of Agriculture and its state cooperating institutions. No other agency or organization could offer a comparable existing structure, geographic distribution of expertise, depth of experience, impartiality of assessment and proven history of scientific integrity. Duplication of this existing network would be both costly and unjustified.
The mission of the NBIAP would be to monitor fairly, accurately and continuously the impacts of the genetically altered organisms produced by biotechnological research. This close and continuous scrutiny by a national
82




network of agricultural and allied scientists would enable the United States to gain the maximum benefits from biotechnological research while assuring the greatest possible protection of society and the environment.
In developing the following sequence of assessment and/or protocols that would be used by the NBIAP, existing state and federal structures and protocols were utilized wherever applicable and new or proposed structures and protocols have been integrated into the existing network. This has the
obvious advantages of reducing the costs of implementation and placing a significant amount of regulatory and monitoring responsibility at the local level. The logic behind such a proposition is sound when one considers how effective local biohazard, animal protection, and human subjects committees have functioned in their respective roles. The following outline represents an effort to develop an idealized structure; however, it draws heavily from specific locations, institutions and agency protocols and hence requires additional fine tuning before it is truly a workable national structure.
As currently envisioned, the structure would function at three different levels of research and development, i.e., laboratory, initial field releaseexperimentation, and long term monitoring of commercial releases. The following sequences are organized to accommodate these three levels of inquiry:
Level 1. Laboratory Research
The following outline or sequence to be followed with respect to obtaining "approval" for laboratory research in the area of biotechnology, i.e. genetic engineering, etc., is a generalized description of existing procedures and protocols. These procedures and protocols have proven effective and have been accepted. The outline is presented here simply because it provides a platform for levels 2 and 3. It also underscores the fact that there is in place an infrastructure for handling laboratory experimentation.
A sequence of events that would result in the approval of laboratory experimentation in the area of the new biotechnologies might be as follows:
(A) Development of the proposal by the principal investigator and/or
cooperators.
(B) Submission of the proposal to the SAES director or other appropriate
office for review and submission to the central university division of sponsored research or similar structure established to handle
sponsored research.
(C) Submission of the proposal to the university biohazard committee if
appropriate.
(D) Submission of the proposal to the university animal safety committee
if appropriate.
(E) Submission of the proposal to the university Biological Impact
Assessment Program Committee as information only at this point. The
Biological Impact Assessment 15rogram Commiitee could be an expanded university biohazard committee or an autonomous committee established to regulate and monitor field experimentation and releases
83




involving recombinant DNA and related entities. We suggest expansion of the role of the local biohazard committee.
(F) Submission of the proposal by the institution to the agency from
which funding is requested. Throughout this outline the USDA
Competitive Research Grants Program will be used as the example.
The procedure would be similar in general and only different in a few details with respect to submissions to other agencies such as
NSF and NIH.
(G) Submission of the proposal by the USDA Competitive Research Grants
Program Office to the NIH RAC will depend upon the nature of the
proposal and the appropriateness of the need for NIH review.
(H) Return of the proposal to the USDA Competitive Research Grants
Program Office by the NIH RAC approving or requesting additional
information or denying the proposal.
(I) Evaluation of the proposal by the USDA Competitive Research Grants
Program Office and panels for adherence to program guidelines and
for quality.
(J) Return of the proposal to the principal investigator by the USDA
Competitive Research Grants Program Office with a statement of
action taken.
The above sequence is based on the assumption that as the proposal is submitted to the various local and national organizations it is approved and forwarded with approval. This would result ultimately in the funding of an approved proposal, i.e., a proposal that had met all of the requirements of the NBIAP. These requirements would have been met without adding any additional structure other than the expanded local biohazard committee which as indicated above would receive a copy of the proposal only as information, since the proposal, at this point, involved only laboratory experimentation.
Level 2. Field Release Experimentation
The following sequence is based on the assumption that an investigator or
group of investigators had developed a biotechnological research product involving recombined genetic material to the point that field testing is appropriate. Field testing involves a controlled release for purposes of further experimentation in natural or agricultural ecosystems with the
ultimate goal of determining the performance of the released material and the potential for adverse environmental impacts. A generalized procedure under the NBIAP for field release experimentation could be as follows:
(A) Submission of the proposal to the SAES director or other appropriate
office.
(B) Submission of the proposal to the local expanded biohazard
committee. The expanded biohazard committee would evaluate the
proposal and determine if adequate procedures had been.outlined for
84




protection of the environment, utilizing criteria that had been developed at the national level, from a potentially destructive
rel ease.
(C) Submission of the proposal to the university animal safety committee
if appropriate.
(D) Submission of the proposal to the university central division of
sponsored research for approval and eventual transmission to the
USDA Competitive Research Grants Progri-m-7TI-ce.
(E) Following approval at the local level, submission of the proposal to
the USDA Competitive Research Grants Program Office.
(F) Submission of the proposal to the USDA National Biological Impact
Assessment Program Board by the USDA Competitive Research Gr ants Program Office This national Board, appointed by the Secretary of Agriculture and reporting to the Assistant Secretary for Science and Education, would have developed previously a set of criteria whereby
each proposal for field release experimentation would be judged.
The national Board would set up a substructure consisting of program
commissions or committees to deal with each proposal on a programmatic basis. (See section on the Board later in this Chapter).
(G) The proposal would be submitted to the NIH RAC for evaluation. The
NIH RAC would report back to the USDA Competitive Research Grants Program Office the results of their deliberations and their
decision.
(H) The USDA Competitive Research Grants Program Office would provide
the USDA Biological Impact Assessment Board results of the NIH RAC deliberations. That information along with the results of deliberations of the USDA Board's program committee(s) would be used by the board to make a final decision regarding the safety of the proposed
field release experiments.
M Results of the USDA Board would be communicated to the USDA Competitive Research Grants Program Office.
M The proposal would be reviewed by the USDA Competitive Research
Grants Program Office for appropriateness in terms of guidelines and
overall quality, and a final decision regarding funding would be
made.
(K) The principal investigator would be informed by the USDA Competitive
Research Grants Program Office of the results of their evaluation
and whether the proposal had been approved for funding.
At any point in the above scenario, flow could be stopped and the proposal returned to the Principal Investigator for additional information. The only new national structure required would be a special NBIAP Board established by the USDA. Criteria established by the National Board to judge the merits and the potential environmental hazards of various proposals would satisfy the goals of the National Environmental Policy Act.
85




Level 3. Commercial Releaseof Biotechnological Research Products
Given successful development in Levels 1 and 2, the product of the biotechnological research effort might be considered for release on a commercial scale. The following set of procedures would be utilized in obtaining approval for such a release. It is envisioned that this process would be a part of NBIAP and the following is a general outline of the type of protocol that might be utilized:
Also, this protocol has been developed for the release of a hypothetical variety which contained recombinant DNA molecules and which had been developed
within the general framework of the protocols outlined in Levels 1 and 2 above.
(A) The institution, agency, or industry proposing the commercial release would prepare a release request document or proposal which
would include the following kinds of information:
1. A description of how the plant variety was developed.
2. A statement of the performance of the variety under laboratory,
greenhouse, and experimental field conditions with emphasis on data which indicate the release represents little or no potential threat to the environment.
3. Documentation indicating that protocols established under Levels
1 and 2 were satisfied.
4. A description of the program of monitoring that would be utilized to follow development of the release on an appropriate periodic basis. Di f ferent rel eases woul d Idi ctate the use of different monitoring systems, and it would be incumbent on the organization proposing the release to provide a detailed description of monitoring protocols that would be used. Where
appropriate protocols are not available, the organization proposing the release would outline research to develop such protocols. This could involve research activities in the broad
area of risk assessment and in the development of specific
procedures to be used in the monitoring program.
(B) The request release document would be submitted to NBIAP for evaluation and approval. In the case of a SAES the request for release document would be submitted to the local biohazard committee, and, with approval at that point, it would be forwarded to the USDA, NBIAP Board. If the release was being proposed by an institution other than the land-grant institution in the state in question then the request for release document would be submitted to the SAES director who would forward it to the local Expanded Biohazard Committee of the land-grant university, which, with approval would forward it to the NBIAP Board. If the request for release should be
submitted by a state agency, the state agency would submit the request for release document to the SAES director and it would follow a path similar to that described for non-land-grant institutions above. If the request for release was being submitted
by an industry it would be submitted directly to the ?4BIAP Board.
86




(C) The NBIAP Board would evaluate the proposed commercial release and
utilizing its system of subcommittees, would approve the proposal, require modifications in the proposed monitoring program, or reject the proposal. The basis for a rejection would be provided to the
applicant agency or institution in writing.
V. The National Biological Impact Assessment Board
As proposed, the NBIAP takes maximum advantage of existing structures at both the local and national levels. The only new structure proposed is that of a National Board appointed by the Secretary of Agriculture and reporting to the Assistant Secretary of Agriculture for Science and Education.
It is envisioned that the composition of the board would include members from the following organizations or groups: The State Agricultural Experiment
Stations; the Agricultural Research Service; the Animal and Plant Health
Inspection Service; the Economic Research Service; the Forest Service; the Department of Interior; Industry; and from appropriate private sector groups and organizations. The National Board, in concert with representatives from local expanded biohazard committees of both industry and academic institutions
would develop a set of criteria that the local expanded biohazard committees would use for evaluation of proposals for field release experimentation and commercial release into the environment. Additionally, the National Board
would develop an infrastructure of subcommittees which would be program
oriented and evaluate specific proposals in their respective program areas. These program subcommittees could be organized along the following lines: Cellular-and protoplast regeneration of plants, embryo rescue and transfer in plants and animals, the identification of agriculturally important genes, the transfer of agriculturally important genes from one genome to another, the regulation and expression of agriculturally important genes in their new environment, microbes containing recombinant DNA molecules, plant species containing recombinant DNA molecules and animal species containing recombinant DNA molecules.
The NBIAP Board would develop appropriate ties with other institutions and organizations as deemed appropriate. For example, close ties would have to be developed between the Board and the Environmental Protection Agency, between the Board'and the NIH RAC, and between the Board and the Food and Drug
Admi ni strati on.
A National Board is one type of structure that might be developed to accommodate the needs of the NBIAP. Other options include the establishment of a commission, or more informal structures such as advisory committees, or the activities of the board could be organized in a national interregional project. The latter would take advantage of existing regional research program of the SAES which have cooperative linkages with other governmental agencies and elements of the private sector. If done in the context of an
interregional project, the procedures and protocols involved in the development of an interregional project would have to be satisfied and ultimate approval would rest in the hands of the administrator of the Cooperative State Research Service. Each of the suggested options has merits and demerits and the specific structure to be utilized would be developed as the overall NBIAP is developed during the coming months.
87




Finally, the National Board would ensure that a maximum of responsibility
and authority for evaluation and approval of proposals and proposed releases would reside with the local internal biohazard committees.
VI. Responsibilities of the Principal Investigator
It will be incumbent on the principal investigator to satisfy certain basic criteria and provide specific information on biological impact assessment procedures and protocols as related to his or her specific research
proposal or specific request for a commercial release. The following items represent the kind of information that will be provided when a proposal for research or release into the environment is made:
(A) Information that will make it possible to identify the genetically
engineered organism such as a marker which would make it possible to trace the movement of such an organism. The specific marker might consist of a gene or genes for drug resistance, an unusual genetic trait or other identifying characteristics that are commonly used
for monitoring the development of an organism in nature.
(B) Specific plans for biological containment of the organism or the
means by which a field experiment might be terminated should such action become necessary. Examples of such mechanisms would include specific herbicides for killing a genetically engineered pl ant
species, the inherent inability of a microorganism to overwinter in the designated environment where experiments would be conducted, or the design of a specific facility to contain the genetically engineered organism.
(C) The specification of an environmental interpretive model to be used
to predict the likely consequences of the influence of environmental
factors on the development of a genetically engineered organism.
This model would be most useful for exploring the benefits and risks
of the proposed research.
(D) A statement that addresses the likely impact of the genetically
engineered organism on agriculture, the environment, the economy and on society. This statement should also weigh the project's reasonable expectations for success and the reasonable consequences of
failure.
The above items represent the kinds of information that the principal investigator would be expected to provide at the time the research is planned. It is not an exhaustive list nor should it be considered final. It does
represent the nature of the kinds of information the principal investigator would be expected to provide.
VII. Legal Overview
Another important avenue of approach which must not be overlooked concerns potential legal problems and the avoidance thereof. Potentials for
legal liability resulting from the release of genetically altered organisms cannot be overlooked even though the possibility of harm is very remote. Early involvement of legal review in pending actions of the NBIAP is crucial,
88




not only in establishing and maintaining public confidence in the system, but also in avoiding unnecessary expenditure of courtroom time and money due to dilatory action. There exists a multitude of environmental laws, both state and federal, which influence the conduct of deliberate releases of genetically engineered organisms. These laws relate to the activities of both public and private entities. Often, formalities are involved which must be carefully observed. Of special note is the National Environmental Policy Act, which requires all federal agencies to consider environmental impacts and concerns when making decisions. Releases of organisms, developed by biotechnological research methods, have potential environmental effects which must be studied and evaluated from a 1 egal standpoint. Consequently, a legal overview must accompany all analyses of scientific inquiry.
VIII. Questions and Issues Yet to be Resolved or Addressed.
As indicated earlier, this proposal for NBIAP is presented as a concept. Many additional details need to be addressed and resolved. The following are examples of questions and issues that need consideration:
(A) The relationships between the USDA NBIAP and other agencies such as
EPA, FDA, and NIH. We need to examine this set of potential relationships and determine what linkages if any, formal or informal,
need to be developed.
(B) Approval of a commercial release by the NBIAP would, without
question, place the responsibility for monitoring the commercial release in the hands of the institution or agency proposing such a release. This raises liability and related questions which we also
need to examine.
(C) Finally, we need to ascertain whether or not the National Biological
Impact Assessment Program, as proposed, would develop its own national capability for monitoring in certain specific situations where a number of states and/or rather large regions of the country
would be involved in a commercial release.
89




CHAPTER 7,
THE COOPERATIVE EXTENSION SERVICE-AND BIOTECHNOLOGY FOR FOOD AND.AGRICULTURE
Biotechnology, the use of living organisms or their components in industrial processes, is not new to agriculture. Biotechnologies in the form
of improved plants and animals have been the centerpiece of agricultural production for at least eighty years, and in a rudimentary way, for the past several thousand years. Plant and animal improvement was significantly
enhanced by Mendel's discovery in the 1860's that characteristics of plants are transmitted from one generation to the next in an orderly fashion and that individual genes control the expression of given traits. The amazing success of American agriculture is in part a result of the application of genetics, beginning with the revolutionary discovery by Mendel, to plant and animal improvement.
The initial primary outputs of biotechnological research will be traditional product, such as plant varieties, animal vaccines and biocontrol agents. These products will be extended to and incorporated into production systems much like products developed via more traditional routes. In other words, while the means to the end will be different, the end product will often be the same as or very similar to traditional products.
The Extension Service has for decades served as a delivery system for the research developments from the laboratories of the experiment stations to the farm and ranch operator. This readily accessible and publicly financed education system has helped to ensure that the innovative and efficient
farm/ranch operator has had access to the latest and most progressive farm practices. It has generated a progressive, and independent agricultural production system which has become remarkedly efficient in resource use. Also, Cooperative Extensions' day-to-day activities -provide a feedback mechanism to bring new problems back to research scientists.
In the emerging area of Biotechnology, the Cooperative Extension Service
will have a key role in disseminating educational information on what biotechnological research has accomplished, what it is trying to accomplish, and how the information can be used gainfully by society. Not only will the audience include our traditional clientele, who need the information to better
understand and apply the information gained from biotechnology research, but also a new group of clientele, e.g., industrialists, financiers, and venture capital ists.
The expectations of clientele will place severe time constraints on the transmission of knowledge from the laboratory to application. A close working
relationship between research scientists and Extension faculty will enhance the appreciation of current technology problems of industry and provide for more effective technology transfer. Land-grant admi ni strators should encourage such interaction through joint task forces in defining objectives, evaluating research progress, and developing education programs.
A number of recent breakthroughs from biotechnological research may directly affect agricultural producers in the very near future. For example,
herbicide resistant plant varieties have been developed, and the genes
90




responsible for resistance to several herbicides have been cloned recently. Within the next decade, varieties of plants resistant to certain herbicides may be on the market. Live bacterial agents useful for control of certain insect pests are already commercially available.
Scours is one of the most prevalent causes of mortality among newborn calves. Recently, monoclonal antibodies have been produced to be used against scour microorganisms. The product is currently being tested for labeling and distribution. Extension personnel will help determine the correct application
of such products, as well as educate cattlemen regarding the economic feasibility of the new products. Hormones which hasten the growth and
development of livestock may soon be available for producers. Since hormones are proteins, they are degraded in the body and consequently leave no residue
in the animal, in contrast to some types of growth stimulants used in the past. Livestock producers will need to be aware of the potential of these and
similar products and how to apply them properly for increased efficiency and profit.
An important role of Extension is to educate people about the available options and to determine the effectiveness of given new technologies within a local area. In addition, it will be important to determine if slight modifications might make the options more applicable for given locations or situations.
As companies strive to get products accepted and used on a wide scale, they will probably try to utilize new biotechnology products within current processes or practices. However, this may not be the best approach.
Extension will help determine the most acceptable form, process or practice for making products acceptable to producers.
As with many new breakthroughs in technology, the expertise for educational programs will come about through retraining current staff,
fostering joint Extension-Research appointments, or by hiring new staff with the necessary expertise. Extension has the "know-how" to reach new clientele including industrialists, financiers, venture capitalists, businessmen in top management and others not traditionally served by Cooperative Extension educational programs. In cooperation with scientists and administrators directly involved in biotechnology programs Extension will use these proven methods to communicate the opportunities and developments of this new research area. The needed outreach activities include specialized workshops and seminars, bul I eti ns, slide/tape sets, and films to highlight such developments.
Numerous technological developments have been introduced into agriculture over the past half century. Among the most significant are improved.crops and animals; the use of commercial fertilizers, and pesticides; and the transition to tractor power and large scale equipment. Most technologies introduced have been cost decreasing or output increasing or both. The introduction of biotechnology developments will likely produce similar results and/hence, will likely be accompanied by economic and social adjustments. Extension can play an important role in helping individuals and firms anticipate adjustment problems, adapt once change has occurred and facilitate adjustments in
91




Full Text
xml version 1.0 encoding UTF-8
REPORT xmlns http:www.fcla.edudlsmddaitss xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.fcla.edudlsmddaitssdaitssReport.xsd
INGEST IEID E2H7Z3154_WWNHP0 INGEST_TIME 2019-01-02T17:11:30Z PACKAGE UF00056210_00001
AGREEMENT_INFO ACCOUNT UF PROJECT UFDC
FILES