To the Independent Citizens' Oversight Committee of the California
Institute for Regenerative Medicine:
We are writing to register our concerns about the intellectual
property (IP) policy framework for state-funded stem cell research
proposed by a special committee formed by the California Council
on Science and Technology (CCST). The issue of intellectual
property is one of the most critical issues facing the CIRM.
At stake is who will own, profit from, and benefit from any
discoveries made using taxpayer funds managed by CIRM.
A detailed IP policy must be in place not only before any grants
are issued, but also before any bonds are put on the market.
Some observers, including the state bond counsel, have interpreted
federal tax law to mean that taxable, rather than tax-exempt
bonds, will be necessary if the state receives a portion of
royalties from any profitable discoveries - as promised by the
Proposition 71 campaign and indicated in its text. Thus, issuing
bonds with a pre-determined tax status before clarifying CIRM's
IP policy would be premature, and likely to preempt a full discussion
of possible policies. We hope that the CCST's recommendations
will not encourage the ICOC to make a hasty decision on this
question that would conflict with the promises made by the Proposition
To fulfill the mandates and promises of Proposition 71, a variety
of innovative approaches must be considered. Unfortunately,
the CCST report reflects little, if any, original thought or
creative suggestions about IP management under Proposition 71.
CCST's recommendations draw heavily on the current IP scheme
used by universities and other not-for-profit institutions to
manage federally funded discoveries under the Bayh-Dole Act.
However, these recommendations are insufficient to be in compliance
with Proposition 71.
The report's recommendations would fail to fulfill the claims
made in Proposition 71 about financial returns to the state
from patent royalties and licensing revenues. Nor do they envision
ensuring that any treatments developed with the use of CIRM's
state funds are widely accessible. Of course, the people of
California approved the Stem Cell Research and Cures Initiative
based both on the language of the initiative and on promises
of financial returns and health benefits made repeatedly during
the course of the campaign by key backers of Proposition 71,
some of whom now play central roles at CIRM. As you're well
aware, it is the legal and moral responsibility of CIRM and
the ICOC to ensure that the people's expectations and wishes
are diligently carried out.
In evaluating the report of the CCST committee, it is important
to recognize that its composition is fundamentally skewed. A
large majority of its members, by virtue of their institutional
affiliations, are unlikely to look beyond Bayh-Dole or to be
inclined to ensure returns to the state and/or accessible pricing.
The single committee member representing the state is a lawyer
from the Department of General Services, whose role was likely
limited to ensuring legal compliance. Furthermore, and importantly,
the committee includes no representation at all of public interest
We believe that CIRM needs to establish not only an IP policy,
but an accompanying commercialization plan as well, in order
to guarantee the financial benefits to the state and the health
benefits to the people of California that voters understood
they could expect if they passed Proposition 71. CIRM will have
to think 'outside the box' to devise an appropriate strategy
that is compatible with the intent and spirit of Proposition
71. We recognize that this will involve departures from the
status quo arrangements with which universities and their technology
transfer offices are comfortable, and that compliance with federal
statutes and regulations must be assured. Nonetheless, CIRM
and the ICOC must live up to the tasks stipulated in Proposition
71 and put in place policies and plans to reconcile the various
factors at play.
We call upon CIRM and the ICOC to arrange for broader public
input in developing its own policies for protecting and licensing
intellectual property flowing from state-funded or state-sponsored
stem cell research. With this input, CIRM must develop a fully
transparent IP management and technology commercialization plan,
explaining how it intends to comply with Proposition 71's mandates
of returning financial and health benefits to the state and
If the appropriate policies and checks-and-balances are not
in place at the before research grants or bonds are issued,
then at the end of the decade, Californians are likely to discover
that a huge transfer of public resources has occurred with little
or no public benefit.
The Center for Genetics and Society