Spruson&ferguson's australian biotech ip review

Spruson&Ferguson's Australian Biotech IP Review NEWS IN BRIEF
Welcome to the sixth issue of Spruson&Ferguson's Australian Biotech IP Review - a bimonthly breakdown of important IP issues in the Australian
biotech industry including expert analysis and practical advice to advance your business.
IN THIS ISSUE
WHAT'S COMING UP?
Start-up companies - biotechnology's commercial engine
room
OUR UPCOMING EVENTS
As business activity in the Australian life sciences sector picks up from the relatively flat 14 & 20 April
2001/02 period, many of the more than 300 largely small- to medium- sized
Life sciences principal Andrew Blattman and biotechnology enterprises are reaping the rewards.
legal principal Rob McInnes will be running
seminars on IP management at the University
Since 2000, one of the most glaring trends throughout the industry has been the growth in of Wollongong on 14 April and the Australian the number and prosperity of these smaller start-up companies. This has become one of the most important ways to generate profits from the intellectual property created in universities, each day will include sessions on why IP matters, IP basics, commercialising IP Kelvin Hopper, managing director of technology consultancy Aoris Nova, publishes an and advanced IP issues. Attendance can also be annual BioIndustry Review of business developments across the biotechnology sector (last published in 2003) and found that over the past year the trend towards start-up for more information on the seminars.
companies has become more pronounced.
"There has been an increase in momentum through the biotechnology sector, especially in 8-10 June
the second half of 2003, based largely on a business model of creating start-ups rather Spruson&Ferguson is also proud to be a than licensing, as was the previous trend," Kelvin said.
sponsor of the CRCA 2004 Annual
Conference to be held at the Adelaide
"Licensing will doubtless continue to be the dominant money-spinner in fields such as Convention Centre. The conference will focus pharmaceuticals, but in many other areas such as diagnostics or devices the small on promoting CRC achievements, hearing from company model is proving more effective with vertically-integrated companies." various stakeholders and sharing experience The dramatic growth in the number of these small research-based companies has been through a series of talks and workshops. The fuelled by the growing pot of capital available to researchers with a solid portfolio of IP - conference is open to CRC staff and others who provided by private equity investors, stock market floats and, most importantly, work with or are interested in working with Despite a frequent reliance on government funding programs, such as START and BIF grants, the business model of creating research-based companies ultimately relies on an ability to raise capital based on commercial performance. The challenge for many is to Spruson&Ferguson is a proud sponsor of the develop the technology before the money runs out or patent life is seriously eroded.
NSW Enterprise Workshop. Programs are
being run in July, aimed at assisting businesses
"Investors are becoming more savvy with early stage companies, wanting higher returns by providing a learning environment to identify file:///R|/DayLib/Distribution/S&Ftest.htm (1 of 6)4/05/2004 9:52:12 PM Spruson&Ferguson's Australian Biotech IP Review from better-established companies with a portfolio of projects, a top quality business- and commercialise business opportunities under focused management and associations with partner companies. In return, they appreciate the guidance of senior business people. Credits the long time frames for biotechnology commercialisation," Kelvin Hopper said. are available toward a M.Ent at the University of Adelaide. Contact the This increasing sophistication of investors is making the process of spinning-off a timetable for the July program, to register for an company from a larger research organisation, the most common form of starting up a information session and to inquire about technology company, more and more difficult.
IP is fundamental part of this process, with a patent portfolio underpinning any technology development by a life sciences organisation. Companies with a limited IP INDUSTRY EVENTS
portfolio run the risk of not surviving the gauntlet of investors unless they can quickly consolidate their position.
29-30 April
Building business relationships and developing
Rob McInnes, principal and head of Spruson&Ferguson's commercialisation practice, has strategies will be the focus of the inaugural been involved in the start-up and private equity investment process at every stage - from AusBiotech/NZBio CEO Forum to be held at
the drafting of initial IP agreements to advising on investment-readiness and conducting the Hyatt Coolum on the Sunshine Coast. The two-day event will mainly be an opportunity for open forum discussion and networking.
"Entrepreneurial researchers creating a start-up company face a daunting task in developing a new business as well as keeping up their scientific focus. IP sits at this crucial juncture of the business and the research. Without a well thought-out IP strategy 12-14 May
and close attention to building the IP portfolio, the whole enterprise will fall over," he Business strategies to improve product pipelines is the theme at the Pharma/Bio Partnering,
Licensing and Investment conference to be
With spin-off companies, there is a tension between ensuring that the spin-off has all the held at the Eden on the Park in Melbourne. IP rights that it needs to prove its business plan, and not unduly exposing the assets of the Representatives from 22 different organisations parent organisation to commercial risk. will speak over two days, followed by a day of workshops.
Careful consideration of the interests of the spin-off, the parent organisation and the other shareholders of the spin-off, coupled with creative structuring, can resolve this difficult issue.
17-21 May
The 7th World Biomaterials Congress will be
Rob points to three main issues in ensuring that the IP in any start-up company is in good held at the Sydney Convention and Exhibition Centre at Darling Harbour. Conference delegates will have the option of attending up to ● Be aware of the IP landscape not only of competitors, but also of potential five days of scientific sessions and symposia. There are optional Sydney tours each day.
● Have a firm legal foundation to ensure that you have access to all the IP used in ● Maintain a commercial focus in all R&D plans and activities, including the San Francisco will be the setting for this year's
BIO 2004, the largest biotechnology conference
It is not only investors who are recognising the importance of a solid IP portfolio, with in the world. US President George Bush will many commercialisation staff becoming more business minded and developing high-level open the five day convention with thousands management skills.
expected to attend multiple venues around the city. Austrade is coordinating a Biotechnology "The increase in investment, and in management sophistication, has led to the building of Australia pavilion at the convention, and more comprehensive and valuable IP portfolios, which are protecting higher value-added exhibition space is available.
products. This is a good sign for the long-term health of Australia's biotechnology Your own IP Management
Training Manual
Biotechnology Australia commissioned
CASE SNAPSHOT
Victoria University of Technology v. Wilson & manual is a valuable step-by-step guide for The value of an effective IP policy
A recent decision of the Supreme Court of Victoria highlights potential consequences of an institution not having an effective IP policy in place. It also provides a timely reminder of the limits of the employee/employer relationship.
The relevant facts of the case were, briefly, that two senior academics at an Australian university, Professor W. and Dr F., were approached by an individual with no affiliation to the university to undertake collaborative R&D of an internet-based e-commerce file:///R|/DayLib/Distribution/S&Ftest.htm (2 of 6)4/05/2004 9:52:12 PM Spruson&Ferguson's Australian Biotech IP Review system. Research was undertaken and led to the filing of a patent application by the individuals and their associated companies. The university commenced action before the We are here to be of service to you. If you have Court, essentially claiming ownership of the invention.
any questions about how to best protect your IP First, the Court found that although an IP policy "existed" in the university at the time, or if you wish to discuss the patentability of there was no evidence that it was ever brought into effect. It was never approved by the your ideas, we would be happy to arrange a University Council, nor was it published in the university's HR manual or any other staff meeting. Our principals and associates are also manual.
available to present seminars and information sessions to your staff. Please call Gavin Recchia Second, the university sought to establish ownership of the invention by virtue of the employee/employer relationship. The Court determined that "the mere existence of the employee/employer relationship will not give the employer ownership of inventions made by the employee during the term of the relationship". Further, the Court found it "unlikely" that an employee's invention will be owned by the employer "unless the contract of employment expressly so provides or an invention is the product of work FEEDBACK
which the employee was paid to perform".
We are interested in your feedback. Email To support its claim the university contended that W and F were "paid to be researchers and that the invention was the product of research". However, the Court was not know if Australian Biotech IP Review targets persuaded that this established rights to the invention, finding that "it is not enough that your interests or to pass on your suggestions for the process of invention can be characterized as one of research, it all depends on the nature of the research that the employee is retained to perform". In this case, it had never
been part of the activities of the relevant university department to invent internet based e- PAST ISSUES
commerce systems so the university was held to not have a right to the invention.
If you would like copies of past issues of Australian Biotech IP Review, contact Gavin The Court also noted that the work an employee is retained to perform can change over the period of employment, and so an employee's work "must be assessed by reference to the work performed at that point of time". The lesson arising here is that, where an employee's tasks change over the course of employment, it may be appropriate to amend the job description to clarify rights under the employee/employer relationship.
Third, the issue upon which the university was successful arose from the finding that W and F were under a "fiduciary duty" to the university by which, as professional employees, they owed an obligation not to profit from their position at the expense of the university and to avoid conflicts of interest. Although the university's policies permitted W and F to undertake outside work, the Court found that W and F had breached their fiduciary duty by "seizing the opportunity presented to them rather than affording the opportunity to the university". Had W and F made a "full and frank disclosure" of the project to the university, thereby giving the university the opportunity to take up or decline the project, it is unlikely there would have been a problem.
A further lesson from the case lies in the Court's statement that W and F "acted in ignorance of the full extent of their obligations". Thus, employers should ensure that all employees clearly understand the full extent of their obligations. In this case, had a comprehensive IP policy been effectively in place and all terms of employment made clear reference to such a policy, all parties would likely have been spared a very unpleasant and costly experience.
ACIP experimental use issues paper released
In recent years, there has been public disquiet that patent rights may be inhibiting R&D, particularly in biotechnology. It has been suggested that excluding experimental use of an invention from infringement may resolve the perceived problem.
As reported in the last edition of the Australian Biotech IP Review, these issues are
currently the subject of an inquiry by the Advisory Council on Intellectual Property
(ACIP), an independent body established to provide advice to the government. In a first
step ACIP has released an Issues Paper to "stimulate public debate" and has called for
submissions from interested parties before 30 April 2004.
The Patents Act 1990 does not explicitly include any provision which generally excludes the experimental use of an invention from infringement. However, ACIP notes that an file:///R|/DayLib/Distribution/S&Ftest.htm (3 of 6)4/05/2004 9:52:12 PM Spruson&Ferguson's Australian Biotech IP Review exclusion may be implicit in the Act and that an exemption may exist by virtue of case law.
ACIP thus believes there is "widespread uncertainty amongst researchers" as to whether experimental activities constitute infringement, and has specifically invited submissions on that point as well as on whether any individual researcher's "uncertainty" has affected their R&D.
The Issues Paper mentions that the "goal of any experimental use exemption should be to balance a patentee's reasonable efforts to recoup their investment and attempts to exert undue control following innovation." Other questions raised for discussion in the Issues Paper include: ● Should an experimental use exemption distinguish between experimenting on the invention itself as against experimenting with an invention for its intended purpose? ● What then of patents covering inventions which are in themselves research tools? ● Should biotechnology, which is heavily reliant on research tools, be treated any ● Might the answer to the disquiet lie instead in improved licensing practices, or compulsory licensing or indeed in open source or public domain principles? GETTING TO KNOW
Dr Kelvin Hopper, Managing Director, Aoris Nova
What is your particular expertise and experience?
I work across the exciting combination of science and business, helping
accelerate the commercialisation of research projects. I have worked in
science for many years, researching in fields such as immunology, cell
biology, infectious diseases and cancer. In 1987, I joined Monoclonal Australia Limited (later bought out by ICI) in a senior management position and worked there until branching out into consulting. I set up the consulting practice Aoris Nova in 1993, and since then have worked with many clients at this interface between research, industry, investment and government.
What are you working on at the moment?
Most of our work at the moment involves working with listed companies, advising them
on markets and business opportunities. This helps them to understand the markets their
products are going into and where their value lies. We are also currently advising on the
feasibility of new projects and providing expert reports for prospectuses. We have also
recently completed several major health and biotechnology policy analyses for
government.
What are the most interesting parts of your job?
I love the way my work involves the combination of science with the big business
picture. While everything we do is technology-based, we are dealing with real problems
that are wide reaching and global. And we deal with a great range of clients, from
scientists to companies to governments. It truly is an exciting field.
What practical advice would you give to innovators?
The key for any innovator is to make sure they have a solid IP position and a good
understanding of their technology relative to others. Any technology needs compelling
reasons for being successful in the international market. You can get outside advice on
the market position of your technology, but everything that you can do yourself at an
early stage to make a market assessment helps to define the product. Scientists usually
know the strengths of their technology, but often fall down in working out market
dynamics and the particular niche for their technology.
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ALRC gene patenting inquiry discussion paper
Integrated US sales and marketing for Proteome
The Australian Law Reform Commission (ALRC) review of gene Proteome Systems has reached an agreement with Shimadzu patents has so far found no real evidence of the need for radical Scientific Instruments for an integrated sales and marketing program changes to Australia's patent laws regarding an "experimental use" in the US to provide a complete proteomics solution. The deal means exemption. Speaking after the release of a discussion paper on the that the North American marketing efforts will be centred on SSI's issue in March, ALRC president David Weisbrot said that there was office in California and Proteome Systems' Massachusetts office, uncertainty and anxiety reported amongst biotech researchers about especially in pushing their jointly-developed Xcise and ChIP the impact of genetic patents on R&D. But he stressed that Australia instruments that bridge sample preparation and protein identification had avoided many of the worst problems experienced in the US and Europe, and the council was working towards a system resulting in a Australian Biotechnology News; Media release: balanced and flexible approach to the issue. The discussion paper contains over 40 proposals on various reforms to the working of the
genetic patent system, and feedback is being sought on the proposals. Benitec pushes into US market
Sydney Morning Herald, Media release:
Following on their December deal with CSIRO and the Queensland government, Benitec has established two US-based subsidiaries with States declare GM moratoriums
a view to push its gene silencing technologies in the US market. One Most Australian states have moved to ban the commercial planting of of the companies, also called Benitec, will handle US business while genetically modified crops. The Western Australian and Victorian the other, called RNAi Therapeutics, will play more of a R&D role. governments have declared five-year moratoriums on GM crops, The US push comes as the company grew at the end of last year with with South Australia and the ACT introducing legislation to regulate a $10.9 million raising, with a further $11 million to be raised at the their release. Tasmania has already run field trials of GM canola, but end of 2004.
has also introduced legislation to prevent commercial planting, while Australian Biotechnology News; Website:Queensland is unlikely to approve commercial trials. Last week, plans for a 3000 hectare NSW trial of Monsanto's Roundup Ready and Bayer's InVigor canola were watered down to smaller trials of Safety concerns derail Ventracor trial
420 hectares following concerns from the Wheat Board. Ventracor has had a trial of its VentrAssist heart device postponed The Australian; Sydney Morning Herald; Australian Biotechnology following the deaths of two recipients in the pilot study at the Alfred Hospital in Melbourne. The delay comes as the hospital conducts a thorough half-way review of the performance of the device, with five CSIRO, Immugene push for bird flu vaccine
of the 10 planned patients having received the implant. Ventracor CSIRO Livestock Industries have joined with animal health company said it is "satisfied" with the performance of VentrAssist and CEO Immugene to research a new vaccine for chickens designed to stop Colin Sutton said that he hoped that the review was thorough.
the spread of the virulent H5N1 strain of avian influenza. The research team is aiming for the quick development of a trial vaccine to protect Australia's poultry industry from falling victim to the outbreak which has devastated Asian stocks. CSIRO also reports that the anti-influenza drug Relenza, based on its research, has been effective in blocking the H5N1 virus in humans. Relenza is manufactured globally by GlaxoSmithKline under license from Australian biotech company Biota.
Sydney Morning Herald, Media release: MEET THE TEAM
file:///R|/DayLib/Distribution/S&Ftest.htm (5 of 6)4/05/2004 9:52:12 PM Spruson&Ferguson's Australian Biotech IP Review (from left to right) Martin O'Brien, Principal, BSc(Hons) PhD MLS; Andrew Lee, Associate, BSc MRACI; Paul Power, Associate, BSc
MSc DipLaw (BAB) LLM, Solicitor; Ruth Clarkson, Associate, BSc(Hons) MSc MRACI; Gavin Recchia, Associate, BSc(Hons) PhD MIP
MASM; Nico Van Niekerk, Legal Practitioner, BSc(Eng)(Chem) BCom BProc, Solicitor; Nigel Lokan, Technical Assistant, BSc(Hons)
PhD; John O'Connor, Principal, BSc MRACI; David Myers, Associate, BScAgr(Hons) PhD MLS; Richard Grant, Technical Assistant,
BSc(Hons) PhD DIC MBA FRACI; Christine Elliott, Associate, BSc(Hons) MSc GradDipIP; Andrew Blattman, Principal, BScAgr(Hons)
PhD GradDipIP; Shahnaz Irani, Principal, BSc(Hons) LLB(Hons) Solicitor; Linda Govenlock, Technical Assistant, BSc(Hons) PhD; John
McCann, Principal, BSc(Hons) PhD.
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Source: http://sprusons.com.au/epublications/biotechenews/04april/Aus%20Biotech%20IP%20Rev%20APR04%20FINAL.pdf