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Full text of "Stanford's Office of Technology Licensing and the Cohen/Boyer cloning patents : oral history transcript / 1998"

University of California Berkeley 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



Program in the History of the Biological Sciences and Biotechnology 



Niels Reimers 
STANFORD'S OFFICE OF TECHNOLOGY LICENSING AND THE COHEN/BOYER CLONING PATENTS 



Interviews Conducted by 

Sally Smith Hughes, Ph.D. 

in 1997 



Copyright 1998 by The Regents of the University of California 



Since 1954 the Regional Oral History Office has been interviewing leading 
participants in or well-placed witnesses to major events in the development of 
Northern California, the West, and the Nation. Oral history is a method of 
collecting historical information through tape-recorded interviews between a 
narrator with firsthand knowledge of historically significant events and a well- 
informed interviewer, with the goal of preserving substantive additions to the 
historical record. The tape recording is transcribed, lightly edited for 
continuity and clarity, and reviewed by the interviewee. The corrected 
manuscript is indexed, bound with photographs and illustrative materials, and 
placed in The Bancroft Library at the University of California, Berkeley, and in 
other research collections for scholarly use. Because it is primary material, 
oral history is not intended to present the final, verified, or complete 
narrative of events. It is a spoken account, offered by the interviewee in 
response to questioning, and as such it is reflective, partisan, deeply involved, 
and irreplaceable. 

************************************ 



All uses of this manuscript are covered by a legal agreement 
between The Regents of the University of California and Niels 
Reimers dated May 8, 1997. The manuscript is thereby made available 
for research purposes. All literary rights in the manuscript, 
including the right to publish, are reserved to The Bancroft Library 
of the University of California, Berkeley. No part of the 
manuscript may be quoted for publication without the written 
permission of the Director of The Bancroft Library of the University 
of California, Berkeley. 

Requests for permission to quote for publication should be 
addressed to the Regional Oral History Office, 486 Library, 
University of California, Berkeley 94720, and should include 
identification of the specific passages to be quoted, anticipated 
use of the passages, and identification of the user. The legal 
agreement with Niels Reimers requires that he be notified of the 
request and allowed thirty days in which to respond. 

It is recommended that this oral history be cited as follows: 



Niels Reimers, "Stanford's Office of 
Technology Licensing and the Cohen/Boyer 
Cloning Patents," an oral history 
conducted in 1997 by Sally Smith Hughes, 
Ph.D., Regional Oral History Office, The 
Bancroft Library, University of 
California, Berkeley, 1998. 



Copy no. ' 



Cataloguing information 

Reimers, Niels (b. 1933) University technology licensing officer 

Stanford's Office of Technology Licensing and the Cohen/Boyer Cloning Patents. 
1998, ix, 84 pp. 

Pre-Stanford career in industry; establishing a technology licensing program 
at Stanford University; Cohen-Boyer recombinant DNA patents: negotiating with 
inventors, Stanford, and University of California, commercial potential, 
royalty distribution, controversy over patenting in biology, licensing plan, 
recombinant DNA controversy, National Institutes of Health role, opening 
patent files to public, Chakrabarty Supreme Court case, claims by John Morrow 
and Robert Helling; patenting and licensing monoclonal antibodies; Pajaro 
Dunes Conference on Biotechnology, 1982; University Licensing Pool for 
Technology (ULab); comments on Stanley Cohen, Herbert Boyer, and Donald 
Kennedy. 

Interviewed 1997 by Sally Smith Hughes, Ph.D., for the Program in the 
History of the Biological Sciences and Biotechnology, Regional Oral 
History Office, The Bancroft Library, University of California, 
Berkeley. 



TABLE OF CONTENTS- -Niels Reimers 



SERIES HISTORY i 

INTERVIEW HISTORY vi 

BIOGRAPHICAL INFORMATION ix 

I DIRECTOR, OFFICE OF TECHNOLOGY LICENSING, STANFORD, 1968-1996 1 

Pre-Stanford Career 1 

Establishing a Technology Licensing Program at Stanford 1 

The Cohen-Boyer Patent on Recombinant DNA Technology 3 

Learning of the Invention 3 

Negotiating with Stan Cohen and the University of 

California 3 

Commercial Potential 4 

Contacting Herbert W. Boyer 6 

Negotiating the Institutional Patent Agreement 7 

First Description and Anonymous Review of the Invention 9 

Paul Berg's Reaction 10 

Explaining the Patenting Process 12 

Royalty Distribution 13 

Controversy over Patenting in Biology 14 

The Licensing Plan 16 

Claims to Inventorship 16 

Ken Imatani 18 

Rejecting Genentech's Request for an Exclusive License 19 

Worries about Patent Coverage 20 

Cohen's Involvement 22 

The Biohazards Controversy 23 

National Institutes of Health 23 

Honoring Cohen and Boyer 24 

More on the Licensing Plan 25 

Criticism 25 

Opening Patent Files to Public Scrutiny 27 

Setting a Low Licensing Fee 28 

The International Trade Commission 29 

The Patent as a Potential Source of Income 30 

Royalty Distribution 31 

Threat of Regulatory Legislation 33 

U.S. Patent Office 33 

The Chakrabarty U.S. Supreme Court Case 34 

The Patent Specification 35 

Patenting and Licensing Monoclonal Antibodies 36 

Closing the Cohen-Boyer Patent File 37 

John Morrow's Claim 39 

Stanford's Announcement of the Licensing Program 40 

Pajaro Dunes Conference on Technology Transfer, 1982 41 



Reimers 1 111 Ease about a Licensing Opportunity 
A Possibility of Premature Disclosure 
Selling Licenses 
The University Licensing Pool for Technology 



TAPE GUIDE 



43 
46 
47 
47 

49 



APPENDIX 

A Niels Reimers Curriculum Vitae 50 

B "Tiger by the Tail," by Niels Reimers. Reprinted in 

1987 by the American Chemical Society from CHEMTECH. 

August 1987, pp. 464-471 52 

C "Shaping Life in the Lab," cover reprint from Time 

magazine, 1981 75 

D "Tech Pioneer Reimers To Sell UCSF Discoveries," San 

Francisco Chronicle, March 7, 1996 76 

E "New technology management office pairs inventors with 

investors," Newsbreak [UCSF campus newspaper], November 

22, 1996 77 

F Stanford Office of Technology Licensing web page, as of 

July 20, 1998 78 

G Cohen/Boyer Patent Chronology 79 



INDEX 



81 



BIOTECHNOLOGY SERIES HISTORY--Sally Smith Hughes, Ph.D. 



Genesis of the Program in the History of the Biological Sciences and 
Biotechnology 

In 1996, a long-held dream of The Bancroft Library came true with 
the launching of its Program in the History of the Biological Sciences 
and Biotechnology. For years, Bancroft had wished to document the 
history of the biological sciences on the Berkeley campus, particularly 
its contributions to the development of molecular biology. Bancroft has 
strong holdings in the history of the physical sciencesthe papers of 
E.O. Lawrence, Luis Alvarez, Edwin McMillan, and other campus figures in 
physics and chemistry, as well as a number of related oral histories. 
These materials support Berkeley's History of Science faculty, as well 
as scholars from across the country and around the world. 

Although Berkeley is located next to the greatest concentration of 
biotechnology companies in the world, Bancroft had no coordinated 
program to document the industry nor its origins in academic biology. 
For a decade, the staff of the Regional Oral History Office had sought 
without success to raise funds for an oral history program to record the 
development of the industry in the San Francisco Bay Area. When Charles 
Faulhaber arrived in 1995 as Bancroft's new director, he immediately 
understood the importance of establishing a Bancroft program to capture 
and preserve the collective memory and papers of university and 
corporate scientists and the pioneers who created the biotechnology 
industry. He too saw the importance of documenting the history of a 
science and industry which influence virtually every field of the life 
sciences, generate constant public interest and controversy, and raise 
serious questions of public policy. Preservation of this history was 
obviously vital for a proper understanding of science and business in 
the late 20th century. 

Bancroft was the ideal location to launch such an historical 
endeavor. It offered the combination of experienced oral history and 
archival personnel, and technical resources to execute a coordinated 
oral history and archival program. It had an established oral history 
series in the biological sciences, an archival division called the 
History of Science and Technology Program, and the expertise to develop 
comprehensive records management plans to safeguard the archives of 
individuals and businesses making significant contributions to molecular 
biology and biotechnology. All that was needed was funding. 

In April 1996, the dream became reality. An anonymous donor 
provided seed money for a center at the Bancroft Library for historical 
research on the biological sciences and biotechnology. Thanks to this 
generous gift, Bancroft has begun to build an integrated collection of 
research materialsprimarily oral history transcripts, personal papers, 



ii 

and archival collectionsrelated to the history of the biological 
sciences and biotechnology in university and industry settings. One of 
the first steps was to create a board composed of distinguished figures 
in academia and industry who advise on the direction of the oral history 
and archival components. The Program's initial concentration is on the 
San Francisco Bay Area and northern California. But its ultimate aim is 
to document the growth of molecular biology as an independent field of 
the life sciences, and the subsequent revolution which established 
biotechnology as a key contribution of American science and industry. 

UCSF Library, with its strong holdings in the biomedical sciences, 
is a collaborator on the archival portion of the Program. David 
Farrell, Bancroft's new curator of the History of Science and 
Technology, serves as liaison. UCSF Library contributed the services of 
Robin Chandler, head of UCSF Archives and Special Collections, who 
carried out a survey of corporate archives at local biotechnology 
companies and document collections of Berkeley and UCSF faculty in the 
biomolecular sciences. The ultimate aim is to ensure that personal 
papers and business archives are collected, cataloged, and made 
available for scholarly research. 



Project Structure 

With the board's advice, Sally Hughes, a science historian at the 
Regional Oral History Office, began lengthy interviews with Robert 
Swanson, a co-founder and former CEO of Genentech in South San 
Francisco; Arthur Kornberg, a Nobel laureate at Stanford; and Paul Berg, 
also a Stanford Nobel laureate. A short interview was conducted with 
Niels Reimers of the Stanford and UCSF technology licensing offices. 
These oral histories build upon ones conducted in the early 1990s, under 
UCSF or Stanford auspices, with scientists at these two universitites . ' 
The oral histories offer a factual, contextual, and vivid personal 
history that enriches the archival collection, adding information that 
is not usually present in written documents. In turn, the archival 
collections support and provide depth to the oral history narrations. 



Primary and Secondary Sources 

This oral history program both supports and is supported by the 
written documentary record. Archival materials provide necessary 
information for conducting the interviews and also serve as essential 



1 Hughes conducted oral histories with Herbert Boyer, William Rutter, and 
Keith Yamamoto of UCSF, and with Stanley Cohen of Stanford. The first volume 
of the oral history with Dr. Rutter is available at the Bancroft and UCSF 
libraries; transcripts of the other interviews are currently under review by 
the interviewees. 



iii 

resources for researchers using the oral histories. The oral histories 
orient scholars to key issues and participants. Such orientation is 
particularly useful to a researcher faced with voluminous, scattered, 
and unorganized primary sources. This two-way "dialogue" between the 
documents and the oral histories is essential for valid historical 
interpretation. 

Beginning with the first interviews in 1992, the interviewer has 
conducted extensive documentary research in both primary and secondary 
materials. She gratefully acknowledges the generosity of the scientists 
who have made their personal records available to her: Paul Berg, 
Stanley Cohen, Arthur Kornberg, William Rutter, Keith Yamamoto. She 
also thanks the archivists at Bancroft, UCSF, and Stanford libraries, 
and personnel at Chiron, Genentech, and Stanford's Office of Technology 
Licensing, for assistance in using archival collections. 



Oral History Process 

The oral history methodology used in this program is that of the 
Regional Oral History office, founded in 1954 and producer of over 1,600 
oral histories. The method consists of research in primary and 
secondary sources; systematic recorded interviews; transcription, light 
editing by the interviewer, and review and approval by the interviewee; 
library deposition of bound volumes of transcripts with table of 
contents, introduction, interview history, and index; cataloging in 
national on-line library networks (MELVYL, RLIN, and OCLC) ; and 
publicity through ROHO news releases and announcements in scientific, 
medical, and historical journals and newsletters and via the ROHO and 
UCSF Library web pages. 

Oral history as an historical technique has been faulted for its 
reliance on the vagaries of memory, its distance from the events 
discussed, and its subjectivity. All three criticisms are valid; hence 
the necessity for using oral history documents in conjunction with other 
sources in order to reach a reasonable historical interpretation. 1 Yet 
these acknowledged weaknesses of oral history, particularly its 
subjectivity, are also its strength. Often individual perspectives 
provide information unobtainable through more traditional sources. Oral 
history in skillful hands provides the context in which events occur-- 
the social, political, economic, and institutional forces which shape 
the course of events. It also places a personal face on history which 
not only enlivens past events but also helps to explain how individuals 
affect historical developments. 



1 The three criticisms leveled at oral history also apply in many 
cases to other types of documentary sources. 



iv 

An advantage of a series of oral histories on a given topic, in 
this case molecular biology and biotechnology, is that the information 
each contains is cumulative and interactive. Through individual 
accounts, a series can present the complexities and interconnections of 
the larger picture. Thus the whole (the series) is greater than the sum 
of its parts (the individual oral histories), and should be considered 
as a totality. 



Emerging Themes 

Although the oral history program is still in its infancy, several 
themes are emerging. One is "technology transfer," the complicated 
process by which scientific discovery moves from the university 
laboratory to industry where it contributes to the manufacture of 
commercial products. The oral histories show that this trajectory is 
seldom a linear process, but rather is influenced by institutional and 
personal relationships, financial and political climate, and so on. 

Another theme is the importance of personality in the conduct of 
science and industry. These oral histories testify to the fact that who 
you are, what you have and have not achieved, whom you know, and how you 
relate have repercussions for the success or failure of an enterprise, 
whether scientific or commercial. Oral history is probably better than 
any other methodology for documenting these personal dimensions of 
history. Its vivid descriptions of personalitites and events not only 
make history vital and engaging, but also contribute to an understanding 
of why circumstances occurred in the manner they did. 

Molecular biology and biotechnology are fields with high 
scientific and commercial stakes. As one might expect, the oral 
histories reveal the complex interweaving of scientific, business, 
social, and personal factors shaping these fields. The expectation is 
that the oral histories will serve as fertile ground for research by 
present and future scholars interested in any number of different 
aspects of this rich and fascinating history. 



Location of the Oral Histories 

Copies of the oral histories are available at the Bancroft, UCSF, 
and UCLA libraries. They also may be purchased at cost through ROHO. 

Sally Smith Hughes, Ph.D. 
Research Historian 



Regional Oral History Office 
April 1998 



Program in the History of the Biological Sciences and Biotechnology 

Completed Oral Histories 

November 1998 



Arthur Kornberg, M.D., Biochemistry at Stanford, Biotechnology at DNAX, 1998 



Niels Reimers, Stanford's Office of Technology Licensing and the Cohen/Boyer 
Cloning Patents, 1998 



William J. Rutter, Ph.D., The Department of Biochemistry and the Molecular 

Approach to Biomedicine at the University of California, San Francisco, 
1998 



Oral Histories in Process 



Paul Berg, Ph.D. 
Stanley N. Cohen, M.D. 
Herbert W. Boyer, Ph.D. 
Edward E. Penhoet, Ph.D. 
Robert A. Swanson 
Keith R. Yamamoto, Ph.D. 



vi 

INTERVIEW HISTORY- -Niels Reimers 



This short oral history with Niels Reimers focuses on only one, 
albeit a major, aspect of his career in technology licensing at Stanford 
University: his pursuit of the patenting and licensing of recombinant 
DNA cloning technology devised by Stanley Cohen of Stanford and Herbert 
Boyer of the University of California, San Francisco. The three patents 
are basic tools of biotechnology, licensed by every company engaged in 
recombinant DNA science and bringing immense royalty income to the two 
universities. 

The discussion begins with Reimers' arrival at Stanford in 1968 as 
associate director of the Sponsored Projects Office. Soon after, he 
initiated a pilot program promoting the patenting and licensing of 
Stanford faculty "inventions" thought to have commercial application. 
Immediately successful in increasing the university's patent income, the 
program was formally established in 1969 as Stanford's Office of 
Technology Licensing [OTL] , with Reimers as director. The campus had 
thus acquired an efficient mechanism to facilitate "technology 
transfer"--the catch phrase for the process in which information 
embodied in basic science discoveries is transferred to industry for 
commercial development. The essence of this process is patenting and 
licensingpatenting by the U.S. Patent and Trademark Office [PTO] in 
Washington, D.C., and licensing, in this case by Stanford's OTL, to 
companies of the right to use the patented "technology". 

Reimers tells in the oral history how he learned in the spring of 
1974 that Cohen and Boyer had developed a technique for joining DNA 
segments from different sources and replicating or "cloning" them in 
bacteria- -recombinant DNA technology, as it came to be known. Reimers 
contacted Cohen, who confirmed that the technique had commercial as well 
as scientific potential. Thus began a long and arduous process, lasting 
well over a decade, of attempting first to patent and then to license 
the Cohen-Boyer process and products. 

Reimers describes how he submitted a patent application in late 
1974 shortly before the patent "bar", the one-year period after 
"disclosure" or communication of the discovery, within which a patent 
application must be filed according to U.S. patent law. The process was 
far from straightforward. University biologists up to this point had by 
and large stuck to "pure" basic research. Commercial application of 
academic research was largely confined to their colleagues in 
engineering, chemistry, and other applied fields. Although patenting in 
medicine was not unknownthe University of Toronto's patent on insulin 
is an early example--academia nonetheless approached commercialization 
of discoveries in biomedicine warily and usually sought means to avoid 



vii 

direct involvement. OTL's direct and aggressive management of the 
patenting and licensing of DNA cloning technology was a new departure. 

There were other stumbling blocks to patenting and licensing the 
Cohen-Boyer work. The period between 1974 to 1980, when Reimers and 
others were negotiating with the PTO to issue the first of the three 
recombinant DNA patents, was a time of heightened concern about the 
safety of recombinant DNA science. Paul Berg, the leading scientist in 
the recombinant DNA biohazard debate, was also at Stanford and outspoken 
in his belief that the university's patenting effort would undercut his 
position as primary spokesman for the resumption of research under 
government guidelines. For this and other reasons, Reimers and other 
Stanford officials trod softly during the 1970s when the patents were 
pending. 

By the late 1970s, there was another problem stalling Stanford's 
effort to patent the Cohen-Boyer procedure: the Supreme Court was 
considering the patenting of "life forms" in the renowned Chakrabarty 
case in which General Electric sought to patent an organism constructed 
to metabolize oil. In view of the legal indecision regarding the 
patentability of living organisms, Stanford dropped its "product" claim 
--its claim on recombinant organisms and filed a patent application on 
the cloning process alone. On December 2, 1980, the PTO issued the 
first Cohen-Boyer patent, the so-called "process" patent. 

Reimers recounts his efforts to structure a licensing program 
which would encourage wide industry utilization of the new technology 
and, by setting low licensing fees, discourage litigation. After 15 
percent had been taken off the top to pay for Stanford's management of 
the patent, potential royalties were to be split 50-50 between Stanford 
and UCSF, the university affiliations of Cohen and Boyer. The 
dissensions of this period and the increasing participation of Stanford 
administrators, from President Donald Kennedy on down, are outlined in 
the oral history. In 1984 and 1988, the PTO approved the two "product" 
patents, on "lower" (prokaryotic) and "higher" (eukaryotic) organisms. 



The Oral History Process 

One interview, somewhat hastily arranged when I learned that 
Reimers was about to retire, was conducted in his office in the UCSF 
Faculty Club, where in March 1996 he established the campus's first 
Office of Technology Management. Down-to-earth and friendly, he 
attempted to cover a complex period of history in a short time. The 
result is insightful but not comprehensive. For further research, the 
interested reader is referred to the extensive records on the Cohen- 
Boyer patent at Stanford's OTL. Some of these documents were used in 
the course of the interview and suggest the richness of this collection, 
as well as their value in getting beyond "an oft-told tale." 



viii 



There is intrinsic interest in this history of major patents as 
told by the man most responsible for steering them through the patenting 
procedure and for creating the structure and terms of the licensing 
process. His tenacity in this arduous business stemmed in part from his 
gradual realization of what these patents could mean to the two 
universities in income and prestige. But the oral history also suggests 
a dramatic shift in philosophy as university administrators, industry 
figures, and university scientists learned the value--scientif ic, 
commercial, and f inancial--of discoveries in biological science. 
Reimers is among those responsible for facilitating the increasingly 
complex interconnections between the academic and industrial worlds. 

The Regional Oral History Office was established in 1954 to 
augment through tape-recorded memoirs the Library's materials on the 
history of California and the West. Copies of all interviews are 
available for research use in The Bancroft Library and in the UCLA 
Department of Special Collections. The office is under the direction of 
Willa K. Baum, Division Head, and the administrative direction of 
Charles B. Faulhaber, James D. Hart Director of The Bancroft Library, 
University of California, Berkeley. 



Regional Oral History Office 
The Bancroft Library 
Berkeley, California 
March 1998 



Sally Smith Hughes, Ph.D. 
Research Historian/Senior 
Interviewer 



ix 



Regional Oral History Office University of California 

Room 486 The Bancroft Library Berkeley, California 94720 

BIOGRAPHICAL INFORMATION 
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Date of birth /^ay /. / 9 3 3 Birthplace 

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Education 



Occupation(s) /^? u' y 



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Areas of expertise "Sf- /_ / c <? ' r> 5 / n 4 <? S~ UG51C. Q r?/ 1/ -**&i 



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INTERVIEW WITH NIELS REIMERS 



I DIRECTOR, OFFICE OF TECHNOLOGY LICENSING, STANFORD, 1968-1996 
[Date of Interview: May 8, 1997] it 1 

Pre-Stanford Career 



Hughes: Mr. Reimers, please give me a thumbnail sketch of how you ended 
up at the Office of Technology Licensing [OTL] at Stanford. 

Reimers: I had been in industry before then, namely at Ampex Corporation 
[Redwood City, California, 1959-1962] and Philco Western 
Development Laboratories [Palo Alto, California] , which became 
Philco-Ford Corporation, which then became Ford Aerospace [1963- 
1968] and is now Loral Corporation. I went from engineering to 
become a division manager of contracts for Ford. From there I 
wanted to apply my knowledge in a university setting. I 
contacted Stanford and was hired by Stanford [May 1968]. 



Establishing a Technology Licensing Program at Stanford 



Reimers: I soon found out that the business of managing grants and 

contracts in a university was nowhere near as interesting as at a 
company. So when a technology disclosure came by, after I had 
been at Stanford a couple of months, I asked, "What do you do 
with this?" And they said, "Well, you send it to the Research 
Corporation, which is based in New York City. They handle 
inventions for a great number of universities. Then after a few 
months, they'll respond, and then you take it from there." 

I looked up the income we had from Research Corporation from 
'54 through '67, and it was something like $4,500. I thought we 
could do a lot better licensing directly, so I proposed a 



'*# This symbol indicates that a tape or tape segment has begun or 
ended. A guide to the tapes follows the transcript. 



technology licensing program. And I had some advice: in the 
university setting, you don't just start a program; you begin a 
pilot program. So I started it as a pilot program, and proposed 
how the royalties would be distributed, how the financial 
structure would be, and began the program later in 1968 on a 
pilot basis. But I still had my responsibility in the Sponsored 
Projects Office, so this was a part-time thing. 

In that first partial year, the program brought in about 
$55,000, and I was making thirteen or fourteen thousand at the 
time. So Stanford really never had to look back. We were making 
money from the beginning. And then we set the program up on a 
formal basis for the next year. After I put together the plan 
for it, Stanford planned to go out and hire somebody, and I could 
get back to doing what they hired me for. I said, "Not a chance. 
I want to do this." And I went to my boss, Ken Creighton, 
Stanford's controller, who said, "Well, there's not a career path 
in university administration for this sort of thing. This could 
be a dead end." My response was, "If I can see my way clear to 
doing something I've really enjoyed for five years, that's a 
lifetime." 

The next year I raised around seventy-five thousand in 
royalty income. I thought with a growth in revenue of 50 percent 
a year, we're going to really do great. But then I had the first 
downturn in royalty income in the third year, down to seventy-one 
thousand. But after that third year, we then increased steadily. 
It's now around forty or so million dollars. I don't know the 
exact number though. 1 

Typically, a faculty member or a graduate student or 
research staff member at Stanford sends in an invention 
disclosure to begin the licensing process. When I started, the 
volume was probably around twenty-two, twenty-five or so 
disclosures per year. Very quickly, after we had our own campus 
program, it built up to fifty-sixty, and then rose, in the last 
ten or fifteen years, to about one hundred seventy- five a year. 
Three or four discoveries come in every week. The office manages 
the licensing of those discoveries. 



'Reimers' editorial note: FY 96-97 income was $52 million. 



The Cohen-Boyer Patent on Recombinant DNA TechnoloRy 



Learning of the Invention 



Reimers: The news director at Stanford, Bob Beyers, had a practice, and I 
don't think it's done anymore. If he saw something that would be 
of interest relating to the educational worldhe compiled 
something called the "Educational Digest" that he circulated at 
Stanford once a month or so--he would photocopy these articles he 
saw in newspapers and magazines and send them around. But if he 
found something specifically of interest for technology 
licensing, he would immediately get that off to us. In this 
case, it was an article from the New York Times, 1 not too 
extensive, about this work of Stan Cohen, 2 and that's the only 
name I really looked at at the time. It reported on the 
publication of Stan's workthis was in May of '74--and it looked 
interesting to me. Later that same day, I got a press release 
from Spyros Andreopoulos, who was head of the news service at the 
[Stanford University] Medical Center. It was the first tip I got 
from Bob that stimulated me to investigate it. 



Negotiating with Stan Cohen and the University of California 



Reimers: I called up Stan, with whom I had worked before, but not in this 
field. He had been in clinical pharmacology, and there he had 
developed some drug interaction technology, software based. So I 
had gotten to know Stan. I said, "Stan, this looks like it's 
interesting and important work." And he said, "Yes." He thanked 
me for that; he agreed that it was very important. "But, no 
patents. This is something that's going to go out broadly." I 
said, "Well, it certainly will, but if we apply for a patent on 
it, there's the concern about the safety of recombinant DNA 
research. Through a patent we might be able to get an exclusive 
license to a company to develop a recombinant insulin and so on. 
You can't get drugs developed today without some proprietary 
protection, because they require an investment of a couple of 
hundred million dollars for R & D. So through the mechanism of 



1 Victor E. McElheny. Gene transplants seen helping farmers and 
doctors. New York Times. May 20, 1974, 60:1. 

2 An oral history is in progress with Stanley N. Cohen, which will 
eventually be available for research at UCB and Stanford. 



the license we would be able to do that sort of thing. We could 
require companies to follow safety guidelines also, through the 
mechanism of the license." Then I explained to him how patents 
worked. Stan finally agreed to cooperate and then added, 
"There's a co- inventor on this, Herb Boyer, and he will have to 
agree as well." 1 said, "Fine." 

At UC, the technology is controlled by the UC Systemwide 
office. So I contacted Josephine Olpaka, who worked for Mark 
Owens, a lawyer who was handling the UC licensing office. They 
were overloaded with technology, but the program had never made 
any money (over expenses). 

Hughes: What do you mean overloaded by technology? 

Reimers: Overloaded with technology that they didn't move. They did not 
market; they'd wait for a company to come to them, instead of 
taking the very proactive way that we did it at Stanford. So 
this invention of Cohen and Boyer was just one more thing to do. 

Herb agreed that we could go forward. That meant 
negotiating with UC, so I drafted an inter-institutional 
agreement. UC Systemwide did not want to take any risks, so they 
wouldn't cover any patent or marketing costs. Everything would 
be at Stanford's risk. I said that 15 percent off the top would 
go to Stanford for managing the patent. Then Stanford could 
recover its expenses, and then the balance would be divided 
fifty-fifty. But if nothing ever came in in royalties, Stanford 
would be out whatever they had spent on it. This was the essence 
of the inter-institutional agreement that was signed. Of course, 
later on the licensing proved to be successful. UC then thought 
that 15 percent was an over-recovery, and I told them, "You had 
your chance." 



Commercial Potential 



Hughes: Did the New York Times article spell out the applied 
possibilities of this technology? 

Reimers: It talked about the potential. Stan and I disagree on this one 
point, by the way. My recollection was, Stan thought that 
commercial use was far out there in years. He now says he 
realized then it would be a shorter period. I explained that the 
patent runs seventeen years, and he thought the real big money 
wouldn't come until later. He's quite right in that. But, of 



course, we were able to get a fairly decent return before the 
patent expired [December 1997]. 

Hughes: He was saying that the patent would expire in seventeen years and 
there probably wouldn't be much profit in that period of time? 

Reimers: Yes. But that's an area where we decided to agree to disagree. 
Hughes: From the very start that was his attitude? 

Reimers: No, later, when I was giving a talk on this, I had mentioned that 
he didn't think that there would be any significant commercial 
applications for many years. He says, no, he anticipated it 
would be earlier. It probably was my interpretation of what he 
said. He may have said that any significant money may not come 
until the patent expires. As it turned out, we had a difficult 
time in the [U.S.] Patent [and Trademark] Office, which in a 
sense, turned out to be advantageous for us, because it's 
seventeen years from issue. 

Hughes: Well, let's go over it step by step. Did Beyers send you this 
article with the idea that this might be patentable research? 

Reimers: Well, no. It was a piece of technology of a Stanford professor; 
Beyers would have no idea whether it was patentable or not. He 
was just keeping me informed. That publication, by the way, 
after I talked to Stan, led me back to a 1973 publication, 
November of 1973, ' which had disclosed it before, but it didn't 
get any attention at that time. 

The only reason Stan's publication got attention in May of 
'74 is that a reporter [Victor McElheny] from the New York Times 
was going to do an article on--I forget the topic something from 
a Harvard or MIT professor. The scientist said that it really 
wasn't ready; he had to do some more science. And the reporter 
said, "Oh, gosh, I need to have an article." The scientist said, 
"Well, I think this is interesting work by Stan Cohen"--he may 
have said the others [authors); I forget who was on the 
publication. My focus was on Stan Cohen and Annie Chang, who 
were at Stanford. 

Hughes: It was [Robert B.] Helling and Boyer on the UCSF side. 



1 S. N. Cohen, A. C. Y. Chang, H. W. Boyer, and R. B. Helling. 
Construction of biologically functional bacterial plasmids in vitro. 
Proceedings of the National Academy of Sciences 1973, 70: 3240-3244. 



Reimers: That's right. Helling was on that. And that became a problem 
later, which was not in the publication. 1 The reporter then 
contacted Stan. So it's just by happenstance that that article 
was written. Otherwise, the research may have just lain fallow 
in the journal. 

Before that time, the research results of people in 
biochemistry and genetics and such were fertile ground for Nobel 
Prizes, but not much for commercial application. In fact, when 
this whole industry [biotechnology] got going, they just did not 
have people in companies that had competence in the biological 
sciences. So this was quite a change. And there was a great 
demand for graduates in these fields at that time. 

So I got UC signed up. Then I got the inventors signed up. 
Well, actually I only got Stan signed up, because UC signed up 
Herb. In the inter-institutional agreement, UC had to assure me 
that they had Herb signed up. 



Contacting Herbert W. Boyer 



Hughes: After your conversation with Cohen, you had a conversation with 
Boyer, right? 



Reimers: Yes. 
Hughes : 
Reimers : 



Can you remember the substance of that conversation? 



No, I'm fuzzy about it. It could have been through the UC 
[patent] administrator. 

Hughes: Well, you know how it might have happened. I went through the 
documents at OTL, and I noticed there were notes, 2 not by you. 
[interruption; Hughes hands copy of notes to Reimers.] Mr. 



'Reimers' note in editing: Dr. Helling was on sabbatical from the 
University of Michigan in Herb's lab. Because he was listed as an author, 
the University of Michigan contacted us, maintaining he was an inventor and 
that the UM was entitled to a royalty share. This was later resolvedonly 
Stan and Herb were inventors. 

2 BC [Bill Carpenter] to 74-43, September 18, 1974, re Dr. Herbert 
Boyer (Office of Technology Licensing, Stanford, S74-43, Correspondence 
1974-1979. Hereafter, OTL correspondence.) 



Reimers is looking at notes taken by a Bill Carpenter, who was a 
student? 

Reimers: A business school student. I made it a practice to have business 
school students work with me every summer, and then part-time 
during the rest of the year. It was the summer between their 
first and second year of business school. And Bill was 
excellent. 

Hughes: So he obviously had had a conversation with Boyer, which doesn't 
mean that you also didn't. 

Reimers: It probably is the case. It probably was Bill. And good for 

Bill. I'm glad the note was in the file. But I knew that Boyer 
was ready to go forward. And that's probably why I'm fuzzy about 
that contact. 

Hughes: Was Boyer immediately ready? He didn't have Stan's hesitations? 

Reimers: No, not that I recall, or even through Bill. Boyer was very 

straightforward, and we went on. I don't think at that time he 
had been contacted by [Robert] Swanson. 1 I don't think it was 
until we started to get some publicity about the commercial 
potential of recombinant DNA. 



Negotiating the Institutional Patent Agreement 



Reimers: So we got the inter-institutional agreement with UC worked out. 
The research at Stanford had been sponsored by, I think, NIH 
[National Institutes of Health], and at UC by NSF [National 
Science Foundation] and the American Cancer Society. The 
American Cancer Society had never released rights on an invention 
before. So I contacted them and explained the situation. I said 
that what I'd like to do is have it managed under our 
institutional patent agreement with NIH. And I explained the 
patent system and how the net returns would go back into 
research. They eventually agreed. 



1 According to Swanson, Boyer and he first met to discuss the 
formation of a company, later named Genentech, in January 1976. See the 
oral history with Robert A. Swanson in the Program in the History of the 
Biological Sciences and Biotechnology Oral History Series. Hereafter, The 
Bancroft Library Series. 



Hughes : 



Reimers : 



Hughes : 
Reimers : 

Hughes : 
Reimers : 



Did every educational institution that was receiving money from 
NIH have an agreement with NIH? 

No, you had to negotiate an "institutional patent agreement." In 
1980, I was involved with lobbying the Bayh-Dole bill through 
Congress. That then gave universities automatic rights, first 
option to rights, in all inventions created with government 
money. But at the time of the Cohen-Boyer invention, we had to 
negotiate specific agreements with each agency. So I had an 
institutional patent agreement with NSF as well as NIH. But the 
invention fell more in the NIH camp. NSF said we still had the 
obligations to them, and we would need to report to them and so 
on, but they would agree that NIH could take the lead. So that's 
how it ended up. 

By the time that last agreement was inked and the patent 
application filed, it was one week before the patent bar. It was 
late, very late. I had engaged Bert [Bertram I.) Rowland. He 
was one of the few patent attorneys that had knowledge in this 
field at that time. 



You mean in biological science? 



Yes. He had gotten his Ph.D. 
very knowledgeable in that. 

In biology? 



at the University of Washington, 



Yes. What we now call biotech, biochemistry. It was filed one 
week before the absolute patent bar. Because we filed after the 
publication by Cohen, Boyer, et al., the only patent rights we 
could seek were U.S. rights, and that application had to be filed 
by November of 1974. ' So I hadn't given Rowland too much time. 
There were a lot of tense times with the safety issues and so on. 



1 In the U.S., inventors may file a patent claim up to one year after 
public disclosure of the invention. European countries operate under a 
"first-to-file" patent system. 



First Description and Anonymous Review of the Invention 



Hughes: The first description I saw of the very preliminary stages of a 
patent application, I suppose, was written on October 18, 1974.' 
It was called Plasmid Gene Transplantation Technique. Of course, 
you've since changed the nomenclature. 

Reimers: Well, we made it a little more descriptive. 

Hughes: [hands document to Reimers] Did you write that? 

Reimers: I doubt it. 

Hughes: It's by Bill Carpenter, presumably. At least he's on the memo. 

Reimers: Oh, it's his handwriting. 2 Yes, that was Bill. 

Hughes: Apparently you sent out this preliminary description. 

Reimers: We sent that to Cohen and Boyer, asking for feedback. 

Hughes: Yes, but you must have also sent it to somebody else because 

there was an anonymous review. 3 May I read the first paragraph? 

Reimers: Sure. 

Hughes: It says, "In response to your request for the evaluation of the 
patent application entitled 'Process and Composition for 
Biologically Functional DNA Chimeras' by Cohen and Boyer, I would 
like to make the following comments." 

The first paragraph reads: 

To begin with, this technological 
development very clearly has immediate 
applications and probably represents one of 



1 Memo, Bill Carpenter to Niels Reimers, S74-43, Gene Transplantation, 
and attachment, The Plasmid Gene Transplantation Technique, October 18, 
1974 (OTL, Stanford, S74-43, correspondence 1974-1979.). 

2 Mr. Reimers is mistaken about the handwriting; he refers to a 
marginal note penciled by the interviewer. 

3 "In confidence, re: Process and composition for biologically 
functional DNA chimeras--Cohen-Boyer , " July 1, 1975 (OTL correspondence 
1974-1979.). 



10 



Reimers : 
Hughes : 
Reimers : 
Hughes : 
Reimers : 

Hughes : 
Reimers : 



the most outstanding new developments in 
molecular biology in recent years. It is a 
far-reaching development and has extremely 
high potential with respect to its commercial 
application. If the patent is successful 
there is little doubt that it represents a 
potential source of considerable amount of 
royalties for the Universities involved. 
With respect to the feasibility of the 
project, it clearly is based on sound 
biological principles and does, indeed, 
represent a novel development. 

Do I recall who did that? 

Yes, do you? 

[long silence] 

Was it common procedure to ask for a review? 

My sense was that I had something that was potentially very 
important, and I wanted to get feedback on it. 

You don't know who the anonymous reviewer might have been, 
somebody, obviously, who could appreciate the science. 



It's 



Yes, here he talks about the early work. I'm trying to think who 
I was close to at that time, that might have done it. I needed 
to get someone fairly objective, I felt; it was probably not a 
Stanford or UCSF person. 



Paul Berg's Reaction 



Reimers: Some emotions were involved with all of this. I remember Paul 
Berg wanted to meet with me, and he was quite upset that I had 
filed on this case, very upset. 1 Then he noted the work that he 
and his student--Janet Mertz--had done earlier. I said, 
"Everyone stands on the shoulders of the scientists that have 



1 For a record of one such meeting see: John Poitras to File S74-43, 
Meeting on DNA Patent, May 17, 1976, attendees: Clayton Rich, William 
Massy, Robert Rosenzweig, Paul Berg, Stanley Cohen, Joshua Lederberg, 
William Baxter, Peter Carpenter, John Poitras. (OIL correspondence 1974- 
1979.) 



11 



worked before. Had you disclosed your earlier work to me, and it 
was something that could be applied..." In other words, you 
can't patent just an idea; you have to have a teaching in the 
patent, so you can make that insulin product, and so on. 

So if Berg's research was that far along, and he had 
disclosed it, then I certainly would have gone for it by applying 
for a patent. As it turns out, he was probably close to doing 
that, but he was working then with-- 

Hughes: He was working with SV40 [a simian virus]. 

Reimers: SV40, yes. And SV40 had some safety concerns. So, he held back. 
You'd have to talk to other scientists as to whether he could 
have done what Cohen and Boyer successfully did, or not. But he 
didn't. And so Stan and Herb were clearly first. Stan was not 
in the inner circle at Stanford, or perhaps elsewhere, because he 
had been, if you recall, in clinical pharmacology. He may not 
have been one of those they would have liked to have had do this. 
You'd have to talk them; 1 maybe he was an interloper in the 
field, or whatever. There was not universal joy in the 
biochemistry establishment about what I was doing. 

Hughes: Why were you convinced that this invention could be something 
big? 

Reimers: I wasn't convinced. I didn't know that much about it. Because a 
great excitement developed regarding this area, I maintained from 
the beginning that this work of Cohen and Boyer would underlie 
the whole field of biotechnology. And I repeated it and repeated 
it. When I first went licensing, a lot of the companies, the 
business people, didn't really understand the technology. They 
had just been reading about its potential. Now, that was true of 
some of the companies, not all of them. So we had to go through 
a tutorial as well. 

By then I had a couple of other business school students. I 
saw Ken Imatani's name in your documents. Then I hired Andy 
Barnes, and Andy was just super helpful. He was just graduating 
from the business school, and I felt I needed somebody full-time 
to help me on this. And so he agreed to work full-time. So Andy 
and I developed all these documents and visuals that explained 
the patent and the four royalty elements. 



1 See the oral histories with Paul Berg and Arthur Kornberg in The 
Bancroft Library Series. 



12 



Explaining the Patenting Process 



Hughes: Let's wait a bit on that. Let me just read the last paragraph in 
this review, because it brings out some of the problems that 
you're going to confront as you apply for the patent. 

In summary, it is my view that this is a 
somewhat ill-conceived patent application 
that disregards (albeit unintentionally) the 
contributions of other scientists and is very 
basic in its concepts and applications. 
While one can argue that the University 
should attempt to benefit from this 
scientific achievement, I am concerned that 
given the fundamental nature of the work and 
the number of scientists involved, either 
directly or indirectly, that this patent will 
not reflect favorably on the public service 
ideals of the University. 

Reimers: I mentioned that biochemistry is the fertile ground for Nobel 
Prizes and that sort of thing. Few biological scientists had 
been involved with the commercial side. They didn't understand 
the role of patents, such as the patent is an ultimate 
publication. A patent provides much more information than the 
typical publication. You have to, or the patent will be invalid. 
You have to teach how to go forward. And it does not in any way 
restrict publication. I had to work almost one on one with each 
scientist to explain the system to them. 

It's not like an academic publication. Yes, if you need to 
explain the science, the teaching part of the application, you 
would refer to work by others. But if there wasn't a teaching 
element, you might not refer to other scientists' work. But in a 
[scientific] publication, you have got to refer to those who came 
before. The perception was that the patent was restrictive. 
They didn't understand the basic principle: patents do not 
inhibit research, because that's a public policy issue. The 
right to patent goes back to the [U.S.] Constitution. 

Hughes: What became an issue, and what to this day is an issue, is that 
in certain instances scientists do hold up publications until 
they can get patents filed. 

Reimers: Oh, it's terrible, yes. In my career at Stanford, MIT, UC 

Berkeley, and UCSF, I have never delayed publication- -not for a 
year, not for a month, not for a week, not for a day, not for an 



13 



hour, not for a minute, not even a second. When people said, 
"Well, if you haven't had enough time to evaluate my technology, 
to decide to file a patent on it, I can hold up publication," I 
would tell them, "No." 



Royalty Distribution 



Reimers ; 



Hughes : 
Reimers ; 

Hughes : 
Reimers : 

Hughes : 



I had to be a little cynical about Art [Arthur Kornberg] and Paul 
[Berg] because they got involved with DNAX [1980], and DNAX was 
sold to Schering-Plough not long after it was founded. 1 The key 
asset that [Alejandro] Zaffaroni had in that sale was the tie-in 
with Paul and Art and perhaps a few others. So I was just 
estimating backwards of what financial piece they got out of 
that, and it was much more than Stan had gotten up to that point. 
In fact, Stan had initially waived his right to personal 
royalties, because everybody was all over him; he didn't want to 
be tarred with that brush. I think, he didn't even give his 
royalties to Stanford; they went to his alma mater, which was the 
University of Pennsylvania, I believe. 

He graduated from the University of Pennsylvania. 

Yes, so he gave them to Pennsylvania. However, later he decided, 
perhaps based on what others were doing, that he would take the 
money himself. 

When was that? 

It should be in the file. Let's see, the first intern came in 
when we did our first license. Was that 1980? 

The process patent issued in 1980. 2 You certainly began actively 
soliciting licenses in 1981, and that was when Andy Barnes was 
very active. 3 



1 For more on DNAX, see the oral history with Arthur Kornberg in The 
Bancroft Library Series. 

2 United States Patent 4,237,224, Cohen et al., December 2, 1980. 
Process for producing biologically functional molecular chimeras. 

3 See, for example: memo, Andy Barnes to Niels Reimers, September 1, 
1981, Cohen-Boyer gene-splicing licenses (OTL correspondence 1980-1982.) 



Reimers: [musing] So it was in the fall of that year, December 15, 1981, 
when all that money came in. And then that year's income was 
distributed the fall of the next year, the fiscal year that ran 
through August 31, 1982. It probably would have been '83 or '84 
that Stan decided to accept personal royalties. I said, "I'm 
going to tell people, because I publicly said that you were 
waiving your royalties. And if anybody said that they understood 
that you waived royalties, I'm going to explain that you did, but 
now you don't, and then refer them to you." He pointed out he 
could still be donating them. I said, "That's fine. You deal 
with that." 

Hughes: Does Boyer receive personal royalties? 

Reimers: No, I am told he turned them over to UCSF, to the Department of 
Biochemistry. 1 I haven't seen the documents; you'd have to talk 
to Herb. He made a ton of money through Genentech. 

It's interesting. I don't think to this day, Stanford has 



received patent disclosures from Paul or Art. 
few others. 



But from quite a 



Controversy over Patenting in Biology 



Reimers: I think it's important for scientists, if they can't aid the 
process by which results of their research are delivered in a 
form the public can use, they should at least not inhibit it. 
And I don't think people are inhibiting the process, but it's 
better if they aid the process. If Paul or anybody has come up 
with something significant, a drug won't be developed unless we 
can get a patent on it. 

Hughes: In biology, there wasn't that long tradition of patenting that 
there had been in the physical sciences. 

Reimers: Yes, it's coming out more and more. 

Hughes: You were probably on the first wave in biology. 

Reimers: Yes. 



1 The Department currently has a Boyer Fund which largely supports 
students. 



15 



Hughes: What complicated these issues and made people even more skittish 
was the fact that the recombinant DNA controversy was almost 
synchronous with the patenting attempts. And who was most 
prominent at Asilomar? Paul Berg. 

Reimers: Exactly. There was a conference at MIT on recombinant DNA, and 
Stan--he may have given a talk earlierwas leaning against the 
wall in the back of the auditorium. 

Hughes: Oh, the Miles symposium [June 8-10, 1976]. 

Reimers: And somebody said, "What about the patent applications? We 

understand, there are patents. Stan Cohen may know something 
about that." Stan told me, "That was a long walk down the aisle 
[to the podium]." But he says all the way along he was trying to 
remember what I had said about the basics of the patent system, 
and so on. And when he got up there, he essentially diffused the 
situation and explained it. At that time he was probably talking 
about the fact that he was not taking any personal royalties; any 
monies received went back into research. 1 

Hughes: Yes, but I think he also was trying to explain that patenting 
would not affect academic research. 

Reimers: Right. By the way, we had some disagreements as we went along, 
Stan and I. It was not all peaches and cream. As a matter of 
fact, Sally Hines was in my office. There was essentially just 
me, Sally, John Poitras, and the [business school] students. She 
or another person there said that, gosh, they were worried about 
me, because Stan was raising his voice. 

Hughes: Do you remember what the issues were? 

Reimers: No, I honestly don't. But some of it was, he didn't quite 
understand the situation. What we do is a complex mix of 
business, technology, and law. 

Stan was very interested in what was going on, but 
maintained that he wasn't. But I put a note in the file every 
single time I talked with him on the phone. You probably saw 
them when you went through the files. Stan is a wonderful guy; 
he's very tenacious. 



1 For Cohen's viewpoint, see his oral history in progress. 



16 



The Licensing Plan 



Claims to Inventorship 



Hughes: Well, I want to show you a July '76 licensing plan 1 and see if it 
brings back any memories. This is the first one that I saw. 

Reimers: Yes. 

Hughes: Was there a debate about the inventors being solely Cohen and 
Boyer? 

Reimers: Yes, there certainly was. And you can get that from the patent 

file history; it's public. The University of Michigan was trying 
to assert that Helling was a co-inventor, because he was on the 
publication. Annie [Chang] wasn't a co-inventor. But based on 
patent law, it was Herb and Stan. Stan had the plasmid, and Herb 
had the enzyme. And they agreed to collaborate. 

Hughes: How did you discount Annie? 

Reimers: The patent attorney makes the decision. It was a non-issue with 
Annie: she was carrying out the experiment, but she wasn't the 
inventor. But the patent attorney determines that; I don't 
determine that. At that time, patent law was even more stringent 
than today about who is the inventor, that you don't put on 
people who aren't inventors, and you don't leave off people who 
are inventors. 

Hughes: The Helling problem came later. What I'm asking is, at the time 
of this licensing plan, were you discussing who should be the 
inventors? 

Reimers: Oh, no. The inventors were determined in 1974, and this was '76. 
During the patent prosecution process, after we had filed, then 
there was a call from the University of Michigan. In some ways, 
I didn't care a lot about that, because Boyer 's royalties would 
come out of the UC half. Royalties were divided equally between 
the universities, and then we would diwy ours out based on our 
policy. UC would diwy theirs out based on their policy. So, 
Helling, in that sense, wasn't a concern to Stanford, except for 
the fact, from the patent point of view, we had to have the 



1 Memo, Niels Reimers to file S74-43, Recombinant DNA Process, July 
13, 1976, subject: Licensing Plan (OTL correspondence 1974-1979.) 



17 



correct inventors. So that meant it needed to be dealt with 
publicly before the patent office, which it was. 

By the way, a sore point for Boyer is somewhat 

understandable. Stanford took 15 percent for managing the case, 
and at UC, the standard practice was 15 percent off the top for 
managing the case, and then you distributed. Well, UC took 
another 15 percent. All they had to do was cash the checks from 
Stanford, but they took another 15 percent. So if you want to 
get some sharp reaction, talk to Herb about that. [laughter] 

Hughes: They took 15 percent off the 50 percent that went to UC? 

Reimers: Yes. 

Hughes: Yes, that makes a difference, doesn't it? 

Reimers: Big difference. I mean, you're talking big money. I got a 

chance to talk to Herb about that. I didn't know that UC took 
the 15 percent until I saw Herb last year, and he mentioned that 
to me . 

Hughes: How was the Helling claim handled? 

Reimers: It was through communication with the University of Michigan, and 
through the patent office by Bert Rowland. Bert Rowland took the 
lead for us in that. He handled the inventor question. And as I 
say, it was to the benefit of UC, well, not the benefit of UC. 
In a way, it was only to the benefit of Herb Boyer, as the 
"inventor's share" at UC would be divided among two people rather 
than one. But the key thing was, we wanted to get the 
inventorship right, and there was no negative feeling toward 
Helling or the University of Michigan. Helling' s claim was 
probably sort of annoying; it was disturbing things. But it got 
resolved. 

Hughes: Resolved on the grounds that the concept had come from Boyer and 
Cohen, and Helling was an implementor, rather than an inventor? 

Reimers: Yes, Cohen and Boyer described under testimony just exactly what 
he did, and it was determined he didn't contribute to the 
invention. The thing about this business, somebody can do all 
the work and not be the inventor if they're simply the hands of 
the experiment. 

Hughes: So it's the idea that is important. 



18 



Reimers: Yes. And publication co-authors may not appreciate that, because 
in academic publications you put down everybody who was involved, 
and of course Helling 's name was there on the paper. 1 He had 
been on sabbatical from the University of Michigan during that 
time. 



Hughes : 



Reimers : 



I pulled you away from the July '76 licensing plan, 
anything you care to say about it? 



Is there 



Oh, I just felt I needed to write something up. 
explain where to go forward. 



And maybe to 



Ken Imatani 



Hughes: I saw some documents by Ken Imatani, who I gather was another 
student from the business school? 

Reimers: Yes. I still see Ken. I play golf with Ken every now and then. 
I stay in touch with my students. 

Hughes: He did what looked like a market analysis. 2 Was that the basis 
for your discussion of the market here? 

Reimers: Well, there was a lot of stuff being written at the time. 

Different students had different backgrounds. Ken was more 
analytical. Bill was more of a marketing type. Oh, here's the 
one from Ken Imatani. Okay, he had a discussion with Herb 
Boyer. 3 I asked him to talk with him about what further 
development work was going on, because that would be important to 
me in this. Herb at this time said that he wanted to get some 
funds to support organic chemists to synthesize [DNA] molecules. 
At this time, he probably had not been contacted by Swanson, is 
my guess. 



1 S. N. Cohen, A. C. Y. Chang, H. W. Boyer, and R. B. Helling. 
Construction of biologically functional bacterial plasmids in vitro. 
Proceedings of the National Academy of Sciences 1973, 70: 3240-3244. 

2 Memo, Ken Imatani to Niels Reimers, subject: S74-43 Industrial 
Markets for Recombinant DNA Process, August 13, 1975 (OIL correspondence 
1974-1979) . 

3 Memo, Ken Imatani to Niels Reimers, subject: File S74-43 Discussion 
with Dr Boyer for Future Development Work for Recombinant DNA Process, 
August 6, 1975. (OIL correspondence 1974-1979). 



19 

Hughes: No, he hadn't. 

Reimers: Ken and articles in the paper and such led to the licensing plan. 

Rejecting Genentech's Request for an Exclusive License 



Hughes: Genentech was founded early in 1976; it was April when the 

incorporation papers were signed. Also by that time, actually 
somewhat sooner, Cohen had become a scientific advisor to Cetus. 
Did these commercial ties present any problems in pursuing the 
patent issue? 

Reimers: No, not for me; that was totally separate. 

Hughes: Well, in the perception of those on the outside, would those ties 
have been perceived as a conflict of interest? For example, one 
of the companies that became most interested in this technology 
early on was Genentech. 

Reimers: Yes, I'll tell you about my first meeting with them. 
Hughes: Yes, I'd like to hear. 

Reimers: I had absolutely no problem with that. Typically, we licensed 
exclusively, because most university technology is undeveloped. 
And to encourage investment to develop a product, you need to 
give an exclusive license. That's very typical of university 
licensing. But when you've got a basic tool, such as this, you 
want it to get out broadly and nonexclusively. I did early on 
think that maybe we could give a field-of-use exclusive. But as 
I learned more about this recombinant DNA technology, I felt that 
this was something that we'd want to get out to everybody, as 
broadly as possible. I wanted to get it established early on as 
sort of the fundamental patent building block of the whole field. 

So I was contacted by Swanson, and met with him and Tom 
Kiley. Tom Kiley was an attorney with Lyon and Lyon in Los 
Angeles, and it was he whom Bob was working with to develop the 
company. Bob was an associate with the Kleiner & Perkins venture 
capital firm at the time. When I was in San Francisco for the 
meeting, I talked briefly with either Gene [Kleiner] or Tom 
[Perkins], and then there was this very young-looking fellow, 
Swanson, and Tom Kiley. They wanted an exclusive license for all 
polypeptides. Tom gives very dramatic presentations, and he'd be 
ferocious in the courtroom, as a lawyer. But I knew where I 



20 



Hughes : 



Reimers : 



stood, and there was no doubt in my mind of the appropriate 
response. I just smiled and said, "No." I don't believe they 
were optimistic Stanford would agree, but it was worth a try. 

There was a meeting called "Alliance" put on by Recombinant 
here in San Francisco a couple of weeks ago at the Ritz Carlton, 
and there was some reminiscing about the early beginnings of the 
biotechnology industry. George Rathmann, Bob Swanson, and Bill 
Rutter were on a panel. I think it says so here in the program. 
I was on a subsequent panel; my presentation didn't have to do 
with reminiscing, but I did a little because there was interest 
in the early days. I had to mention a few things that I thought 
the audience might find of interest. One was an anecdote 
involving a meeting with George Rathmann. The other was with 
respect to Swanson, telling about that meeting where they asked 
about an exclusive license to polypeptides . I talked later with 
Tom Kiley, who was at the meeting as well, and Bob, and they also 
reminisced about that meeting with a slightly different spin. 
But they were laughing. They realized my attitude was, "Nice try 
guys." And they knew that. It was friendly. 

Were they at that stage worried about the future of their baby 
company? To not get an exclusive license jeopardized their 
future, did it not? Or, were they enough ahead of the game? 

Well, what they've gained from that meeting was that the patent 
would be licensed at a low royalty, because this license was 
going to underlie commercial activity in the biotechnology 
industry. 



Worries about Patent Coverage 



Reimers: By the way, in the setting of the royalty, I got one letter from 
an alumnus: "You've got a patent; you can dominate everything 
here. Why are you charging such a low royalty? You know 
Stanford could use the money. Charge a higher royalty." 

I had to smile because he obviously didn't understand the 
full situation. For one thing, it was a bit flaky, whether we 
could make this or not, whether we had adequate coverage in the 
patent specification for prokaryotes, hosts, and eukaryotes, and 
whether we could get broad patent claims. And also there was 
another factor: we only had U.S. rights. As a patent gives the 
right to make, use, and sell, somebody possibly could use our 



21 



process overseas, and then sell the non-infringing end product 
back in the United States. 

We then dealt with that issue in part through the 
International Trade Commission [ITC] and part through the royalty 
structure. The ITC (a U.S. government commission) is concerned 
with a level playing field and fairness in cross-border trade. 
If, to avoid a U.S. process patent, a company sets up a 
manufacturing operation outside the U.S., the ITC can stop 
importation of the resulting products to the U.S. We obtained, 
and made public, a legal opinion, we could use the ITC mechanism. 
The issue became moot when, after the Supreme Court's five-to- 
four decision on "patenting of life," [1980] we obtained patent 
claims to products. 

In devising the licensing program, a concern was that the 
genetic engineering steps of cutting and splicing DNA, and then 
inserting the resulting recombinant DNA in a microorganism host, 
whether prokaryotic or eukaryotic, was as far as our patents 
might reach. After the insertion step, then the modified 
organismthe transformant--expresses the high value protein 
desired. But it is essentially nature that is carrying it 
forward after the insertion step. 

So it could be argued that the defensible patent coverage--! 
can talk about this now since the patent expires on December 2 
[1997] --ends with the transformant . In other words, would I be 
able to enforce the patent on the end product of the expressed 
protein or just at the stage of the transformant? 

And then I had to realize some people might make some dumb 
economic moves, too. For example, a scientist might sell a 
transformant for small dollars to a company. And then I might 
not get the company to license the technology because of no 
enforceable patent coverage for the end product, the proteins 
that were being expressed by the transformant. The royalty was 
established at 10 percent at the level of the transformant. It 
was a factor of 20 from the transformant 10 percent to the end 
protein product royalty of 1/2 percent. 

After we got the first group of licenseesyou will see if 
you talk with Floyd Grolle--that there have been a number of 
changes in the royalty rate of subsequent licensees, all up. In 
fact, I don't know what it is now- -it may be 2 percent at the end 
product level rather than 1/2 percent. But most companies that 
have become licensees recently are not worried about the earned 
royalty rate. They just don't want to be inhibited from 



22 



practicing the technology; their sales of end product will be 
long after the patents expire. 



Cohen's Involvement 



Hughes: Cohen initially said that he didn't want to be involved in the 
patenting process. 

Reimers: Is that from his notes? 

Hughes: I got that from notes about a conversation with Stan. 1 

Reimers: Stan said he wanted to be excluded from licensing matters; he 

didn't want to be involved. In fact, as I mentioned earlier, he 
had little things to say all the time. 

Hughes: Also, he reversed himself. In June of 1976, he wrote to you 

saying that he wished to reverse his original request to remain 
uninformed about Stanford's activities in the licensing arena. 2 
And it followed from that Miles symposium. Both you and Robert 
Rosenzweig responded. 3 

Reimers: It's my normal practice to keep inventors fully informed of our 
licensing. 

Hughes: Robert Rosenzweig disagreed, saying it was better for Cohen to be 
detached from Stanford decisions. 

Reimers: I don't think Rosensweig really understood the whole complexity 
of the business, but I would agree with his decision. 

Hughes: Also, don't you think he was looking at it-- 

Reimers: He was looking at it from a PR [public relations) standpoint. 
That was his role. He is a very savvy individual. 



1 Unsigned penciled notes, probably by Reimers, dated April 9, 1976 
(OIL correspondence 1974-1979). 

2 Memo, Stanley N. Cohen to Niels Reimers, subject: DNA Cloning 
Patent, June 14, 1976 (OIL correspondence 1974-1979). 

3 Memo, Niels Reimers to Robert Rosenzweig, subject: Recombinant DNA, 
June 18, 1976; memo, Robert M. Rosenzweig to Stanley N. Cohen, July 7, 1976 
(OIL correspondence 1974-1979). 



23 



The Biohazards Controversy 



Hughes: Also remember what these high profile people are dealing with. 

Reimers: The whole safety issue. Oh, I can tell you about this safety 
issue, which we went through for a time with NIH. Remember, I 
mentioned I was going to put in the license that it was mandatory 
for industry licensees to follow the NIH guidelines for 
recombinant DNA research. So I put in a requirement that the 
industry licensees follow the safety guidelines and submit 
evidence that they were doing this to the NIH--or HEW, the 
Department of Health, Education, and Welfare. The rights came 
from HEW, which is now HHS [Department of Health and Human 
Services]. NIH didn't want to be involved as an enforcing 
agency, even though they had gotten some PR concerning safety 
guidelines for industry. So we modified the license safety 
clause to satisfy NIH. 

Academics had to follow safety procedures--?! , P2, P3 levels 
of physical containment, and levels of biological containment, 
such as an enfeebled E. coli host. But industry, because it 
wasn't receiving government funding, didn't at the time need to 
follow safety guidelines for rDNA research. So while I had 
trumpeted the fact that through the license we could require 
compliance with the guidelines, NIH didn't want to be a 
regulatory agency. So if you look at the license, you'll see 
that it reads that industry will make efforts to follow the 
safety guidelines, or something like that. 



National Institutes of Health 



Hughes: Right. In the summer of '76, you met with people at NIH. In 

fact, you wrote in July of "76, "The recombinant DNA patent issue 
is considered ' hyper- impor tant ' at NIH, with concerns about the 
media, the Congress, and the public." 1 



Reimers: I have a lot of old files in the basement that I thought I should 
keep. When I came to Stanford, I was starting the licensing 
program, and then I went back into the old files that I could 



1 Memo, Niels Reimers to Robert Augsburger, subject; Recombinant DNA, 
July 19, 1976 (OTL correspondnce 1974-1979). 



24 



find about the klystron patent. Other patents had been filed by 
Stanford in the past, but nothing had been done with them. I 
shuffled through those, and I found some of historical interest. 

I took maybe half a dozen patents, max, down to where I was 
on the first floor of Encina Hall, and then Encina Hall was 
burned during the Vietnam conflict period. In the top part of 
Encina Hall were all the administrative records, including all 
the patent records, all of which were burned. So the only ones 
that were left were the half dozen I had, which are pretty; they 
have the purple ribbons of old patents. 



Honoring Cohen and Boyer 



Reimers: That reminds me: I invited Julie [Julius] Krevans, who was 

chancellor at UCSF, and Don Kennedy, president of Stanford-- 
neither institution had recognized Herb and Stan. So I arranged 
with a faculty spouse, who was a good painter, to have two 
paintings made and framed of an artist's representations of DNA. 
One I didn't like so well, so she made a third one for nothing, 
so there were three paintings. And then I had the process patent 
and the product patent framed. Then Herb and Stan signed an 
agreement: if we needed those in litigation, they'd have to give 
them back. So Cohen and Boyer were given two framed paintings. 
Then the extra painting, which I wish I had kept, I gave to Bert 
Rowland, our patent attorney. So I've got nothing, except for my 
memories . 

No, actually we did get this award, which probably doesn't 
belong to me but to Stanford. That award is why I wrote the 
paper. ' 

Hughes: Please read the citation for the record. 

Reimers: Oh, it says, "The seal of the American Chemical Society." And 
it's a metal plate on a walnut plaque. "Stanford University, 
University of California in recognition of their innovative 
cooperative licensing of the Boyer and Cohen patent, United 
States patent number A, 237,224." And in smaller letters: "ACS 



1 In 1986, the American Chemical Society awarded Stanford and the 
University of California its ACS Award for their "innovative cooperative 
licensing of recombinant DNA technology." The paper (on the licensing of 
DNA technology) which Reimers refers to is: Niels Reimers. Tiger by the 
tail. Chemtech, August 1987, 464-471. 



25 



Hughes; 
Reimers : 



Division of Chemistry and the Law. ACS Committee on Patents and 
Related Matters, 1986." The paper was written for the award, 
because they wanted a paper along with that. 

"Tiger by the Tail." 

Yes; the journal editor gave it that title. 



More on the Licensing Plan 



Criticism 



Hughes: Getting back to the controversy that surrounded the licensing 

activities: At the time, was Stanford viewed as having a conflict 
of interest in pursuing the patent and at the same time being the 
major locus for discussing safety issues? 

Reimers: Now, that was one of the things that Paul talked to me about. 

Here we are filing a patent, and here they are taking the lead in 
the safety issues, and some could perceive that we at Stanford 
were just trying to cement our proprietary position, while others 
were required to hold back in research using recombinant DNA 
technology. And so, partly as a result of that, Stanford could 
have been viewed as having a conflict of interest. 

Many articles began appearing in the paper about whether 
doing rDNA research is the right thing to do. But also articles 
about commercialization: the commercial world is going to get in 
there, and they are really going to do bad things. So that's 
when I recommended, and it was agreed, that we essentially go 
back to the NIH, which was the government entity with which we 
were working on this, and give them the opportunity to deal with 
the patent rather than Stanford, if Stanford's actions were not 
considered in the public interest. And Rosenzweig wrote that 
letter; it's in Watson's book. 1 

After the Rosenzweig letter was received at HEW, I talked 
with Norm Latker [patent counsel for HEW] . He told me they were 
uptight on matters about rDNA patents. At an HEW meeting on the 
topic, he walked into, as he put it, "a den of scientists without 
a patent understanding." He had to educate them about the patent 



'James D. Watson and John Tooze. The DNA Story: A Documentary History 
of Gene Cloning. San Francisco: W. H. Freeman and Co., 1981, p. 499. 



26 



system and its role in commercial development. HEW considered a 
number of alternatives, including abandoning the patent 
application. 

Then in the Senate hearings in 1977 on recombinant DNA 
research, Teddy Kennedy got involved. By then, HEW had the 
education on the role of patents and decided it would not be a 
good idea to take over the patent. What message would that send 
out to other HEW grantees who sought to develop the technology so 
that the public could use it, if the government would march in to 
take back any patent with significant commercial potential? 

I listed in the article 1 what Norm told me about the 
different options that HEW had been considering: dedicate the 
patent to the public, don't allow it to go further, take it back, 
take it back and NIH will restrict this and that. They had about 
six different considerations. The final determination was, let 
Stanford go for it. 

Hughes: Do you know why they eventually decided on that option? 

Reimers: Well, I would suspect it was because of Norm's activities 
explaining the patent system, similar to what happened at 
Stanford in many respects. Norm was a wonderful guy. He's very 
much an advocate, in intensity, like Ralph Nader. He's very much 
an advocate for not simply filing patents, but having the 
technology behind that benefit the public somehow by being 
developed. So he was very much a staunch supporter of 
universities that would file patents and get technology 
developed. The university community and the public owe a lot to 
Norm. 

Hughes: Well, another criticism that arose in the late 1970s was that 

recombinant DNA technology had already been widely adopted. In 
fact, companies were founded on that basis. 

Reimers: Sure, before our patent issued [1980]. 
Hughes: Yes. Was that a stumbling block? 

Reimers: Well, no. I typically like to be at the front end of technology 
transfer. That is, we approach companies and propose we work 
together in developing this technology. We'll file the patent, 
we'll exercise the right to exclude others, and we'll develop it 
together. Well, when you do nonexclusive licensing, in a way 



Niels Reimers. Tiger by the Tail. 



27 



you're just applying a tax. But I had no shyness about that 
here. 



Opening Patent Files to Public Scrutiny 



Reimers: I do not like "submarine patents," as they are called. A 

submarine patentee files a patent but does nothing to develop the 
technology of the patent. The submarine patentee lies in wait 
for companies to invest their resources at risk in developing 
commercial applications. If a company achieves market success, 
the submarine patent owner begins legal action against that 
company. That is not technology transfer. We were not lying in 
wait, but were totally open about our plans to license. In fact, 
we did something that nobody in the Patent Office can remember 
applicants doing before, and that was that we opened up the 
patent prosecution process to public scrutiny. 

To enforce this patent, I engaged the Finnegan, Henderson, 
Farabow and Garrett law firm in Washington, D.C., specifically, 
Don Dunner, Charlie Lipsey, and Susan Griff en. We called them 
Bruno, Boris, and Brunhilde. These names were actually suggested 
by Charlie, when we said a key purpose of engaging them was to be 
ferocious enforcers for us should the need arise. We were 
preparing for a defense of the patent, even though we had no 
challenges. Also, I wanted to line up the best litigation 
attorneys that I could, because later on if somebody sued us, 
then we'd have to scramble for litigators. And the best law firm 
might be beholden to others and not be available. In fact, we 
had to get permission from SmithKline, for whom Don Dunner was a 
counsel, to let us employ the Finnegan firm for this purpose. I 
talked about that with Janice Williams, SmithKline 's head patent 
counsel. She was very gracious to say that was okay, to tell Don 
Dunner that he could accept the assignment with us. 

After the law firm's review of the file history, including 
the means by which we made the patent prosecution process open, 
Don Dunner said that we had probably the highest presumption of 
validity of patent he had ever worked with, because any company 
would have to justify why they didn't bring forward any competing 
art to the Patent Office. At the time, this was all open to 
public scrutiny. It was in the newspapers; everybody knew about 
it. 

Al Halluin, who was with Exxon then- -his strong interest in 
biotech was called Halluin 1 s Hobby because Exxon was not in the 



28 



biotech businesswas hired by Cetus. Al was their patent 
counsel who did the well-known PCR [polymerase chain reaction] 
patent work at Cetus. Al Halluin is now with a patent law firm 
here in San Francisco. Jim Watson had a conference on "Patenting 
Life" back at Cold Spring Harbor. Al was there, and he listened 
to me, Bert [Rowland], and some others speak. And then he wrote 
a post-conference paper about how our patent application wasn't 
worth anything because of this, this, and this. 

Well, the beauty of it from my standpoint was we could deal 
with it there in the Patent Office as we presented his paper to 
the patent examiner. If he had kept quiet about these things, 
then if somebody was taking action against our patent in court, 
it could somehow be alleged that we were witholding that 
information from the Patent Office, and it could have narrowed 
the patent. So we were able to deal with it in a unemotional 
setting, if you will, an objective setting rather than before a 
jury. And I know that some patent attorneys, or companies, were 
very upset with Al for having published his article. If he 
hadn't, then they could have used the citations in Al's article 
as a means to invalidate any resulting patent. 



Setting a Low Licensing Fee 



Reimers: By the way, we set up a licensing plan, and with the modest 

royalty rates, there was no way biotech firms could not take a 
license. I talked to licensing officers at several companies in 
the course of promoting our licensing plan. They said if the 
royalties were any higher, they would have refused to take the 
license. We would have had to go through litigation to enforce 
them taking the license. 

Hughes: And I know you had set aside a fund to do just that. 

Reimers: Yes. 

Hughes: Which you, in the end, did not have to tap? 

Reimers: I tapped it to pay for the attorneys to prepare for litigation, 
but that was all we took from the fund. 



29 



The International Trade Commission 



Reimers: During this process, I went back to meet with the International 

Trade Commission [ITC], and Andy [Barnes] came back with me. The 
International Trade Commission is set up, among other things, for 
a situation where somebody would have a process patent, but only 
in the United States. Then somebody could make the product over 
in China, or Germany, or anywhere outside the U.S. And then they 
would ship the non- infringing product back into the United 
States, and they would not have infringed the U.S. patent, 
because they would have used the patented process in a country 
where the U.S. patent holder did not have a patent. 

So the International Trade Commission was set up to deal 
with that sort of thing, and it's a very quick process. They had 
dealt with relatively minor technologies, and here we came along 
with their ability to exclude from import to the United States an 
entire industry. They got excited about it. Armed with their 
support, we went to another attorney with the Finnegan firm who 
had experience with the ITC; in fact, he had worked there. He 
and Don Dunner then wrote an opinion that we could use ITC law to 
exclude imports based on using the patented rDNA process outside 
the U.S. Given we only would have U.S. rights, no license was 
needed for transactions that occurred entirely outside the U.S. 

Tom Kiley of Genentech told me later that Genentech followed 
us into Japan. This was during the licensing process when we had 
meetings with many companies. Tom said, "They had gotten the 
very clear message from you guys: it's either take a license or 
get your socks sued off." And those are his exact words. 

Hughes: Then there was also opposition from people within the medical 
school. 

Reimers: Like Paul? 

Hughes: Yes; I wondered if there were others. It didn't give specifics 
in this letter from [William F.] Massy to Rosenzweig in 1978. ' 

Reimers: Oh, I think Bill was referring to-- 

Hughes: To Berg. 

Reimers: Stuff he had heard from me, yes. 



1 Massy to Rosenzweig, subject: Recombinant DNA Patent, March 2, 1978. 
(OTL correspondence 1974-1979.) 



30 



The Patent as a Potential Source of Income 



Hughes: Did you use the argument that the patent was certainly a 

potential and, as it turned out, actual source of income for the 
medical school? 

Reimers: The interesting thing was the way I originally set up the royalty 
structure at Stanford, which was approved after that pilot year, 
and we had used it through the pilot year of 1969-70. That 
formula was 15 percent of gross income deducted for managing the 
program, and then we'd subtract out-of-pocket expenses to arrive 
at net income. Then one-third to the inventors, one-third to 
their departments (like chemistry, physics, biochemistry, etc.), 
and then one-third to the university, not the school. 

Hughes: So the medical school didn't benefit directly. 

Reimers: No, not at the beginning. The university was the one that 
invested the money for filing the patent, and so on. The 
university quickly began to make money. When that money started 
rolling in, then the medical school got involved. They said, 
we're different than the School of Engineering or the School of 
Humanities and Sciences in that we're under a general fund 
ceiling. So it's really not appropriate that the university get 
that third, because our tub has to stand on its own bottom. 

So Don Kennedy agreed to allocating "the university's one- 
third" to the school of the inventor; he didn't consult with 
trustees or anybody else. I didn't have any real objection to 
it. It was fine with me. The further down you push the 
incentives, the greater positive results you're going to get. So 
now I had the deans excited. [laughter] 

Hughes: Now, this is in regards to patents in general or to this one in 
specific? 

Reimers: Don Kennedy changed it for all patents, with the complaint from 
the medical school about this patent, because they were under a 
general fund ceiling. Every university is worried about the 
potential for cost of their medical school consuming the rest of 
the university. So medical schools have to essentially run 
themselves separately. They get a limited amount of general 
funds . 

Hughes: When was that? 



31 



Reimers: It was probably the year after our initial success in the 
licensing program. 

Hughes: So about 1982? 
Reimers: Yes, probably. 



Royalty Distribution 



Hughes: You mentioned that the Department of Medicine was one of the 
three beneficiaries. 

Reimers: There was a question of which department would get "the 

department's one-third." Stan was in the Department of Medicine, 
plus another. The Department of Medicine includes the Division 
of Clinical Pharmacology, where Stan resided. I forget, but 
there were initially two departments, and then Stan was sort of 
changing his departmental allegiance. 

Hughes: The Department of Genetics was another one of his appointments. 

Reimers: Yes. So it was Genetics and Medicine. But within Medicine, he 
was in Clinical Pharmacology. 

Hughes: Clinical Pharmacology got the money, so that Medicine as a whole 
didn't have access to it? 

Reimers: I don't recall specifics. But there was a bit of discussion on 
that, and I believe the original split was modified. The 
Department of Medicine is so huge. They are disproportionately 
large compared to other departments of the medical school. In 
fact, now that we're down at the molecular level, the old 
departmental designations really don't make a lot of sense 
anymore. They really ought to change the medical school 
departmental organization. The Department of Medicine, I think, 
should be broken into more reasonable department sizes. But 
that's another story. 

Hughes: One of the sore points, which persists to this day, is that 

Biochemistry did not benefit from the patent. 1 Certain members 
of that faculty believe that the Cohen-Boyer technology was based 



1 See the oral history with Arthur Kornberg in The Bancroft Library 
Series. 



32 



substantially on their work, and ergo they should be recipients 
of some of the royalties. 

Reimers: Well, they could have gone to the Dean of the School of Medicine 
and made their case. But you know, Paul and Arthur are wonderful 
people; they have gotten the Nobel Prize, and that's worth a hell 
of a lot more than money. Plus, they have done very well with 
DNAX. 1 

The big discoveries that made lots of money came laterlike 
human growth hormone, insulin, hepatitis B, and so on. If our 
guys at Stanford were in that great position, they could have 
been researching and filing patent applications on those 
potential products and made much more money. The patent for 
hepatitis B vaccine makes more than the patent for recombinant 
DNA. And human growth hormone is up there too in royalties. 
Well, actually, the patent for hepatitis vaccine doesn't make 
more, but it makes close to it. And its income is going to 
continue on after expiration of the rDNA patents. 

Hughes: Because the patent isn't about to expire? 

Reimers: Right. Of the University of California patents, hepatitis 

vaccine is the number one royalty producer; then number two is 
the check they get from Stanford every year [for royalties for 
the recombinant DNA patents], then number three is human growth 
hormone. UCSF has more income from its inventions than the 
combined total of UC Berkeley, UCLA, UC San Diego, UC Irvine, UC 
Davis, UC Riverside, UC Santa Cruz, and UC Santa Barbara. 

Hughes: And it's the smallest campus. 

Reimers: Yes. 

Hughes: How do you explain that? 

Reimers: For any licensing program to succeed in a big way, it has to have 

a medical school, because their patents can become big hits. And 

engineering; they can be the most creative people, and a lot of 

companies will come out of engineering, sure. But big bucks from 

patents tend to come in the medical field. And part of that is 
because of the regulatory process. If patents weren't strong in 

the medical field, because of the cost of getting a new drug to 

market, the field would be chaotic; it wouldn't go forward. It's 



1 For discussions of DNAX, a biotechnology company in Palo Alto of 
which Berg and Kornberg are founders, see their oral histories in The 
Bancroft Library Series. 



33 



too bad the Stanford Department of Biochemistry didn't get a 
share of royalties. 



Threat of Regulatory Legislation 



Hughes: By 1977 and 1978, there was legislation pending to regulate 

recombinant DNA research at the federal level, and in some cases, 
at the state level as well. Were you taking into account this 
context? 

Reimers: Yes, definitely. There was nothing I could do until we started 

licensing. When you're going to license exclusively, you license 
on a patent application. But if you are trying to license non- 
exclusively, who's going to pay you before your patent issues? 
You have to wait until your patent issues. There was really 
nothing I could do about that, nor did I want to influence, nor 
could I influence that. 

Hughes: You mean what-- 

Reimers: Was going on with safety, and so on. There emerged the physical 
containment, PI, P2, P3 type of facilities, and the biological 
containmentthat ' s not the right term for it. For an example of 
biological containment, Roy Curtiss developed an enfeebled E_^ 
coli at the University of Alabama. By the way, Curtiss 's strain 
of E. coli was never really used. I understand it was too 
enfeebled for useful experiments. 



U.S. Patent Office 



Hughes : 



Reimers ; 



In 1977, according to your article, 1 the patent examiner, whose 
name was Alvin Tanenholtz, told Bert Rowland that he would only 
consider a process patent. Can you give me the background? 

Well, it didn't end up that way, of course. Getting a patent is 
a process of negotiation between the patent attorney and the 
examiner. Typically, when you send in a patent application, the 
Patent Office rejects it, and then it's a process of overcoming 
the rejection, and getting rejected again and overcoming that 
rejection, until a patent is awarded. It's rare that the 



Tiger by the Tail. 



examiner looks at a patent application and says, "Okay, I'm going 
to issue it to you." Patent examiners get rewarded based on 
disposals. A disposal is a rejection, an award, or other formal 
action taken on a patent application. The Patent Office has a 
huge load of work. So to spend hours and hours on a patent 
application, they only get one disposal. 

So what an examiner tries to do is find a bunch of 
publications that seem to relate to the patent application. 
(They will provide more specifics; I'm being a little cynical.) 
The examiner will say, "In view of these publications, everything 
you've done is anticipated, so your application is rejected." 
Then they sort of define the universe. Then you as applicant go 
back and you say, "This cited publication is irrevelant because 
it relates to fish; this one doesn't apply for this reason," and 
so on. If a citation is relevant, then we deal with it. The 
exchanges with the patent examiner could have been part of my 
worry about whether we'd get product claims or not. We 
eventually did get product claims. 



The Chakrabarty U.S. Supreme Court Case 



Hughes: Because the Chakrabarty case was not settled until 1980, there 
was a debate about whether you could patent an organism. 

Reimers: Yes, a "life form"; that's absolutely true. There actually were 
two cases. One was Upjohn, and one was G.E. [General Electric]. 
Upjohn backed out so that there could be focus on the G.E. patent 
of [Ananda] Chakrabarty. He forced a mutation in bacteriahe 
didn't use the recombinant DNA process and the bacteria then 
became very efficient in eating oil. 

There was a cartoon at that time, which shows a microscopic 
view of organisms developed to eat oil. There was a picture of a 
slide, and then there were black things all over, but they were 
cars. [laughter] 

Newsweek or Time or another magazine had an article which 
said, "Universities hold fall sale." And it showed a picture of 
a carnival barker holding out a cane and pointing to spirals of 
DNA stacked up behind him. People in the audience of this 
cartoon were shown clamoring for the DNA, and on the side of this 
crowd, people were walking away with DNA under their arms, 
[laughter] 



35 



The Supreme Court decided, five to fourthat's pretty 
close that genetically engineered organisms are handiworks of 
man, not of nature, and anything made by man is patentable. 

H 

Reimers: The patent issued shortly after the Supreme Court announcement, 

and a lot of people thought that our patent issued because the of 
Supreme Court decision. But that was the process patent, and we 
were going to get that anyway. We earlier had divided our patent 
application into two, one covering process claims and the other 
product claims. We were still arguing about the product patent, 
and Tanenholtz was treading water until the Supreme Court made 
its decision. We dealt with arguments by the examiner about 
whether we should get both prokaryotic and eukaryotic organisms 
patented. We had very few words in the patent application to 
support getting eukaryotes, which are the higher organisms. We 
had "cell," [following spoken with pause between each word:] the 
--oneword "cell." And it ended up being enough for us to get 
the claim to the eukaryotes. 



The Patent Specification 



Hughes: The document is called a disclosure? 

Reimers: Specification. A patent has two primary sections. One is called 
the "specification," which teaches how to practice the patented 
technology. The other section covers "claims," which set the 
metes and bounds within which the patent can be enforced. 

Hughes: You can't go back and modify a specification? 

Reimers: No, you cannot change it. You can change the claims, but you 
cannot change your teachings. What you have to go do is file 
another patent. But you only get the priority benefit from the 
date you file the second application. U.S. laws provide the 
inventor is the one first to conceive the invention. If somebody 
has filed in the intervening period, you'll probably have some 
difficulty getting patent claims corresponding to the 
specification of your second patent application. In other 
countries, the inventor is the first to file, rather than first 
to invent (conceive). There are many other complexities in the 
patenting process. 



36 



Hughes: I can imagine how difficult it must have been in 1974 to 

anticipate how this process was going to develop. Wasn't there 
an element of luck? For example, that the specification included 
the word "cell?" 



Reimers : 
Hughes: 

Reimers ; 



Hughes : 



Reimers: 



Sure. 

Was inclusion of the word "cell" deliberate? 
sure that the patent covered eukaryotes? 



You wanted to make 



Well, we placed a lot of faith in Bert Rowland. I think if Bert 
had had twenty- twenty hindsight, he would have asked Cohen and 
Boyer, "Is there a reason why this can't apply beyond bacteria 
(prokaryotes) to higher organisms, like yeast (which is a 
eukaryote)?" They would have told him, yes, the gene splicing 
technique does apply to any cell, to any DNA, because it doesn't 
matter. So, Bert could have asked the question. But "cell" was 
in there and that did it for us. 

Arthur Kornberg maintains that he, and I think he includes others 
in the Department of Biochemistry, didn't at the time see the 
applications of this technology. 1 It wasn't until later that 
they realized that they had a revolution in their midst, so to 
speak. How cognizant were Berg and Kornberg, in your estimation, 
say in the mid-seventies, of what actually could come from this 
technology? 

Well, we're talking about an industry that then didn't exist. 
And it's easy with twenty-twenty hindsight to say oh, it was 
obvious. But I don't think it was totally obvious. Visionaries, 
like Swanson (founder of Genentech)-- He was a very young man 
who saw the potential and contacted Boyer. 2 



Patenting and Licensing Monoclonal Antibodies 



Reimers: There was another major discovery that came along not too long 

after recombinant DNA, and that was [Georges] Kohler and [Cesar] 
Milstein's discovery of hybridomas. Hybridomas produce identical 



1 See the oral histories with Arthur Kornberg and Paul Berg in The 
Bancroft Library Series. 

2 For the foundation and development of Genentech, see the oral 
histories with Robert A. Swanson in The Bancroft Library Series and Herbert 
W. Boyer in the UCSF Biotechnology Series. 



37 



antibodies, termed monoclonal antibodies. Prior to the Kohler- 
Milstein discovery, antibodies harvested from the blood of 
animals injected with an antigenic source were polyclonals, a mix 
of antibodies. And they blew it there in the UK as far as 
getting a basic patent on the hybridoma process. The British 
Technology Group blamed it on the university, and the university 
blamed it on the British Technology Group. And I don't know 
where the real truth lies. 

But if you look at the first publications of Milstein and 
Kohler, you'll see two co-authors, Len [Leonard] Herzenberg and 
Vernon Oi of Stanford. Len was a professor and Vernon was, I 
believe, a Stanford graduate student with him. They brought that 
technology back to Stanford. And I'll wager we were the first 
ones to license monoclonal antibodies. 

Hughes: Do you remember when that was? 

Reimers: I would say it was probably '78 or so, but I'm not sure. 

Hughes: So before the Cohen-Boyer patent issued. 

Reimers: Yes. At UC, it's Boyer-Cohen. [laughter] I started calling it 
Cohen-Boyer. 

Hughes: Yes, I noticed it's usually that way. 

Reimers: I thought that recombinant DNA would have tremendous commercial 
application. But I was just a mechanical engineer. That summer 
vacation--! had about a month that yearwe were going up to 
Montana. I took along Watson's Molecular Biology of the Gene of 
1974, whatever the current edition was, so that I'd have some 
understanding of what in the world this was all about. 

In each new technology, it's a question of learning the 
terminology, so you can converse with people. Not that the 
invention a scientist is describing is always rocket science. I 
mean they could be, but you just need to understand what the 
scientists in the field are saying. 



Closing the Cohen-Boyer Patent File 



Hughes: You mentioned earlier in the interview that you opened up the 
patent file to the public. 



38 



Reimers: And much later we closed it. 

Hughes: Why did you close it? 

Reimers: What did Stan say? 

Hughes: I'm not sure that I even asked him. 

Reimers: The public reason I think I mentioned in the article. But what 

was going on then regarding the patent application was that every 
time there was an office action-- Remember, I call it an office 
action, but the word is rejection. And so every time there was 
an office action, or rejection if you will, it would make the 
papers, because people were very interested in this. And Stan 
didn't like the heat. Like they could see the Helling affair in 
there. This was grist for the writers. But I agreed to close 
it, because we had accomplished our purpose. 

Hughes: There are always personalities involved, aren't there? 

Reimers: Yes. Well, Stan or Herb may perhaps find some faults with what I 
did, but they've made millions. But it's possible, frankly, that 
their involvement could be a factor that is inhibiting them from 
getting the Nobel Prize. And that would be sad. 

Hughes: The fact that they were involved with commercial-- 

Reimers: With a patent, yes. And when you think of who is on the Nobel 
Prize committee that decides this. 

Hughes: Well, it seems to me, if it were going to happen, it would have 
been at the time of the Berg Nobel Prize in 1980. 

Reimers: I was so glad when he got that. That's worth, in my mind, a lot 
more than having your name on a patent and millions in royalties. 
I was feeling bad before then, because Paul was a distinguished 
scientist, and he had been very upset with the patenting process 
and not being recognized. I had a discussion with him in his 
office where we talked about Janet Mertz, and so on. He was 
obviously not happy about things at that time. Well, he got the 
Nobel Prize. That's great. And Art got it too. 

Then I had to smile when DNAX was sold. I knew how much it 
was capitalized for, what Zaffaroni sold it for, and you could 
back in reasonably what they each made. They made a lot of 
money, even though the university didn't benefit financially. 
But the university has benefited tremendously from them in other 
ways . 



39 



John Morrow's Claim 



Hughes : 



Reimers : 

Hughes: 
Reimers: 
Hughes : 

Reimers : 



Hughes : 
Reimers : 
Hughes : 

Reimers : 



We mentioned Helling, but there was also a protest in 1980 from 
John Morrow, who didn't want to sign a disclaimer withour first 
seeing the patent application. 1 He had worked on the Xenopus 
research. Is there a story to be told there? 



I don't think 



No. I do remember that. But it's sort of vague. 
it ever amounted to anything. 

Morrow had supplied the toad RNA. 
To Stan. 



To Stan, yes. When disclaimers were sent around, he refused to 
sign, and also Helling refused to sign. 

This was our patent attorney doing a thorough job. Because what 
happens is, when you're processing a patent through the Patent 
Office, and you've got sixteen authors on a publication that 
describes it, and there's only one or two inventors, then the 
Patent Office is going to say, "Well, look, are all those other 
people inventors, too?" So to anticipate that situation, you 
supply to the Patent Office disclaimers from co-authors. So 
disclaimers were sent to them, because Morrow must have been a 
co-author as well. 

Yes, he was, on the 1974 paper. 2 
But the invention goes back to '73. 

The 1974 work used eukaryotic DNA. Was that not included in the 
1980 process patent? 

Because we filed later in '74, we would have put in all the 
inventive steps that had preceded. We had a patent based largely 
on that '73 publication, but not necessarily everything that we'd 
claimed by the November 1974 filing date. The recombinant DNA 
success was in the summer of "73, and it was reported at a summer 



1 David Dickson. Inventorship dispute stalls DNA patent application. 
Nature 1980, 284: 388, April 3, 1980. 

2 J. F. Morrow, S. N. Cohen, A. C. Y. Chang, H. W. Boyer, H. M. 
Goodman, and R. B. Helling. Replication and transcription of eukaryotic 



DNA in Escherichia coli. 
1974, 71: 1743-1749. 



Proceedings of the National Academy of Sciences 



40 



meeting. And most of the scientists there realized how important 
this was. 

Hughes: Was there any fanfare when the process patent finally issued in 
December of 1980? 

Reimers: We may have publicized it. 

Hughes: You'd been trying to get the patent issued for a long time. It 
was no big deal, as far as you were concerned, when it finally 
issued? 

Reimers: It was a big deal. It was the Stanford-UC patent for the basic 
technique in biotechnology which issued. And that was in the 
newspaper. And, of course, Science and Nature were following 
this. 



Stanford's Announcement of the Licensing Program 



Hughes: Well, there was a Stanford news release in August 1981, and 
another in November. 1 

Reimers: We began doing the licensing in '81. 

Hughes: I want to quote a statement, which was attributed to you, in the 
November 1981 release: "[TJhere's no precedent for this sort of 
program, seeking to license all companies who are using what is 
essentially the basic tool needed in genetic engineering." Is it 
really true that in no f ield--computers, engineering, 
agriculture, or anything elsethat there ever had been such an 
inclusive patent? 

Reimers: I doubt it. But I'd have to ask somebody in the history of 
science. No, because a discovery of commercial significance 
generally would be an invention of a company, and they would want 



1 On August 3, 1981, Stanford announced the recombinant DNA technology 
licensing effort: Advance for release August 3, 1981, Stanford University 
News Service (OIL, Stanford, S74-43, news clippings 1981-1985); "For 
immediate release," Stanford University News Service, November 17, 1981 
(OIL, 74-43, news clippings 1981-1985). The first sentence reads: 
"Stanford's unprecedented effort to license the entire genetic engineering 
industry for use of its basic scientific techniques is off to a strong 
start. . " 



to keep that for themselves, as long as they could get advantage 
from it. 

Hughes: And then the news release went on to quote Donald Kennedy: "[The 
licensing effort was designed to] assist the process of 
technology transfer by making sure lots of players get into the 
game. This increases the probability of valuable new 
applications for human science." 

Reimers: It's fine that Don said that, but whether we licensed it or not, 
commercialization of recombinant DNA was going forward. As I 
mentioned, a nonexclusive licensing program, at its heart, is 
really a tax. He's correct in that we were letting every player 
in on the game. But it's not an action that made the industry 
grow. I guess you could say it provided some order. It sort of 
was a base line, and the industry proceeded from that point. But 
from a legal point of view, or from what a patent means, or what 
the license means, it didn't make the industry grow. A lot of 
people don't fully understand all facets of technology licensing, 
because it is, as I mentioned earlier, a complex mix of business, 
technology, and law. 

Hughes: You are saying that the growth of the biotech industry was not 
dependent upon this patent? 

Reimers: That's right. Well, you've got to turn that around; you mean the 
license. 

Hughes: Yes. 

Reimers: It was dependent on what was behind the patent, but it wasn't 
dependent on the license. 

Hughes: Because the technology would have happened regardless? 

Reimers: Would have happened. We were just, in one sense, taxing them. 
But it's always nice to say "technology transfer." [laughter] 



Paiaro Dunes Conference on Technology Transfer, 1982 



Hughes: Kennedy had said in a news release a few months before that he 
thought scientists should consider calling an "Asilomar II" 
conference dealing with the "rush to proprietary control" of 



Reimers : 

Hughes : 
Reimers : 



Hughes : 
Reimers : 
Hughes : 

Reimers : 
Hughes : 

Reimers : 



recombinant DNA research. 1 He was very concerned about the 
commercialization of basic research. In 1982, he was the main 
instigator of the Pajaro Dunes Conference. Do you remember that? 

Don didn't involve me in that. He had some naive perceptions, 
but this was something that Don got into. 



Into what? 



He 



The whole industry-university thing and commercialization, 
did not really discuss it with people who understood the 
complexities of it. I don't mean to make a big deal of it, but 
it was his thing. He has a good sense for what is newsworthy, 
and I don't mean to put that down. But he probably realized 
intuitively that it would be important for Stanford in 
particular, because it was making all this money on the license, 
to talk about commercialization issues. The companies they asked 
to the Pajaro Dunes conference were all big ones. They didn't 
get to the little ones, which were the key playersparticularly 
if there was any discussion of potential conflict situations. 

Swanson was there, and Genentech was not very big. But you're 
right; there were representatives from big companies. 2 



And then they excluded the press. 
Beyers about that. 



You ought to talk to Bob 



From some accounts, there was really no tangible outcome. I 
mean, there wasn't a firm policy established regarding university 
interactions with industry. 

I don't want to say anything. It had some PR value, I think. 

Kennedy was representing a fairly widespread viewpoint at that 
point . 

Sure. I fought against the commercialization. Publish! Get it 
out there! I was sort of an evangelist: If you don't want to 
patent, don't. If you don't want to deal with industry, don't. 
If you do deal with industry, that will have absolutely no impact 
on your scientific career or interactions with other scientists 
unless you personally choose to alter your behavior. 



i 



Dec. 6, 1980 news release. 



2 For a report on and participants at the conference, see: Barbara J. 
Culliton. Pajaro Dunes: The search for consensus. Science 1982, 216:155- 
158. 



Reimers' 111 Ease about a Licensing Opportunity 

Reimers: In fact, I got very upset with a professor, who shall remain 

nameless. This could have been a very big invention, but it much 
later turned out it didn't quite work. He had this particular 
organism, let me just say that, and I was going to license its 
use. It wasn't something everybody would want a license to, but 
quite a few would. It was also going out nonexclusively, and so 
I was promoting it. Then I found that he was not sharing the 
organism with his scientific colleagues. And not only that, the 
word that I was getting back was that it was because of patent 
considerations. And that angered me, because there's no way that 
he should restrict sharing his research results with other 
scientists. The patent is another matter. 

There are some other corners in this. They were trying to 
form a company around the uses of the organism. A very prominent 
figure in Silicon Valley wanted to form a company based on this 
technology, and only that company could use the organism. I 
remember meeting in Don Kennedy's conference room, and I said, 
"This is not right. This is something we want to make broadly 
available; this is a basic tool. By licensing it nonexclusively, 
I can get scientists throughout the world using the technology. 
Besides, if I can license the use of the organism nonexclusively, 
I think it's in the public interest that I do so." 

At any rate, before I began to put in all these arguments, 
Don had to go off to deal with a call that he had just gotten 
that Stanford apparently had a yacht, and that was in the 
indirect cost base. Do you remember that? By the way, I can 
explain. Stanford was not really guilty in any of this stuff, 
even the yacht thing. 

Don didn't hear this, and I was really worried; I was upset. 
So I got together with Beyers and Spyros [Andreopoulos] , and we 
had a private lunch meeting in Bob's conference room. And I 
said, "This can explode. I'm not going to sit back and be 
accused that I'm holding back distribution of this research 
result." That night, around eleven o'clock, I got a call from 
Beyers. He said, "I talked to Don. I got to him, and you've got 
a meeting with him at seven tomorrow morning." So I came in 
there at seven, and I told him this could be devastating. 

Before Don had left the earlier meeting in his conference 
room, he said, "Let's find a way to make this work." And so 
everyone was leaning in that direction, except for me. So I told 
Don what I had said and my feeling that this was going to 



explode, and I wouldn't put up with it, and this is just not the 
way to do it. He fully agreed. And then later that morning, a 
press release went out that Stanford was making this organism and 
licenses broadly available. [laughter] I actually got in 
trouble for meeting with Don, because on my way back to my 
office, and by this time it was about eight o'clock, I stopped by 
Vice President Bill Massy's office. I said, "Bill, I just had a 
meeting with Don and wanted to let you know about this." He was 
upset that I didn't contact him first. I said, "Well, this was 
eleven at night." 

Hughes: When was this? 

Reimers: It was probably around 1980 or so. 

Reimers: I don't want to tell you too much to embarrass the inventor who 

has just died. It didn't work, actually. We still were going to 
pursue a patent, because the organism worked, but weakly. We 
chose to offer the companies that had paid for a license their 
money back. I had about seven licensees by then; four got their 
money back, and three of them decided to keep their license on 
the possibility a useful patent would result. 

Hughes: Well, I wonder if this letter is perhaps related to that 

episode. 1 It's dated November, 1980. You were writing to Kent 
Peterson. I don't know who he is. 

Reimers: He was my boss. I kept moving down in the organization. 

[laughter] Yes, this is it--Henry Kaplan, hybridomas. It was 
usually mouse-human or rat-human. Here he had a human fusion 
partner. It was Zaffaroni who wanted to put together the 
company, and he talked to Henry and then Don. I had no idea what 
was going on. I walked in the president's conference room, and 
there was Zaffaroni, there was Henry Kaplan, Don, a Stanford 
lawyer, and others. Henry hadn't advised me of his company 
plans. Does my memo to Peterson reflect which article I was 
referring to? 

Hughes: Well, there's one attached. 

Reimers: Yes. [reads it] I look back and I don't fault what I did. 
That's satisfying. 



1 Reimers to Peterson, subject: Cell Line Distribution, November 18, 
1980 (OIL correspondence 1980-1982). 



Hughes: I was interested in this partmay I quote it? You wrote this in 
the context of the hybridoma and the recombinant DNA research- - 
maybe everything. 

Reimers: Yes, in general. 
f! 

Hughes: November 18, 1980 memo to Peterson: 

As Stanford is perhaps the first 
institution to begin filing genetic 
engineering patent application and to license 
hybridomas, we ... are to a degree "leading 
the way" for other universities and 
government policy makers. We need to be very 
careful in our public and private actions 
with respect to developments in these fields, 
including policies of cell line distribution 
and licensing so that we do not 
inadvertently, in fact, restrict scientific 
collaboration and deny or delay development 
of benefits of this research for the public. 
We must also guard against "overreaching" in 
financial and other license terms. 

Reimers: Beautiful. 

Hughes: There it is in black and white. 

Reimers: Yes, in black and white. I didn't realize I had done that. But 
by that time there were layers of people between the president 
and those doing the work. And I think there was sort of a loss 
of touch. Don's legal advisor built up a legal office from zero 
to somewhere around thirty lawyers, with a total staff of sixty 
or so. 

Hughes: Largely because of the patent situation? 

Reimers: No, just because. Lawyers began to sit in in most important 

Stanford meetings, including licensing, and actually wanted to 
control us. And I resisted. They wanted to authorize all the 
patent filings that we made with private patent attorneys. 1 
said that adds a layer of cost that's unjustified, we had never 
screwed up in any legal steps, and so we got out of it. Then 
they began to off-load part of their budget on us, as they did 
elsewhere, because they had to somehow pay for this large office, 
and we and other Stanford offices were going to pay for it. But 



to Gerhard Casper's credit, he cut the number of lawsuits way 
back, down to three or four or so. How many lawyers did MIT 
have? [Reimers forms a zero with his thumb and forefinger] 



A Possibility of Premature Disclosure 



Hughes: Well, I'm back to challenges to the validity of the patent after 
it issued in 1980. The Biotechnology Newswatch in 1982 reported 
that an article by Edward Ziff in the New Scientist in October 
'73 might count as premature disclosure. 1 Why was this an issue 
in 1982 when the process patent had already issued? 

Reimers: What they're saying is that there was that summer [1973] Gordon 
conference where Boyer first disclosed what he and Stan had done. 
You know there's a time lag before publication, so the 
publication hadn't occurred. The Gordon conference was supposed 
be an open exchange, and you're not to take advantage of someone 
else's discovery, in terms of beating them to publication. 

Each Gordon conference focuses on a narrow field. They're 
usually held at a prep school back in New England, and it's just 
an open discussion. So one of the attendees may have told 
something to Ziff. But there's a question of what Ziff put in 
his October article as to what is called "enablement" in patent 
terms. I don't even remember this, by the way. If he mentioned 
what Boyer presented at the Gordon conference, the question is 
whether the Ziff article was really an enabling disclosure. If 
it were, he would have screwed us. Obviously, it wasn't, or 
somebody would have picked it up. 

Hughes: Why was this being debated in 1982? 

Reimers: I don't know if it was being debated, but they probably thought 
that that meant the patent was invalid. And if it was invalid, 
you can bet your boots the pharmaceutical companies that were 
paying royalties would have ceased immediately. 



1 Patent office suddenly withdraws second Cohen-Boyer patent. McGraw- 
Hill's Biotechnology Newswatch. July 5, 1982, 1-2. 



Selling Licenses 



Hughes: We talked about the trips that were made in the fall of 1981 in 
which you were selling the technology or explaining the 
technology to companies that you thought might be interested in 
licensing it. 

Reimers: Well, Andy Barnes did most of that. 

Hughes: Do you know what kind of reception he got in most cases? 

Reimers: Andy is a vice president of Mycogen in San Diego; you could talk 
to Andy. We also mailed out a lot of stuff. We just sent 
letters out to everybody. Yes, Andy's marketing led to a career 
in the biotech industry. I actually released him early because 
he had a job offer he wanted to take. So I said okay, with tears 
in my eyes. 



The University Licensing Pool for Technology 



Hughes: One last question, in 1983, Stanford and UC formed the University 
Licensing Pool for Biotechnology. 1 

Reimers: Oh, that was my proposal; it never went anywhere. What I was 

concerned about is, here we have a unique point in the history of 
technology where you've got this whole new field; you've got a 
basic discovery, and all of these other patents are coming up and 
being filed everywhere. So assuming they were all needed, they 
would be layered. It could be chaotic for companies to develop 
products because they'd have to pay Stanford; they'd [also] have 
to pay this university or that, and then another technology comes 
up from the university. I think I was a little over-concerned 
then. 

The idea was that we would make available this pool of 
technology, except for the recombinant DNA patent. My friend, 
Howard Bremer at the University of Wisconsin, said, "You should 
include recombinant DNA." I said, "No." You put it into a pool, 
and maybe we includedoh I forget what I had--a 3 percent 
royalty. And companies would get all of this pool of patents, so 
it wouldn't inhibit them; they would get it nonexclusively. 



1 Marjorie Sun. 
1983, 219:1302-1303. 



A one-stop shop for gene-splicing patents. Science 
For more on the Licensing Pool, see the appendix. 



These would all be what I call "tool patents." A patent for an 
application, such as a specific drug composition, would not be 
included. Then at the end of the year, with input from the 
companies, we would establish the relative contribution as to 
which patents in the pool they were actually using and which ones 
they weren't. The patent pool concept died for lack of my 
enthusiasm and others'. 

Hughes: Well, that's the end of my questions. Do you have anything more 
you want to say? 

Reimers: Well, there are all sorts of little things that happened along 

the way. I'm pleased to see that somebody is interested; this is 
great. And then to see some of the words that I wrote a long, 
long time ago was kind of fun, sort of a personal retrospective. 

Hughes: Well, I thank you. 



TAPE GUIDE--Niels Reimers 



Date of Interview: May 8, 1997 

Tape 1, Side A 1 

Tape 1, Side B 13 

Tape 2, Side A 23 

Tape 2, Side B 35 

Tape 3, Side A 45 

Tape 3, Side B not recorded 



APPENDIX 



A Niels Reimers Curriculum Vitae 50 

B "Tiger by the Tail," by Niels Reimers. Reprinted in 
1987 by the American Chemical Society from CHEMTECH. 
August 1987, pp. 464-471 52 



"Shaping Life in the Lab," cover reprint from Time 

magazine, 1981 75 

"Tech Pioneer Reimers To Sell UCSF Discoveries," San 

Francisco Chronicle. March 7, 1996 76 

"New technology management office pairs inventors with 

investors," Newsbreak [UCSF campus newspaper], November 

22, 1996 77 

Stanford Office of Technology Licensing web page, as of 

July 20, 1998 78 

Cohen/Boyer Patent Chronology 79 



50 APPENDIX A 



NIELS REIMERS 

Technology Management Consultant 
886 Tolman Drive, Stanford, CA 94305 



BACKGROUND: Born and raised in Carmel, California, of Norwegian immigrant 
parents. Educated through high school in Carmel public schools except for 1946-47, 
when attended school in Norway. 

EDUCATION: 

1951-1956 Stanford University and Oregon State University, under a US 
Navy scholarship. BS Mechanical Engineering and BA Mechanical 
Engineering, Minor in Business Management. 

1956-Present Various short courses. 



EXPERIENCE: 

1956-1959 US Navy. Line officer aboard the USS Bon Homme Richard, an 
aircraft carrier. Radio Division Officer and Deck Division Officer. 

1959-1961 Ampex Corporation, Redwood City, California. Manufacturing 
coordination between final assembly and marketing at this electronics 
company. Later transferred to Ampex International to coordinate 
manufacturing between Redwood City and overseas manufacturing sites. 

1961-1968 Ford Aerospace, Palo Alto and Newport Beach, California. Became a 
Division Director of Contracts Management for this aerospace firm after 
experience in scheduling engineering projects and as a contract manager. 

1968-1991 Stanford University, Stanford, California. After beginning in the 

research management office, founded the successful Office of Technology 
Licensing at Stanford in 1969. OTL is recognized as a leader in 
university technology management. 

1985-86 Massachusetts Institute of Technology, Cambridge, 
Massachusetts. On loan from Stanford as Director of MIT's Technology 
Licensing Office, reformed existing licensing office and developed staff. 

1989-90 University of California Berkeley, Berkeley, California. 
Also on loan from Stanford, established UCB's campus Office of 
Technology Licensing, which involved negotiating an agreement from UC 
system administration (responsible for all 9 UC campuses) to permit an on- 
campus licensing operation 

1991-1996 Intellect Partners, Palo Alto, California. Chairman of international 
technology transaction firm which pursues technology alliances and 
licensing. From this position, was sought to startup a campus licensing 
office at UCSF and agreed to a two year assignment. 



51 
Resume of Niels Reimers, Page 2 



EXPERIENCE, cent.: 

1996-1998 University of California San Francisco, San Francisco, California. 
As Director of the Office of Technology Management, negotiated an 
agreement from UC system administration to permit a campus licensing 
office. As with other universities, established policies and procedures and 
developed staff. The two year assignment ended February 28, 1998. 

1998-Present Technology management consultant, Stanford, California. Clients 
primarily universities but also advisor to industry licensing programs. 
Beginning about 1975, has consulted for over 20 universities and research 
institutions worldwide in the establishment of licensing offices or in 
reviewing technology management practices and operations at existing 
licensing offices. 

PROFESSIONAL: 

President. Licensing Executives Society, USA and Canada, 1978-79. Member 
since 1970, served in other LES positions and currently a member of the 
Endowment Committee. 

Association of University Technology Managers. Attended founding meeting and 
given many presentations to the membership. 

LES Award of Honor. 1996. First award to a university licensing officer. "For 
his exceptional contribution to the improvement of the profession of licensing and 
the transfer of technology." 

Study of "Alternative Organizational Mechanisms for the Innovation of University 
Research". With National Science Foundation and corporate support, undertook a 
summer sabbatical in 1978, based in Norway, to compare how universities 
worldwide were organized, if at all, in aiding the transfer of their research results 
for societal use. (See Publications, below) 

American Chemical Society. 1987. Award for creation and management of the 
recombinant DNA licensing program. This program licensing program will have 
returned well over $200 million in royalties by its expiration in 1998. 

Editorial Board, Technology Access Report. 1989 to present 
Editorial Board, Journal of Technology Management, 1992 to present. 

Service on National Research Council and other national committees reviewing 
technology policies. 

Testimony before House and Senate Committees on issues such as patenting of life 
forms and testimony which led to the 1980 "Bayh-Dole Bill" 



APPENDIX B 



Tiger by the tail 

When Stanford tried to license a recombinant DNA discovery, the legal 
implications and regulations of biotech were still untamed wilderness. 



Niels Reimers* 



It all began on a balmy evening in Hawaii at a Waikiki Beach 
delicatessen where Stanley Cohen of Stanford and Herbert 
Boyer of the University of California at San Francisco were 
excitedly engaged in a conversation. This conversation occurred 
in November 1972, at the time of a United States-Japan joint 
meeting on bacterial plasmids. 

Herbert Boyer had been working on restriction enzymes, which 
"cleave" DNA at a particular site. Meanwhile, Stanley Cohen 
had been working in his laboratory on plasmid DNA. They 
contemplated that, with Boyer's restriction enzymes and 
Cohen's plasmid technology, it might be possible to insert 
foreign DNA into a plasmid, insert that plasmid into a living 
organism, and have that living organism replicate and produce 
expression products as directed by the foreign genetic 
information (Figure 1). 

By March 1973, Cohen and Boyer achieved success in DNA 
cloning. They immediately perceived the importance of their 
discovery and began to prepare a publication, which appeared 
in November 1973. Prior to this publication, in June 1973, 



Niels Reimers, formerly the director of the Office of Technology 
Licensing at Stanford University, is now a principal at Intellect Partners in Palo 
Alto, California. This article is reprinted with permission from CHEMTECH, 
August 1987, 17 (8), pp. 464-471. 

1987, American Chemical Society 

25 



53 



26 Niels Reimers 



Boyer attended a Gordon conference at which molecular 
biologists immediately recognized the incredible potential of the 
discovery. Some believed that Pandora's box had been opened 
and a possibility now existed that manmade organisms could 
escape from a laboratory and cause unknown diseases. One 
month after the Gordon conference, Maxine Singer and 
Heinrich Soil sent the National Academy of Sciences a 
thoughtful letter that initiated debate over the safety of 
recombinant DNA research. The letter was published in Science 
but aroused little public interest. 

Figure 1 



Rceornbinant 

DNA 



DNA vector 

(e.g., ptasmid, 
virus) 




Metabolic 
products 

(e.g.. amino acids, 
antibiotics, 
alcohol, methane) 



Nucleic 
acid products 
(nuclcotides) 

(e.g., gene sequence 
expression regulator 
operon attenuator) 



Microorganism 

host 

(e.g.. E. Coll, 

B. Subtnis, 

yeast; 

unicellular 

only) 



J Expression 

products 

(proteins) 

(e.g.. hormone, 
tnzyme, antibody) 



Figure 1. Gene splicing procedure 



Tiger by the tail 27 



Another letter to Science, published in July 1974, did get the 
public's attention. This was by Nobel Laureate Paul Berg of 
Stanford and 10 other scientists (including Cohen and Boyer) 
who called for the National Institutes of Health (NTH) to 
establish safety guidelines for recombinant DNA research and 
asked scientists to observe a moratorium on certain DNA 
research of unknown biological hazard pending the issuing of 
those guidelines. We'll come back to the safety issue later. 

In early April 1974, Vic McElheny, then a science writer for the 
New York Times and now a research associate at the 
Massachusetts Institute of Technology (MIT), noticed an article 
regarding the represser gene. In pursuing this story, he learned 
two interesting facts. One was that there had been a meeting in 
Cambridge, Mass., to draft "the letter" by Paul Berg, et.al, 
referred to above. The other fact was that there was a paper 
about to be published in the Proceedings of the National 
Academy of Sciences (PNAS), by Cohen, Boyer, and colleagues, 
entitled "Replication and Transcription of Eukaryotic DNA in 
Escherichia coli." Genetic information from a toad was 
successfully introduced into bacteria, crossing the species 
border. This work led McElheny back to the November 1973 
PNAS article. McElheny's article in the New York Times on May 
20, 1974, was forwarded to me that same day by Bob Byers, 
campus news director at Stanford University. This was my first 
knowledge of the work, and it looked like a promising licensing 
opportunity. Later that day, I received a news release from 
Stanford's Medical Center News Bureau, announcing the 
research results and their implications. 

I called Stan Cohen to discuss the potential practical 
applications of this research. He acknowledged that the 
discovery was of great scientific significance, but he stressed 
that he did not want to have it patented and that, although 
there was great potential, significant commercial application 
might not occur for 20 years. After considerable discussion, he 
finally agreed that a patent application could be investigated. 
This investigation led me to Herb Boyer of the University of 



55 



28 Niels Reimers 



California (UC) at San Francisco who, after some discussion, 
agreed to cooperate on the basis of Stan Cohen's willingness. 

We contacted Josephine Olpaka, of the UC Patent Office, with 
the proposition that if the rights in the invention could be 
straightened out, assuming Cohen and Boyer were co-inventors, 
Stanford would manage the patenting and licensing of the 
technology, sharing net royalties 50-50 after deduction of 15% 
of gross income to Stanford for administrative costs and then 
deducting out-of-pocket patent and licensing expenses. 
Agreement was reached between the university and the 
inventors. But there was another hurdle. 

In the storm of applications 

Three research sponsors were involved in the discovery: the 
American Cancer Society, the National Science Foundation 
(NSF), and NIH. We were not aware of a precedent where the 
American Cancer Society had released any invention to any 
grantee. Eventually, the American Cancer Society, NSF, and 
NIH all agreed that the invention could be administered on 
behalf of the public under the terms of Stanford's "institutional 
patent agreement" with NIH. These administrative matters got 
straightened out just in time for us to file a patent application 
on Nov. 4, 1974--one week before the one-year U.S. patent bar 
was to occur on the basis of the November 1973 PNAS 
publication. 

Remember, we learned about the discovery many months after 
publication; the delay precluded our chances of getting patent 
coverage in other countries. (For more information on patenting 
biotechnology, see References 1 and 2,-Editor.) 

In the meantime, the informal moratorium on recombinant 
DNA research continued. In December 1974, scientists were 
invited to an international conference to review the progress, 
opportunities, potential dangers, and possible remedies 
associated with the construction and introduction of engineered 



56 



Tiger by the tail 29 



recombinant DNA molecules into living cells. The conference 
was held at the Asilomar Conference Center on California's 
Monterey Peninsula and was sponsored by NAS with funding 
provided by NIH and NSF. 

Throughout this period and later, a patent application covering 
a 1972 work of Ananda Chakrabarty, a biologist working for the 
General Electric Company (GE), was making its way through 
the U.S. Patent Office. He had made a bacterium that could 
break down multiple components of crude oil. He did not 
engineer the bacterium through gene splicing and cloning; he 
used conventional genetic manipulation techniques. It appeared 
that this bacterium's appetite might have significant value for 
treatment of oil spills. 

GE's patent application covered claims to the method of 
producing the bacteria, the bacteria combined with a carrier 
material, and the bacteria themselves. The patent examiner 
allowed the method and combination claims but rejected the 
claims for the bacteria per se, indicating that micro-organisms 
are products of nature and that as living things they are not 
patentable subject matter. GE appealed. We will come back to 
the progress of that case later in this chronology. 

The meeting at Asilomar was well attended both by scientists 
and the media. In his article in Rolling Stone, entitled The 
Pandora's Box Congress," Michael Rogers summarized the 
conference activities: The conference --four intense, 12-hour 
days of deliberation on the ethics of genetic manipulation- 
should survive in texts yet to be written, as both landmark and 
watershed in the evolution of social conscience in the scientific 
community." He quoted a scientist as remarking, "Nature does 
not need to be legislated, but playing God does." 

The moratorium was lifted, and recombinant DNA research was 
resumed, but under strict self-imposed laboratory safety 
guidelines. These became required of NIH grantees as a 
condition of research support. The guidelines involved levels of 



57 
30 Niels Reimers 



physical and biological containment. An example of biological 
containment might be use of an organism that would not 
survive outside of the laboratory environment. 

The media and public suddenly discovered recombinant DNA. 
One article about DNA cloning and its implications was titled, 
"Dr. Jekyll and Mr. Hyde and Mr. Hyde and Mr. Hyde." Other 
headlines included "Regulating Recombinant DNA Research: 
Pulling Back from the Apocalypse," "New Strains of Life--or 
Death," and "Playing God with DNA." Erwin Chargoff wrote in 
Science in June 1976, "Have we the right to counteract 
irreversibly, the evolutionary wisdom of millions of years, in 
order to satisfy the ambition and the curiosity of a few 
scientists?" 

Into this atmosphere came the news that the basic recombinant 
DNA technique had been patented, although our case was still 
in the patent application stage at that time and had not yet 
been made public. This occurred during a meeting at MIT in 
June 1976. Patents meant corporate involvement to some who 
maintained that the profit motive clearly would drive 
recombinant DNA research into dangerous areas. More articles 
appeared: "Genetic Manipulation to Be Patented," and 
"Stanford, U. Calif. Seek Patent on Genetic Research 
Technique." 

Getting mighty crowded 

In May 1976, Stanford scientists and administrators met within 
Stanford to discuss the university's policy and practices with 
respect to patenting biotechnology discoveries, particularly the 
recombinant DNA patent. There were concerns that patents 
would interfere with scientific communication. There was also 
a concern about a perception by the public that Stanford would 
have a conflict of interest with respect to recombinant DNA 
safety issues if it were to hold a proprietary interest in 
recombinant DNA work. It was decided that the university 
would open these issues for review at a national public policy 



58 



Tiger by the tail 31 



level. Robert Rosenzweig, then Stanford Vice-President of 
Public Affairs, wrote NIH Director Donald Fredrickson, asking 
the government's views on the appropriateness of Stanford 
patenting and licensing recombinant DNA discoveries. 

Meetings were held within the government. Norman Latker, 
then patent counsel for the Department of Health, Education, 
and Welfare, told me of a July 1976 meeting at NIH where he 
"walked into a den of scientists without a patent understanding." 
Over and over throughout this controversy, it was necessary to 
explain the patent system's role in encouraging innovation and 
being the antithesis of secrecy to scientists who had had no 
exposure to it. The government considered the following 
options: 

Abandon the patent 

Let the patent issue and require Stanford to dedicate it 
to the public 

Let Stanford license, but with government controls 

Review all licensing arrangements 

Review no licensing arrangements 

Require nonexclusive licensing only 

Impose no restrictions other than those already present 
in the terms of Stanford's institutional patent agreement 

Take title and handle any licensing 

The patent issue was brought to the NIH Recombinant DNA 
Advisory Committee. Fredrickson wrote to the committee to 
raise the question of whether patents inhibit dissemination of 
research information. This stimulated me to write to 
Frederickson, conveying to him my experience: "I am not aware 



59 



32 Niels Reimers 



of any economic, administrative, or physical force that will stop 
or delay a dedicated scientist at a university from promptly 
publishing his or her research findings, whenever he or she is 
ready to do so. From a pragmatic point of view, it would be 
fatal to the licensing program at this or any other university if 
an administrator delayed a scientist's publication in order to 
secure a patent position." 

By September 1976, everyone was in the act, including Senator 
Edward Kennedy. After Fredrickson's prepared testimony about 
the safety issues at hearings held by Senator Kennedy, the 
senator asked, "Well, what about the patents?" Frederickson 
responded, noting Stanford's willingness to consider 
modification of its institutional patent agreement as it related 
to the recombinant DNA patent situation. He also advised that 
comment on patent issues was being requested not only from 
the NIH Recombinant DNA Advisory Committee but from 
those who participated in the public hearings on the 
recombinant DNA guidelines, as well as the public at large. 

Fredrickson, in explaining the institutional patent agreement, 
added that through a licensing program, corporations could be 
encouraged to follow the recombinant DNA safety guidelines. 
At that time, the recombinant DNA safety guidelines could only 
be required of entities that accepted government research 
funds. 

Two years after Rosenzweig's letter, the government, through 
a March 2, 1978, letter from Fredrickson, reaffirmed that it was 
appropriate that universities should, in general, patent and 
license recombinant DNA inventions provided that industry 
licensees comply with standards set forth in the NIH guidelines 
on research involving recombinant DNA molecules. 

In the meantime, the public became aware of the GE patent 
application on "patenting of Life." Recall, GE had appealed the 
rejection of the patent examiner on the patenting of micro- 



60 



Tiger by the tail 33 



organisms as products of nature. GE eventually appealed to the 
Supreme Court, which agreed to hear the case. 

Many articles began to appear about the commercial potential 
of the technology. Genentech and other biotechnology 
companies were formed. The military aspects of DNA cloning 
were discussed. An article in the Los Angeles Times was 
headlined, "Russ Believed Plunging Into Gene Study-New Labs 
Could Lead to Development of Biological Weapons." 

Finally eight years after the patent examiner's final rejection, on 
June 16, 1980, the Supreme Court held five to four that a living, 
manmade micro-organism is patentable subject matter. The 
Supreme Court based its decision on the fact that the Congress 
had used expansive terms in writing the patent laws, and 
therefore, they should be given wide scope. The Court cited the 
evidence that Congress intended statutory subject matter to 
"include anything under the sun that is made by man." 

Supreme Court Chief Justice Warren Burger, writing for the 
majority, stated that "the patentee has produced a new 
bacterium with markedly different characteristics from any 
found in nature and one having potential for significant utility. 
His discovery is not nature's handiwork, but his own; 
accordingly, it is patentable subject matter under Section 101." 

But let us return at this juncture to the Stanford and UC patent 
application and our licensing program. The application, 
originally filed on Nov. 4, 1974, covered both the process of 
making and the composition for biologically functional 
"chimeras." (A chimera is a mythical hybrid creature of two 
species, such as man and goat.) During the course of 
prosecution of the application, the patent examiner, Alvin 
Tanenholtz, indicated to our patent attorney, Bertram Rowland, 
that he was willing to allow process claims that described the 
basic methods for producing biological transfonnants, but that 
he was not willing to allow claims on the biological material per 



61 



34 Niels Reimcrs 



se. The original patent application was then divided into 
"product" and "process" applications. 

The process patent issued on Dec. 2, 1980 (Figure 2). Note that 
this occurred only six months after the Supreme Court's 
decision called by some as allowing "the patenting of life." Many 
perceived that issuance of the Cohen-Boyer process patent 
resulted from the Supreme Court decision. However, that 
decision related only to claims of our product application, which 
at that time was still pending prosecution in the Patent Office. 

In the period between the Supreme Court's decision and our 
patent issuance, Genentech went public, experiencing a huge 
public demand for its stock. 

Open house 

We had tried something different in the prosecution of this 
patent. We reasoned that the patents, when issued, would 
underlie the entire field of genetic engineering. This clearly 
dictated, very early, a nonexclusive licensing strategy. And, given 
that we would seek to license the entire industry, challenges to 
the patents in the courts seemed certain. As a strategic move to 
enhance the validity of the patents, we determined to open the 
patent process to the public. (Normally, a patent application is 
held confidential by the Patent Office until its issue, when the 
entire prosecution history is made available for public review.) 



62 



Tiger by the tail 35 



Figure 2 



United Stile 

Cohen rt i. 



Patent 1191 



(111 
1451 



4,237.224 
Dcc.2. 19SO 



IMI PROCESS FOR PRODUCING 

BIOLOGICALLY FUNCTIONAL 
MOLECULAR CHIMERAS 

ITS) Inventors: Stanlev N Cohen. Ponola Valley; 
Herbrn W. Borer. Mill Valley. both 
of Calif. 

173 1 Aaaignee. Board of Trustees of the Letaml 
Stanford Jr. University, Stanford. 
Calif. 

(Ill Appl. No.: 1.021 

122] Filed Jan. 4. 1979 

lUUttd L'-S. Applic.non Dua 

1C) I O..i..Kau<.^p.nofirt No . M9.IM . Ne. 9 1971. 
which 11 a ronunuBtioa-m-ocri of Scr No U7.430. 
klj* 17. 1976. atumtunrO. which is conunuauotMiw 
pn ofSti. No. S70.69I. No.4. 1974. 



151] hit O' 



CI2P2IWO 



1521 U.S. Cl. 3V68: 435/172: 

435.T3 ; 4JVIBS: 43V317: 435/849. 435/820: 

4 35/V . 4JS/207: 260 I 1 2.5 S. 2UV27R. 435.7 12 

1581 FieUofSarch 195/1. 28 N. 28 R. 1 12. 

195/78.79:435/68. 172. 2S I. I8J 

[56 ) Refernco Cited 

U.S. PATENT DOCUMENTS 

3.8:3.311. VI974 Chakrabany _ 195/28R 

OTHER PUBLICATIONS 

Morro> e< a. . Proc. Nat. Aad. So. USA. ol. 69. pp. 
SS65-3J69. No. 1972. 

Morro cl al.. Proc Nal. Aud. Sci. USA, rol 7 I. pp. 
I74J-I747. May 1974. 

HrnhficlJ cl al.. Proc Nat. Acad. So. USA. vol. 71. 
pp MSScneq (1974). 

Jackion ci j Proc NX. Arad. Sci. USA. oi 69. pp 
2904-2909 Oci 1972 
Mtru ci al.. Proc Nai. Acad. So. USA. >ol. 69. pp 



J37IUSI74. Nm. 1972 

Cnhen el al.. Prat Nai. Ao.l So. USA. ul 70 pp. 

1295-1297. May 1973 

Cohen ci al.. Proc. Nai Acad. So. USA. nl 70. pf> 

3240-3244. No. 1973. 

Oianf et al.. Pruc. Nai ACM). So. USA. <tul. 71. pp 

1030-10)4. Apr. 1974 

Ullrich ei al.. Soenee ml. I9C. pp. 1313-1119. jun 

1977. 

Sinf er et al.. Soeiice ol 181. p. 1114 (1973) 

hakura el al.. Science ol. 198. pp. IU56-IOC3. Dec. 

l77 

Komaroff et al.. Proc Nat. Add So. USA. >ol 75. pp 

3727-3731. Au. I97B 

Chemical anil neineenn|; Newi. p. 4. Ma* 3U 1977. 

Chemtcal aiMl tiiginerrinj News. p. 6. Sep. 1 1. 1978 

Pnmtry Minrt Alnn E TancnlioJtl 

Aturmrj. Aftta. tr Firm Benrani I. RnUml 
(571 ABSTRACT 

Method and composinoru are provided fur replication 
and eipreiMOn of esorrnoui Rrtm m inicronriraiiunii 
Plaimidt or vinti ON A arc cleaved 10 provide linear 
DNA having bpiaWe termini to trhicri it iruened a 
|ene having complementary lermini. to provide a bio 
logically functional replicon with a devred phenoiypi- 
cal property. The replicon it inserted into a microor- 
jrannm cell by i ran* formation Itolaiton of the tramfor- 
norm provulo cellt for renJicaiMwi ami evnreumn i> r 
Ihc DNA molecule! preieni in ihe madified plaimitl. 
The method provide! a convenient and efTioeni way to 
introduce feneuc capabilily into microorgannmt for 
the production of nucleic acidi anil prmeint. tuch ai 
medically or commercially uteful ettsymes. which max 
have direct usefulness, or may find nnresuon in the 
production of druei. such ai hormones. anuUoiics. or 
the like, fixation of nurofen. fermentation, unuution 
of speofic feedstocks, or ihe hike 

14 Claims, No Drawings 



63 



36 Niels Reimers 



We announced that anyone who was aware of factors that might 
affect the patent's validity was invited to make them known to 
the Patent Office. The patent file history was opened to anyone 
as we waived our right of secrecy. The demand for the file 
history was such that at one time more than 30 requestors were 
waiting to see it. Because that file then was not available to the 
examiner and prosecution of the patent might have been 
delayed, the Patent Office made additional copies for public 
review. Any company seeking to challenge the validity of the 
patents after their issue would have the burden of justifying why 
they had not raised those issues with the Patent Office during 
patent prosecution. 

Additional factors were, indeed, brought to the Patent Office. 
In October 1981, a conference on "Patenting of Life Forms," 
organized by James T. Watson, was convened at Cold Springs 
Harbor Laboratories. In a postconference paper, an article by 
Albert Halluin, then of Exxon, brought perhaps the most 
significant new factors to the attention of the patent examiner. 

We eventually closed the file in early 1983, largely because of 
the speculative articles in the media that accompanied every 
Patent Office action and every Stanford response. (In the 
prosecution of a patent application, a series of rejections by the 
patent examiner and responses by the patent attorney occur 
until the patent issues, or a final rejection occurs.) By then, the 
opening of the file had served its purpose. As a result of the 
open process, we believe the patents will have unusually strong 
presumptions of validity. 

As I mentioned above, the original application was divided into 
a process patent (which issued Dec. 2, 1980) and a product 
patent application. The product application was again divided 
into an application covering prokaryotic hosts and another 
covering eukaryotic hosts. The prokaryotic product patent issued 
Aug. 28, 1984. The eukaryotic patent application is still before 
the Patent Office. 



64 



Tiger by the tail 37 



Recombinant DNA licensing 

We had to consider a number of factors in devising a licensing 
strategy for an invention for which products had never been 
sold and which would apply not only to many diverse 
established industries, but in addition to the then newly 
emerging biotechnology industry. Our objectives were to 
develop a licensing program consistent with the public service 
ideals of the university, to encourage the application of genetic 
engineering technology for public use and benefit, to minimize 
the potential for biohazardous development, and finally, to 
provide a source of income for educational and research 
purposes. 

Because the patents covered a basic process underlying many 
potential uses, any license would have to be suitable for a large 
number of applications, including not only companies 
specializing in biotechnology but existing companies in 
chemical, agricultural, pharmaceutical, mining, oil, and other 
industries. We could also anticipate that small as well as large 
companies and newly formed companies would utilize the 
technology. 

It was also necessary to recognize that only U.S. patents were 
available because of prior publication. Because a patent covers 
the making, using, and selling of a technology, onerous earned 
royalty terms could drive a manufacturer to utilize the process 
offshore, paying royalties only on sales back to the United 
States. 

At the time we began our licensing effort, only the process 
patent had issued. Hence a company could make the product 
overseas using the patented process and sell that product in the 
United States without infringing the process patent, having 
utilized the process in a country where we did not have patent 
protection. We decided to investigate the International Trade 
Commission (ITC) as a means of addressing this potential 
problem. The ITC enforces Section 337 of the Tariff Act of 



65 
38 Niels Reimers 



1930, which prohibits certain unfair methods of competition and 
unfair acts in the importation of articles into the United States. 
Of particular interest to us were remedies available to a U.S. 
manufacturer whose method patent is subject to an unlicensed 
competitor who practices the patented method abroad and sells 
the noninfringing product in the United States. A favorable 
decision could involve exclusion orders, or cease-and-desist 
orders, directed to preventing the importation of the goods 
involved. 

We obtained a favorable written opinion from a law firm 
experienced in FTC dealings suggesting that the ITC could stop 
products made overseas with recombinam DNA technology at 
the U.S. border. We distributed this opinion freely to foreign 
companies. 

We also needed to consider that a patent grant is limited to 17 
years. Because the development, testing, and regulatory 
approvals could take up to 10 years or more, there was a 
possibility that the patent could expire before royalty-bearing 
products would reach the marketplace. We had filed a "terminal 
disclaimer" with the Patent Office in 1980, when the first 
process patent application issued. The terminal disclaimer 
meant that regardless of how long the divisional patent 
applications were prosecuted before the Patent Office, those 
patents, once issued, would expire on Dec. 2, 1997, the same 
date of expiration as the 1980 patent. The Patent Office often 
requires terminal disclaimers to prevent an applicant seeking to 
extend patent life from filing continuation applications. 

For us, these factors argued for initiating a licensing program 
as soon as possible. This was also considered desirable from the 
standpoint of many companies, desiring some certainty both 
that a license could be obtained and knowing the royalty terms 
that would be factored into their financial decisions. High 
earned royalties in certain cases could preclude substitution of 
recombinant DNA-made products over existing products. 



66 



Tiger by the tail 39 



In early August 1981, we announced the availability of licenses. 
This was a significant news item, and broad media coverage 
occurred. But to be even more certain that companies intending 
to use recombinant DNA technology would be advised of the 
license's availability, we placed paid announcements in Science 
and Nature. Terms of the license announced in August were 
only guaranteed for those companies signing up before Dec. 15, 
1981. Hence, if a company desired certainty, it might choose to 
take a license before Dec. 15 because possible future changes 
to the license agreement were not divulged. However, the 
general perception was that royalty terms would increase. 

In designing terms of the license, we held discussions with 
companies known to be practicing the technology to learn of 
any "deal-breaking" terms. One license clause that took 
considerable discussion related to application of the 
recombinant DNA safety guidelines. Because we had neither 
the desire, capability, nor the charge to become a regulatory 
agency for enforcement of the guidelines, an early draft clause 
provided that the NIH be involved in this role. However, the 
NIH also did not wish to become a regulatory agency. The 
clause that emerged from discussions with NIH and companies 
required the licensee to follow the intent of the recombinant 
DNA safety guidelines. It should be noted that by this time the 
biotechnology industry voluntarily had agreed to follow the 
guidelines. 

A $10,000 minimum annual advance on royalties was 
determined as reasonable even for small companies intending 
to practice in the biotechnology marketplace. As a further 
encouragement for licensees to sign up before Dec. 15, 1981, a 
five-times credit on the $10,000 minimum annual advance on 
royalties was offered in the original license agreement-that is, 
for each $10,000 payment, the licensee would receive a $50,000 
credit against future earned royalties. A company could accrue 
this credit for five years or until the first calendar year in which 
over $1 million of end product was sold. Because there was a 
$10,000 signing fee that also received the five-times credit, 



67 



40 Niels Reimers 



licensees could accumulate a credit as much as $300,000. And 
most have, as a relatively small number of companies to date 
have had annual recombinant DNA product sales over $1 
million. 

Fixing a price tag 

Determining the royalty structure took a great deal of thought. 
It was necessary to consider all forms of the technology's 
utilization. This included determination of classes of royalty 
bases against which an earned royalty could be applied. (An 
earned royalty is that royalty applied against the sale of an item 
using the licensed technology.) We ended up with four 
categories of royalty base: 

Basic genetic product 

Process improvement product 

Bulk product 

End product 

The royalty rates ranged from 10% for the basic genetic 
product to 1/2% for the end product. 

Basic genetic products include DNA chimeras (transformants) 
and vectors. For example, the transformed organism that makes 
insulin is a basic genetic product with a royalty of 10%. 

Bulk products are products that will be processed further by a 
manufacturer and not used or consumed by the end user. An 
example of a bulk product is the disaccharide sweetener that 
will be used in soft drinks and diet foods. Based on annual sales 
volume, the royalty ranges from 3% down to 1%. 

End product is a product for use by what we called the 
"ultimate consumer," such as an insulin injection, vaccine, or 
pharmaceutical. The royalty ranges from 1% to 1/2% based on 
annual sales volume. 



68 

Tiger by the tail 41 



Process improvement product is a material developed for or by 
a manufacturer to improve an existing process. An example is 
an enzyme that catalyzes a reaction. If an enzyme is genetically 
engineered and improves an existing process, the royalty is 10% 
of the costs savings or other economic benefit. 

We specified that if a licensee sells to another licensee, the two 
parties could agree among themselves as to which would pay 
the royalty. Generally, the end-product producer pays. We had 
determined that the relatively short sales period from August to 
December would be optimum to develop interest and maintain 
momentum. But this also required us to actively and vigorously 
promote the license. We contacted companies throughout the 
free world and, that fall, visited companies in the United States, 
Europe, and Japan. We prepared exhibits (Figures 3, 4, and 5, 
for examples) to explain the technology and the license 
structure. At this time, many of the companies who intended to 
use the promising new technology did not fully understand the 
technology itself and how they would implement it. 

To reduce incentives for overseas manufacture, the license 
provides for a flat royalty of 1/2% on end product made in the 
United States but sold outside the United States. 

To reduce tinkering and to emphasize to potential licensees 
that our terms were standard, the license agreement was 
printed. 

As licenses were signed, the signing was publicized. For many 
companies, this served to notify stockholders and the public of 
a company's entrance into the field of genetic engineering. As 
we approached December, relatively few licensees had sent in 
signed agreements. But in the final two weeks, the arrival rate 
of signed license agreements increased sharply. By midnight on 
Dec. 15, 1981, 73 licensees had signed up. 



69 



42 Niels Reimers 



Figure 3 



.r 1. ,. -JUT" ,~~,. 


sVMI escrleuon 


Goocrj IOKJ m i rprm 


A material Intended 


Products sold to 


Prooucu developed 




tor utirojiion by 


lor runner 


lurtner processing 


and uaed by 




the utivnaie 


tor mutation. 


or genetc 


UcerMe in its 




consumer 


processing, or 


manrputatcn and/ 


manutaciurnc. 






chemical 


or neither end. 


processes to 






iranstormaiion 


bufc. or process 


ennance 








approvement 


proouction 








products 


ettciency 


Examples 


Fnai dosage torm 


Anlibooy or hormone 


Ptasmo 


Eraymesor 




Pharmaceuticals 


sota to pnarme- 


UnceHular organrsm 


antiboowslor 




Animal vaccines 


ceutcai company 


transtormanis 


cnemcai 




Ucrooroanrsms uaed 


Dipeoiioc sold to 


Nucleic acid 


manutaciurmg 




tor animal or 


beverage 


egments 


Uicioorganisms tor 




human lood 


company as 




productcn o' 




baoegraoaiion. 


aweetener 




pnarmaceutcais or 




and mineral 


AmtfK actd sold In 




cnemcars 




leaching 


burn to a heattn- 




Nilrooervtmng 




Industrial process 


11 tarn 




mcroorganams 




enrymes 


Chemical 




used by 






mermeotaies 




agricultural 






produced Or 




coninany 10 






microorganams 




reduce tenriarr 






and sold m Durk 




consumption 


Earned royally rates 










by net sales .own 


M 








DptBtSiMagn 


1.00% 


3% 


10% 


10% o< cost 


IS-S10mnon 


0.75% 


2% 


10% 


SOvmgiand 


More iron s 10 


0.50% 


1% 


10% 


ecoriornc beneiii 



Figurt I ucinitg preoucl daaamcauon and 



70 



Tiger by the tail 43 



Figures 4 and 5 



Cemcr, A incorporatts 
ml f*n into *c 



9'tcunuf t compan 
ot*iop 
wi.cn coots to- 
ntuo^en fnauon 
(rut , r 



Company A etui i*o IP lain* is tnd 




ml 9n to Compaff |. WfHCft 
Dor tti m ytn* into 
whiett H mast p'ocuci - 
A rvc***B JJ and/or 




Company A 
incorporates nil g*r 



m to 

Company B Vftitn r*phcil*l >l 
and (( as l*rbHif tubiniui* 



Proem 10% ot pt 



V% c* ioi' 



V C***Winy A 
fCompany B will MM 
rcT'l'i Of US 

ftutnvoumt twt 
no/or pi *} 



10% pi toai 
ar****nis frc 
by Conpanv 



Company A pwtoutty 
prouucedcmv>*n o^yco 
Py anotner meinoc 



Ethyitn* o+yrot f 7 

/( l*wO'OCuCl 
/ lor Company A f 




Any and aH *myt*n ***' 

praoucM by Camany A y**Ag tmptailffMni pnd oconomic 

mu proc*s 



Company A uaot ttnyten* g'rto! tna 

to ma automobrts anulrooxt. 

MM 






Chomical compony 

wtuert llici*nily 
convtnc carbonyonics 



Company A **** bulk vtrtyMm 

ic Company B to- 

io aotvvmt *nd 



Comptny A i*4is orvamtm lo 
Company lor U and/o* a 
royally on Company la 



py Compony A 



Flyun 5. CanvnodUy dMfnicl 



71 
44 Niels Reimers 



An article in Business Week, entitled "Universities Hold FaD 
Sale," had a cartoon showing a carnival barker on a platform 
with about 5-foot lengths of helical DNA stacked up behind him 
and an audience of men in business suits either waving money 
at the barker or walking off with the DNA helixes with smiles 
on their faces. 

After Dec. 15, 1981, licenses continued to be available but with 
a single-times credit rather than the five-times credit on the 
$10,000 minimum annual royalty. Ninety-three licenses have 
been signed to date (April 1987). However, because of 
acquisitions by one licensee of another and some terminations 
by companies determining not to utilize recombinant DNA 
technology, the number of current licensees is 81, as of April 
1987. Since the end of September 1986, the new license end- 
product royalty rate has been a flat 1% based on sales volume. 

Products based on recombinant DNA technology are beginning 
to enter the marketplace with increasing frequency. The first 
commercial recombinant DNA product, human insulin, was 
engineered by Genentech and is being marketed by Eli Lilly 
under the trade name of Humulin. Human growth hormone, 
engineered and marketed by Genentech, was approved for 
public sale in the fall 1985. And quite recently, the hepatitis B 
vaccine engineered by Chiron and distributed by Merck was 
approved for public sale. Tissue plasminogen activator (TPA), 
which is anticipated to replace urokinase and streptokinase in 
the treatment of blood clots, is expected to be approved for 
public sale within the next few months. We estimate the first- 
year sales of TPA at $450 million. By 1997, when our patents 
expire, it has been estimated that over $30 billion of sales of 
genetically engineered products will have occurred. 

Stanford and UC believe that the licensing program has met its 
goals. The net royalties received by the universities are being 
used for educational and research purposes which, in a self- 
regenerative manner, may yet produce other discoveries for 
public use and benefit. 



72 



Chimeric DNA 



Eukaryotes 



Expression 



mRNA 



Operon 



Plasmid 



Prokaryotes 



Tiger by the tail 45 



GLOSSARY 

DNA composed of two or more sequences 
derived from different origin such as . 
coli and toads. 

Cells that contain a membrane-enclosed 
nucleus (e.g., yeast, plant, and animal 
cells.) 

Process of making proteins from 
information stored in genes. 

Messenger RNA; used to transfer 
information from one or more genes on 
DNA to the ribosomes for subsequent 
translation. 

Series of genes of related function that are 
transcribed into a single mRNA molecule. 

Extrachromosomal, covalently closed 
circular DNA molecule. 

Cells that do not contain a nucleus (e.g., 
bacteria). 



Transformants Organisms containing foreign genetic 

information. 



Vector The agent used to carry foreign DNA into 

a cell (e.g., a plasmid or virus). 

REFERENCES 

(1) Figg, E. Anthony. CHEMTECH, May 1986, p. 277. 

(2) Simmons, Edlyn S. CHEMTECH, March 1987, p. 144. 



73 



46 Niels Reimers 



CHRONOLOGY 

Chakrabarty patent for oil-consuming 
bacterium denied; appeal filed by GE 

Cohen and Boyer achieve first successful 
DNA splicing 

Publication of letter alluding to dangers of 
DNA splicing by Singer and Soil in 
Science 

Publication of paper on DNA splicing by 
Cohen, Chang, Boyer, and Helling in Proc. 
NatL Acad. ScL USA 

Publication of letter calling for NIH 
guidelines for DNA splicing by Berg, et.aL, 
in Science 

Publication of paper by Cohen and Boyer, 
et.aL, on transfer of animal DNA fragment 
into E. coli plasmid in Proc. NatL Acad. 
ScL USA 

Announcement concerning transfer of 
animal DNA fragment into E. coli by 
Stanford News Bureau 

Patent application filed by Stanford 
University 



1972 

March 1973 
September 1973 

November 1973 
July 1974 
May 1974 



May 1974 



Nov. 4, 1974 



December 1974 * Asilomar Conference 



June 1976 



Publication of Chargaff letter, warning 
about DNA splicing, in Science 



*The Asilomar Conference on Recombinant DNA was held February 24-27, 1975. 

Ed. 



74 



Tiger by the tail 47 



1976 

1976 
1978 

1980 

Dec. 2, 1980 
August 1981 
October 1981 
August 1984 



Negotiations between Stanford and NIH 
patenting; Congress gets involved 

NIH safety guidelines are published 

NIH affirms patenting of recombinant 
DNA inventions by universities 

Chakrabarty's bacterium held patentable 
by Supreme Court 

Process patent for making molecular 
chimeras issued to Stanford 

Availability of licenses for use of DNA 
technology announced by Stanford 

Conference at Cold Spring Harbor on 
patenting life forms 

Product patent for prokaryote DNA issued 
to Stanford 

UPDATE 



Editor's Note: The reader is reminded that this article was originally published 
in 1987 and that changes have been made since that time. For example, 
royalty rates have increased, the eukaryotic patent issued April 26, 1988, and 
persons mentioned may no longer be employed at the same location. 

As of August 18, 1995, Stanford had 316 corporate licensees. 
The three Cohen-Boyer patents generated $27 million in royalty 
revenue in Fiscal Year 94/95, and Stanford continues to sign on 
new licensees. 

Floyd Grolle, Ph.D. 

Manager, License Administration 

Stanford University 

Office of Technology Licensing 



APPENDIX C 




76 



APPENDIX D 
San Francisco Chronicle 




Tech Pioneer 

Reimers 

To Sell UCSF 

Discoveries 



By Carl T. Hall 

Chronicle StqffWrlter 

Medical researchers at the Uni 
versity of California at San Fran 
cisco now have their own direct 
pipeline to the biotechnology in 
dustry. 

UCSF officials this week 
named consultant Niels Reimers, a 
pioneer in technology licensing, as 
the first director of a new Office of 
Technology Management at the 
Parnassus Avenue campus. The ap 
pointment was announced Tues 
day by UCSF Chancellor Joseph 
Martin. 




Niels Reimer* 
will direct 
technology 
office 



The new technology office will 
manage the commercialization of 
UCSF scientific discoveries. That 
role previously was handled by a 
technology-transfer office at the 
University of California's system- 
wide headquarters. 



Three other UC campuses have 
made similar moves of late, all de 
signed to lower the bureaucratic 
hurdles between campus research 
ers and the commercial world. 
"We hope to make the process 
more efficient," Reimers said. 

Success would mean more 
profit to the university and indi 
vidual faculty members at a time 
when traditional resources are 
drying up. Critics have argued that 
an excessive commercial focus will 
lead researchers to ignore pure sci 
ence. 

But Reimers, 62, said that uni 
versities have an economic incen 



tive to stick to fundamental re 
search. Narrowly focused applied 
science may find commercial uses 
faster, but the value "doesn't last 
as long in the marketplace. Basic 
research is what produces the big 
hits." 

Reimers is best know for estab 
lishing Stanford University's Of 
fice of Technology Licensing. 
While at Stanford, Reimers read a 
New York Times article about an 
intriguing gene-splicing method 
developed by scientists Herbert 
Boyer of UCSF and Stanley Cohen 

of Stanford. 

Although Cohen and Boyer got 
the patent in 1973, Reimers is cred 
ited with taking the lead in com 
mercializing the discovery. 

The patent is said to have gen 
erated more than 320 licensing 
agreements and $1 billion in corpo 
rate revenues. The take for the 
two universities reportedly reach 
ed $117 million as of last year. 

"It's the seminal biotech pa 
tent," said Fred Dorey, president 
of the industry-backed Bay Area 
Biosdence Center in Oakland. He 
called Reimers "one of the true 
founding figures in the field of 
technology licensing." 

Besides the Stanford program, 
Reimers established similar tech 
nology-licensing operations at UC 
Berkeley and at the Massachusetts 
Institute of Technology. Most re 
cently, he has been head of Intel 
lect Partners, a consulting firm in 
Palo Alto. 



77 



APPENDIX E 



New technology management office pairs 
inventors with investors 



By BRAD FOSS 



/f intellectual property had a place on 
the Monopoly board, Parnassus 
Avenue, the home of world renowned 
biotechnologies and Pharmaceuticals, 
would be highly coveted territory. 

Consider the widespread effects of the 
hepatitis-B vaccine, which since its devel 
opment at UCSF in 1979 has spared thou 
sands of hospital employees from 
contracting the disease. The foamy sub 
stance known as surfactant is another 
highly acclaimed UCSF invention. It pre 
vents the lungs of premature infants from 
collapsing, saving thousands of babies per 
year from respiratory distress syndrome, 
and in many cases, an early death. 

To further UCSF's commitment to 
bringing innovative medical science to the 
public. Chancellor Joseph Martin believes 
it's necessary for UCSF to be more aggres 
sive in its search for new technologies. 
Toward that end, UCSF recently formed 
its Office of Technology Management 
(OTM), which will serve as the scientists' 

advocate in the corporate world, market 
ing their discoveries to prospective in 
vestors. It will also assist faculty with 
little prior experience in this arena to un 
derstand and follow the procedures nec- 
cessary for technology transfer. 

"A more efficient technology manage 
ment progam will not just serve UCSFs 
scientists and educational programs. 
Ultimately, the public will be rewarded 
with creative medical technologies and 
the knowledge that they, too, are winners 
as benificiaries of Parnassus Avenue in 
ventions," Martin says. 

Delivering fresh ideas to industry as 
quickly and as often as possible is essential, 
says Niels Reimers, director of OTM. Tor 
society's benefit, this technology has to be 
translated into public products and 
processes available to you and me," he says. 
Reimers is most widely recognized for 
marketing recombinant DNA, patented 
by Herbert Boyer of UCSF and Stanley 

Cohen of Stanford, enabling scientists to 
cut a fragment of DNA from one source 
and splice it with the DNA of another 
cell. He also managed Stanford's technol 
ogy licensing program for 22 years before 
helping UC Berkeley establish ite licens 
ing program. OTM's senior licensing offi 
cers Joel Kirschbaum and Jeff Labovitz, 
both scientists and businessmen, bring 
decades of experience in working for uni 
versities and industry. 



"We are extremely fortunate to get 
someone with as much experience as 
Niels brings to this campus," says 
Dorothy Bainton, vice chancellor of acad 
emic affairs. Bainton believes the prox 
imity of OTM's office at 745 Parnassus 
Avenue will be a welcome convenience to 
faculty. They'll be able to just walk on 
over to discuss their research while it's 
fresh in their minds." 

Of 100 technology disclosures, which 
are the scientists' descriptions of technolo 
gies submitted to the University's technol 
ogy managers, only 10 to 15 will be 
licensed and generate income. One to 
three of these products will garner more 
than $100,000 annually, Reimers predicts. 

Since 1994, UCSF has generated 
roughly $95 million from health care 
technologies licensed to industry, ac 
counting for 75 percent of the entire UC 
system's royalty income during that peri 
od. Last year, UCSF produced more roy 
alties from licensed technologies than 
any other university in the world. 

"A major hit, such as a recombinant DNA- 
type of invention falls in a once-in-a-bfetime 
category for a licensing program and a he 
patitis-B or a human growth hormone dis 
covery is at best a 1 -in- 1,000 technology- 
disclosures category," Reimers says. 

OTM needn't come away with a licensing 

contract each time scientists face a poten 
tial investor with a new discovery. It is 
often the case, Reimers says, that meetings 
with investors pay off in other ways. 
Companies may give 
the University a gift or 
they may want to sup 
port research that 
they believe shows 
promise. 

"And, there's the 
hiring of a UCSF 
graduate involved in 
that research, the pri 
mary form of technol 
ogy transfer for a university," Reimers 
says. The net royalty income received by 
UCSF is channeled toward education and 
research in a self-regenerative manner, 
resulting in further scientific discoveries 
for public benefit." 

More information and technology- dis 
closure forms can be downloaded from 
OTM's local Web page at http://itsa.ucsf. 
edu/-otm/, or call 502-7537. 




Reimers 



78 



APPENDIX F 



Welcome to Stanford's Office of Technology Licensing 

The mission of Stanford University's Office of Technology Licensing (OTL) is 

to promote the transfer of Stanford technology for society's use and benefit 

while generating unrestricted income to support research and education 




About tht Office 
Ravftfisi Chart 
FAU 

Staff 

Job Opportunities 

Brainstorm 



ABOUT OTL 



AVAILABLE 

TECHNOLOGIES 

DATABASE 



Featured Technology 



Sear ch the Database 



USER INFORMATION 



Co rporste User info 
u Biwsity Usir info 
Efitriaraiuriil Info 
Technology Transfer 





s'nim-ii 





Comments I 1998 Stanford University. All rights reserved. | Last modified July 20, 1998. 



09/03/98 14:5! 



79 



APPENDIX G 



Cohen/Boyer Patent Chronology 

1972 Chakrabarty patent for nonrecombinant oil-consuming 
microbe denied; GE files appeal. 

3/73 Cohen and Boyer teams introduce spliced DNA from two 

different plasmids into bacteria, where it replicates. 

9/73 Singer and Soil publish letter in Science noting 
possible danger of rDNA technology. 

11/73 Cohen/Boyer recombinant plasmid paper published in 
Proceedings of the National Academy of Sciences. 

5/74 Cohen and Boyer publish paper in PNAS describing 

replication of spliced eukaryotic DNA in bacteria. 

6/24/74 Reimers memo noting phone conversation with Cohen is 
first evidence in OTL documents of consideration of 
patent application for rDNA technology. 

7/26/74 Berg et al. letter proposes temporary moratorium on 
rDNA research. 

11/4/74 Stanford/UC file first application for patent to cover 
basic rDNA process and pSClOl product one week before 
patent bar. 

2/24-7/75 Asilomar conference on recombinant DNA technology 

early '75 Concern by Berg & others that pursuit of patent would 
be seen as conflict with research moratorium. 

fall 1975 Stanford OTL begins to approach companies about 
licensing rDNA technology. 

spring' 76 Stanford considering exclusive license to Genentech or 
Cetus . 

6/76 NIH guidelines published. 

6/76 First public disclosure of patent application, at Miles 

Symposium, MIT. 

6/16/76 Supreme Court decides manmade organisms are patentable. 
7/76 NIH decides rDNA technology can be licensed. 
1976 Stanford/UC file second patent application. 

3/78 Stanford receives NIH permission to patent recombinant 
DNA process if licensees conform to NIH rDNA 
guidelines. 



80 



1978 Stanford/UC file third patent application. 

1/4/80 Patent application filed, replacing '74, '76, & '78 
applications. 

6/16/80 Supreme Court decides, 5 to 4 , that raanmade organisms 
are patentable. 

12/2/80 First patent issues, process patent. 

8/81 Stanford announces availability of licenses for rDNA 
technology. 

8/28/84 Second patent issues, product patent, on prokaryotes. 

4/26/88 Third patent issues, product patent extending patent to 
all cell types, prokaryote and eukaryote. 

12/2/97 Process patent expires. 



INDEX--Niels Reimers 



81 



American Cancer Society, 7 
American Chemical Society, 24-25 

award, 24-25 
Ampex Corporation, 1 
Andreopoulos, Spyros, 3, 43 



Barnes, Andy, 11, 13, 29, 47 

Bayh-Dole Act, 8 

Berg, Paul, 10-11, 13, 14, 15, 

25, 29, 32, 36, 38 
Beyers, Robert, 3, 5, 42, 43 
Biochemistry, Stanford Department 

of, 31-32, 33, 36 
biosafety, 8, 11, 23, 25, 33 

guidelines for, 4, 23 
biotechnology industry, 3, 6, 11, 

20, 23, 25, 26, 32, 41-42. See 

also Genentech, DNAX 
Boyer, Herbert W. , 4, 5, 6-7, 9, 

11, 14, 16, 17, 18, 24, 36, 38, 

46 

Bremer, Howard, 47 
British Technology Group, 37 



Carpenter, William, 7, 8, 9 
Casper, Gerhard, 46 
Cetus, 19, 28 
Chakrabarty, Ananda, 34 
Chakrabarty Supreme Court case, 

21, 34 

Chang, Annie, 5, 16 
Cohen, Stanley N., 3-5, 6, 7, 9, 

11, 13, 14, 15, 16, 19, 22, 24, 

38, 39, 46 
Cohen-Boyer patents /patenting, 37 

anonymous review, 9-10 

controversy over, 3, 10-12, 
15, 25, 29, 41-42, 46 

inventors, 5-6, 16-17, 39 

and NIH/HEW, 23, 25-26 



Cohen-Boyer patents /patenting 
(cont'd.) 

opening/closing patent 

prosecution process, 27-28, 

37-38 

patent application(s) , 8, 9 
patent claims, 20-21, 35-36 
patent expiration, 8, 21 
process patent, 13, 21, 24, 

33, 35, 39-40, 46 
product patent(s), 21, 24, 33- 

35, 40 
royalties, 5-6, 10, 11, 13-14, 

16-17, 20-22, 28-32, 38 
U.S. rights only, 8, 20-21 
Cohen-Boyer recombinant DNA 
technology, 21 

commercial potential of, 3- 
5, 10, 11, 36, 41 

disclosure of, 3-4, 5, 46 
Cohen-Boyer technology licensing 
and biotechnology industry, 3, 

11, 19, 20, 41 
controversy over, 3, 10-12, 

15, 25, 29, 41-42, 46 
exclusive /nonexclusive license, 

3, 19-20, 33, 41 
inter-institutional licensing 

agreement, 4, 6, 7, 24 
licensing plan and fees, 4, 

16-19, 28 

litigation fund, 28 
marketing licenses, 11, 13, 

21, 28, 33, 47 
publicity, 40-41 
and recombinant DNA 

controversy, 3-4, 23 
royalties /royalty distribution, 

5-6, 10, 11, 13-14, 16-17, 

20-22, 28-32, 42. 
See also Office of Technology 

Licensing 

Cold Spring Harbor conference, 
"Patenting Life," 28 



82 



commercialization of 

biotechnology, 3, 25-26, 41-42 
Creighton, Ken, 2 
Curtiss, Roy, 33 



DNA synthesis, 18 

DNAX, 13, 32, 38 

drug development, cost of, 5 

drug interaction technology, 

Cohen's, 5 
Dunner, Donald, 27, 29 



Exxon, 27-28 



Finnegan, Henderson, Farabow and 

Garrett law firm, 27, 29 
Ford Aerospace, 1 



Genentech, 19-20, 29, 42 
General Electric, 34 
Gordon conference (s) , 46 
Griffen, Susan, 27 
Grolle, Floyd, 21 
growth hormone, human, royalties 
from, 32 



Halluin, Al, 27-28 

Health, Education, and Welfare, 

U.S. Department of, 23, 25-26 
Helling, Robert B., 5-6, 16-18, 

38, 39 

hepatitis B vaccine royalties, 32 
Herzenberg, Leonard, 37 
Hines, Sally, 15 
hybridomas, 36-37, 43-46 



Imatani, Ken, 11, 18-19 
institutional patent agreements, 

7-8 
International Trade Commission, 

21, 29 



Kaplan, Henry, 43-46 

Kennedy, Donald, 24, 30, 41-42, 

43-44 

Kennedy, Edward (Ted), 26 
Kiley, Thomas, 19-20, 29 
Kleiner, Eugene, 19 
Kleiner & Perkins, 19 
Kohler, Georges, 36 
Kornberg, Arthur, 13, 14, 32, 36, 

38 
Krevans, Julius, 24 



Latker, Norman, 25-26 
Lipsey, Charles, 27 
Lyon & Lyon, 19 



McElheny, Victor, 5-6 
Massachusetts Institute of 

Technology, 15, 46 
Massy, William, 29, 44 
Mertz, Janet, 10, 38 
Milstein, Cesar, 36 
Molecular Biology of the Gene, 37 
monoclonal antibodies, 36-37 
Morrow, John, 39 
Mycogen, 47 



Nader, Ralph, 26 

National Institutes of Health, 7- 

8, 23, 25 

National Science Foundation, 7-8 
New York Times article on 

recombinant DNA, 1974, 3, 4-5 



Office of Technology Licensing, 
Stanford, 1, 15 
exclusive /nonexclusive 

licenses, 19, 26, 43-46 
foundation, 1-2, 23-24 
the Kaplan case, 43-46 
pilot licensing program, 2, 30 
royalties /royalty distribution, 

2-3 
and Stanford's legal office, 

45-46. 



83 



Office of Technology Licensing, 

Stanford (cont'd.) 

See also Cohen-Boyer technology 

licensing 
Oi, Vernon, 37 
Opalka, Josephine, 4 
Owens, Mark, 4 



Pajaro Dunes Conference on 

Technology Transfer, 1982, 41- 
42 
"patenting of life." See 

Chakrabarty Supreme Court case 
and Cold Spring Harbor 
conference, 
patents /patent ing 

Bayh-Doyle Act, 8 

explaining patenting, 3-4, 7, 

12, 15, 25-26, 35 
institutional patent 

agreements, 7-8 
patenting in biology/medicine, 

14, 32, 42 
technology disclosure, 1, 2, 

11. 
See also Cohen-Boyer patents/ 

patenting 

Perkins, Thomas, 19 
Peterson, Kent, 44-45 
Poitras, John, 15 
polymerase chain reaction patent 
work, 28 



Rathmann, George, 20 
recombinant DNA 

cartoons, 34 

commercial potential/ 

commercialization of, 26, 
37, 41-42 

controversy, 15, 23, 25, 33 

legislation, 33 

and licensing pool, 47-48 
Research Corporation, 1 
Rosenzweig, Robert, 22, 25, 29 
Rowland, Bertram, 8, 16, 17, 24, 

28, 33, 36, 39 
Rutter, William J. , 20 



Schering-Plough, 13 

Senate hearings on recombinant 
DNA, 1977, 26 

Smith/Kline, 27 

Stanford University, 24 

business school and students, 

7, 11, 15, 18 

Clinical Pharmacology, 31 
Department of Biochemistry, 

31-32, 33, 36 

Department of Genetics, 31 
Department of Medicine, 31 
legal office, 45-46 
Medical Center news service, 3 
Sponsored Projects Office, 2 
and University Licensing Pool 

for Technology, 47-48. 
See also Office of Technology 
Licensing 

"submarine patents," 27 

Swanson, Robert, 7, 18-19, 20, 
36, 42 



Tanenholtz, Alvin, 33, 35 
technology transfer, 14, 26-27, 
41-42, passim 



U.S. Patent and Trademark Office, 

5, 17, 27, 28, 33-34, 38, 39 
University of California 

inter-institutional licensing 

agreement, 4, 6, 7, 24 
Office of Technology Transfer, 

4, 17 
royalties from biotechnology 

patents, 32 
and University Licensing Pool 

for Technology, 47-48 
university-industry interactions , 

42 
University Licensing Pool for 

Technology, 47-48 
University of Michigan, 6n, 16, 

17, 18 

University of Pennsylvania, 13 
Upjohn, 34 



84 



Watson, James, 25, 28 
Williams, Janice, 27 



Xenopus research, 39 



Zaffaroni, Alejandro, 13, 38, 44 
Ziff, Edward, 46 



Sally Smith Hughes 



Graduated from the University of California, Berkeley, in 
1963 with an A.B. degree in zoology, and from the University 
of California, San Francisco, in 1966 with an M.A. degree in 
anatomy. She received a Ph.D. degree in the history of 
science and medicine from the Royal Postgraduate Medical 
School, University of London, in 1972. 

Postgraduate Research Histologist, the Cardiovascular 
Research Institute, University of California, San Francisco, 
1966-1969; science historian for the History of Science and 
Technology Program, The Bancroft Library, 1978-1980. 

Presently Research Historian and Principal Editor on medical 
and scientific topics for the Regional Oral History Office, 
University of California, Berkeley. Author of The Virus: A 
History of the Concept, Sally Smith Hughes is currently 
interviewing and writing in the fields of AIDS and molecular 
biology /biotechnology. 



U. C BERKELEY LIBRARIES 




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