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Best Practices for Fast-Tracking Your Best Practices for Fast-Tracking Your U.S. Manufacturing Waiver U.S. Manufacturing Waiver

Application for Federally Funded IPApplication for Federally Funded IPPresented by: Ami D. Gadhia, Director of Physical Sciences & Engineering

Johns Hopkins Technology Transfer Office for:

04/21/23 www.techtransfer.jhu.edu

This webinar and its contents are for Guidance Purposes Only.

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04/21/23 2www.techtransfer.jhu.edu

Presenter

Ami D Gadhia, JD, LLM, CLP Portfolio Director- Physical Sciences & Engineering Johns Hopkins Technology Transfer OfficeMs. Gadhia’s role is to lead and grow the JHTT Physical Science portfolio in order to demonstrate the increasing value of Johns Hopkins’ innovation to internal and external customers. She accomplishes this by cultivating excellent relationships with faculty and managing one of the largest and most technologically diverse case dockets comprising bioinformatics, medical devices, software, educational evaluation tools, and other physical sciencetechnologies. She has developed strong corporate relationships and serves as a liaison with JHU School of Engineering. Ms. Gadhia identifies commercialscenarios and strategically markets technologies. She has successfullyreceived manufacturing waivers on behalf of JHTT.


Outline

• What?• Who?• When?• Where?• How?• Why we care about this topic?

04/21/23 www.techtransfer.jhu.edu 4

Bayh-Dole Act

• Bayh-Dole Act is the legislation known for “giving birth to” university tech transfer

• It’s the Act that allows universities to take title to inventions that arose from federally funded research

• Universities are allowed to license their title to federally funded inventions

• Licensing has to be in accordance with 35 U.S.C., which states a preference for U.S. industry


What?35 U.S.C. 204

Notwithstanding any other provision of this chapter, no small business or firm or nonprofit organization which receives title to any subject invention and no assignee of any such small business firm or nonprofit organization shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention or produced through the use of such invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by the Federal agency under whose funding agreement the invention was made upon a showing by the small business firm, nonprofit organization, or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible.


Feeling like this?


http://upload.wikimedia.org/wikipedia/en/f/f4/The_Scream.jpg

What to Expect

• Very serious matter which is not to be taken lightly–preference is for U.S. industry

• Process is lengthy and could take months• Time-consuming process with no guarantee of success

(fact-specific)– It took me about 40 hours to submit one application

• Applications will NOT be rubber-stamped


• Requires digging into your own records and then detailing your efforts with proof in hand to back up your assertions

• Must be ready and willing to press the licensee to provide detailed information regarding their plans


What to Expect

• “in individual cases, the requirement for such an agreement may be waived by the Federal agency under whose funding agreement the invention was made upon a showing by the small business firm, nonprofit organization, or assignee” (35 U.S.C. 204)

• Non-profit organization at the request of the licensee• Non-profit = University = TTOs/Us!


Who?

• Exclusive Licensee (of IP that was federally funded) wants to manufacture substantially outside of the U.S.

• What does exclusive mean? Does it mean all fields only, or would a field-limited license be included? Grey area…not aware of case law on this.


When?

• When the licensee tells us. It’s up to the licensee to let us know that they need a waiver.

• Our exclusive license template includes Bayh-Dole language that puts our licensees on notice of their obligations.


When?

JHU Exclusive License Template Language

Government Rights. This Agreement is subject to Title 35 Sections 200-204 of the United States Code as implemented in 37 CFR Part 401, as may be amended from time to time. Among other things, these provisions provide the United States Government with certain nonexclusive rights in a LICENSED PATENT if federal funds were used to develop the TECHNOLOGY. They also impose the obligation that LICENSED PRODUCTS sold or produced in the United States be “manufactured substantially in the United States”. LICENSEE will ensure all required obligations of these provisions are met.


• Lengthy, time-consuming process with no guarantees– Might want to consider asking for a waiver

fee to cover your additional administrative expenses in applying for the waiver

– Best not to make your license fee contingent upon receiving a waiver


Other Licensing Considerations

• Common industries may include: electronics, medical devices, and consumer products

• Global economy: waiver topic may arise in pharma and biotech sectors too


When?

Where?

• A waiver application must be submitted to the applicable funding agency or agencies, and generally can be submitted online through iEdison, the federal government's online tool for reporting under the Act. (www.iedison.gov)

• For a complete list of agency contacts:https://s-edison.info.nih.gov/iEdison AgencyContactList.jsp


§ 650.12 Waivers and approvals.• (a) Requests for extension of time to disclose to the NSF Patent Assistant, make an election to retain title to, or file a patent on a subject

invention will be granted by the NSF Patent Assistant unless he or she determines that such an extension would either imperil the securing of valid patent protection or unacceptably restrict the publication of the results of the NSF-supported research.

• (b) Approval of assignments by nonprofit organizations (required by subparagraph (k)(1) of the Patent Rights clause in §650.4(a)) will be given by the Patent Assistant unless he or she determines that the interests of the United States Government will be adversely affected by such assignment.

• (c) Approval of long-term exclusive licensing of NSF-assisted inventions by nonprofit organizations (restricted by earlier versions of the NSF Patents Rights clause and by pre-Bayh-Dole Institutional Patent Agreements and waiver conditions) will be given by the Patent Assistant unless he or she determines that the interests of the United States Government will be adversely affected by such waiver.

• (d) The preference for United States industry imposed by paragraph (i) of the Patent Rights clause in §650.4(a) may be waived by the NSF Patent Assistant as provided in that paragraph. [This paragraph imposes the requirements as set forth in 35 U.S.C. 204.]

• (e) Special restrictions on or limitation of the right of an awardee to retain title to subject inventions imposed under §650.5 of this regulation may be waived by the Grants or Contracting Officer whenever he or she determines, after consultation with the cognizant Program Manager, that the reasons for imposing the restrictions or limitations do not require their application to a particular invention.

• (f) Requests for approvals and waiver under this section should be addressed to the NSF Patent Assistant as provided in paragraph (1) of the Patent Rights clause in §650.4(a). Requests under paragraph (a) of this section for extensions of time to disclose, elect, or file may be made by telephone or electronic mail as well as in writing. A written request for extension of time to disclose, elect, or file can be assumed to have been approved unless the Patent Assistant replies negatively within ten business days of the date such request was mailed, telecopied, or otherwise dispatched. Requests for approvals or waivers under paragraphs (b), (c), (d), and (e) of this section must be in writing and should explain why an approval or waiver is justified under the stated criteria. The requester will be given a written explanation of the reasons for denial of a request covered by this section.


NSF Waiver ProcessTitle 45: Public Welfare

NIH- Waiver Process

Application form can be found at:https://s-edison.info.nih.gov/iEdison/ManufacturingWaiver.jsp


How? Requirements for Waiver

• Waiver from the requirement can be obtained from the government agency that provided the funding if:

(a) reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or

(b) under the circumstances domestic manufacture is not commercially feasible.


Scenario I

Reasonable but Unsuccessful Efforts to License to a Company that would Substantially Manufacture in the U.S.

then

Waiver application must include……


Details that TTO must provide

1. Significance of the technology including the availability of alternative products, size of intended patient populations;

2. Whether the requirement for U.S. manufacture will delay entry of the product into the United States or foreign markets, and if so, the effect of such delay [e.g. on public health, environment];

3. The strategies implemented to find a U.S. manufacturer [DETAILED Marketing efforts & feedback].


Significance of the technology

• Significance of the technology, including the availability of alternative products

– Does anyone in the industry manufacture in the U.S.? Where are competing products produced? Typical for this type of technology to manufactured overseas?

– If a medical product, then discuss size of intended patient populations.

– If an environmental technology, then discuss the size of population affected. • Provide numbers of people suffering per year, and how your

technology could help. [Research the specifics and provide the data to back up your assertions.]


Will U.S. manufacture delay market entry?

• Whether the requirement for U.S. manufacture will delay entry of the product into U.S. or foreign markets, and if so, the effect of such delay– Mention if possible to build manufacturing facilities in U.S.– If it will cause delayed entry into market, then note that.

What will be the impact on public health/environment? Example: How many people will suffer/die each year because market entry will be delayed if U.S. manufacture is required?


Detailed Marketing

• Strategies implemented to find U.S. manufacturer– ID past marketing strategy and efforts for the

technology (# of companies contacted, methods used, types of licenses and terms offered to potential licensees, comparison of terms offered to potential foreign licensee and those offered to U.S. companies, and the responses of companies to those marketing efforts)


• Marketing comes in various forms:– E-mail with non-confidential summary– Marketing to company that has come to visit your

campus– Marketing during “partnering meetings” at a

conference– Marketing via your tech locator


Detailed Marketing

• Collect e-mails, flyers, etc. that discuss your marketing attempts

• Include this as supplemental documentation for your application= No stone unturned!


Supplemental Documentation

“Sample Application” Answer to Question #3


• Very important to note the company’s responses to your marketing efforts

• If a company with U.S. manufacturing capabilities wanted to license your IP but you didn’t even entertain the possibility, then that may not be viewed favorably.


Detailed Marketing

Scenario II

U.S. Manufacture Is Not Commercially Feasible

then

Waiver application must include……


Details that COMPANY must provide to TTO

• Discuss factors that make domestic manufacture not commercially feasible including relative costs of U.S. and foreign manufacturing, etc.;

• The part of or percentage of products in the invention to be manufactured outside of the U.S.; and

• The benefits to the U.S. from the technology even if it will not be substantially manufactured in the U.S., including: (a) direct or indirect investment in U.S. plants or equipment; (b) the creation of new or higher quality U.S.-based jobs; (c) the enhancement of the domestic skills base;

(d) further domestic development of the technology; (e) positive impact on U.S. trade balance considering product and service exports as well

as foreign licensing royalties and receipts; (f) cross-licensing, sublicensing, reassignment provisions in license seeking to maximize

benefits to U.S.


• Factors that make domestic manufacture not commercially feasible including relative costs of U.S. and foreign manufacturing, etc.– This is where the company may talk about the cost

of building facilities here in the U.S. versus using already-built facilities in company facilities abroad.


Domestic Manufacture Infeasible

Part/percentage manufactured outside

• Company has to comment on whether entire product will be manufactured abroad or small percentage of product or just a component

• Will final assembly be in U.S.?• Will technology be improved after it enters

U.S.?– “substantial” manufacturing?


The Benefits to the U.S.(a) investment in U.S. plants or equipment

• Example of this could include investment (specific $$$) for marketing or packaging


• Will the product need to be sold here and therefore creates and sales and marketing jobs here?

• Will enhancements be made here? Would that result in R &D jobs in the U.S.?

• Answers may help to show that even though manufacturing may be done abroad, that some jobs, albeit “knowledge-based” jobs may be created in the U.S. Our economy would benefit even though some manufacturing $ are going oversees.


The Benefits to the U.S.(b) the creation of new or higher quality U.S.-based jobs

• Are “Knowledge-based” jobs being created to mobilize sales, marketing, and R&D of the technology in the U.S.?

• Would that enhance the skills of domestic employees?


The Benefits to the U.S.(c) The enhancement of the domestic skills base

• Will improvements to the technology be made in the U.S.?– Will there be an additional engineering or design

done in the U.S.?


The Benefits to the U.S.(d) Further domestic development of the technology

• Positive impact on the U.S. trade balance considering product and service exports as well as foreign licensing royalties and receipts– How will royalties received impact our economy?

• On a small scale, they will be distributed per our IP policy and money will go back into funding research.

– Will the licensee need to pay U.S. taxes?


The Benefits to the U.S.(e) Positive impact on the U.S. trade balance

• Does the license that you are considering (or

have executed) include cross-licensing, sublicensing, or reassignment provisions that would maximize benefits to U.S.?– For example, is the licensee just a pass-through that would

manufacture the technology and then partner with a U.S. company that would commercialize the IP?


The Benefits to the U.S.(f) cross-licensing, sublicensing, reassignment provisions

Pass-through licensee

• Can you show that but for the licensee’s contribution, the TTO wouldn’t be in a position to partner with the ultimate company that brings the technology to the market?

• Would this technology “die on the vine” because it’s so early-stage that a commercial partner is needed to add value and take it to the next stage of development?

• Many times, as TTO’s know, our licensees are in the best position to partner with the ultimate company that brings our IP/technology to market.

• Without the licensee, our IP/technology would fall into the “valley of death” where so many early-stage technologies die.


Time-Saving Tips: Get your Ducks in a Row!

• Make sure that Statements of Government Interest have been recorded for the specific IP that you are requesting a waiver for– If you haven’t then you may have to ask your

patent counsel to file Certificates of Correction for Patents or Amendments for Applications


Example: Statement of Government Interest in an Issued Patent


• Ensure that your case has been reported in iEdison• Update IP information in iEdison and in your waiver

application (e.g. application issues as patent)• Gather all parent-child continuity data for your IP• Find the federal grant numbers, and agencies that

provided funding



• Pose company questions to licensee early on so that they can get started on gathering information about their piece

• Speak to company about limiting request to specific territory (business discussion)

• Collect historical marketing information within your own office (offsite files, e-mail archives, computer folders, etc.)



What NOT to do

– Not on any particular licensee’s behalf

– For ALL of the technologies in your portfolio

– Ask for a WORLDWIDE waiver


Worldwide waiver?

• Why won’t this work?–Probably because worldwide would

include embargoed countries and we wouldn’t want to allow that for public policy reasons.


Territory Example

• If you want to expand the scope of the territories, then you will have to submit a new application.

• You cannot simply amend a prior application that has been approved to add new territories.

• Also, I am unaware of an appeals process.


What will NOT work

• Providing “hand-waiving” information or anything less than FULLY complete information

• Not sufficiently marketing your IP• Not exhausting possibilities of licensing to

company with U.S. manufacturing capabilities


Example of a Poorly Submitted Application

Dear Sir:Please give me a worldwide waiver ASAP (tomorrow, if possible) for all of the technologies in our portfolio that your agency has funded, and even for the ones that your agency has not funded. Don’t know the federal grant number or specific case numbers offhand…We’ve marketed our IP to loads of companies, but nobody has bit. We’re hoping to get this waiver NOW so that we can transfer it + our technology to somebody overseas who can help. It’s a global economy, right? Someone abroad should be able take this off our hands.Did I mention I need this tomorrow?

Thanks,Ami


Why do we care?

• Once you have successfully obtained a waiver for a licensee then this may allow them to enter a new market & open up the possibility of licenses for your follow-on IP (Grow business)

• Your success will garner licensee’s confidence in you as a licensing professional

• On the flip side, knowing nothing about this process and researching your way through it will burn precious “deal” time


• What happens if we don’t get a waiver that a licensee requests and they go forward with their plans?– Breach of our license (recall JHU License

Template)– Government has ability to exercise march-in rights


Why do we care?

March-in Rights

• March-in rights allow the funding agency on its own or by request of a third party to grant additional licenses (e.g. exclusive, co-exclusive, non-exclusive) to other "reasonable applicants“ (i.e. possible competitors).

• This right is limited but is a real possibility.


• Criteria for marching-in:– Patent holder not taking effective steps to achieve practical

application of invention; – To alleviate health or safety needs which are not

reasonably satisfied by patent holder; – To meet requirements for public use specified by federal

regulations not reasonably satisfied by patent holder; or– Because exclusive licensee has failed to give preference to

U.S. manufacturing where that would be required


Criteria for March-in Rights: 35 U.S.C. 203

March-in Rights

• Few instances where the government agency has been requested to exercise march-in rights

• Cell Pro. v. Baxter: NIH determined not to initiate proceedings to pursue exercise of march-in rights– Criteria of statute were not satisfied (Source:

Technology Innovation Law & Practice)


Cell Pro v. Baxter

• JHU owned certain patents which it licensed to Becton-Dickinson and then to Baxter.

• JHU & Baxter have taken or are expected to take within reasonable time effective steps to achieve practical application of patents– Demonstrated by JHU license program and Baxter’s

manufacture of technology and pending application for FDA approval

• NIH also found that info failed to demonstrate unmet health need (For the entire NIH determination, see http://www.nih.gov/news/pr/aug97/nihb-01.htm)

04/21/23 www.techtransfer.jhu.edu57

Take-away regarding march-in rights

– Infringement claim could not be defended by arguing that Bayh-Dole requirements (including substantial manufacturing in U.S.) were not met.

– The license grant remains intact. Nothing happens to the exclusivity of the license unless agency exercises it right.


Summary

• What?• Who?• When?• Where?• How?• Why we care about this topic?


Take-Away Points

• Lengthy, DETAILED, time-consuming process• Has definite benefits to you/your

office/licensee and could have benefits for the U.S. economy

• Not to be taken lightly– Application will NOT be rubber-stamped– High bar for approval


Questions?

QUESTIONS?Utilize the public chat

at the bottom left of your screen to submit your question. The panel will address them in the

order they are received.Thank You!

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04/21/23 www.techtransfer.jhu.edu

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Documents

subject invention

united states

nonprofit organization

small business firm

tech transfer university

physical sciencetechnologies

d gadhia

funded ippresented