The Axel Patents: A Case Study in University Technology Transfer
C. Alessandra Colaianni, B.A.
Center for Genome Ethics, Law & Policy
Institute for Genome Sciences & Policy
P.O. Box 90141 Duke University
North Building, Research Drive
Durham, NC 27708-0141
(919) 668-2616 alessandra.colaianni@duke.edu
Acknowledgements:
This work was supported in part by the Center for Public Genomics, Duke University, under grant
P50-HG003391 from the National Human Genome Research Institute and the US Department of
Energy. This work was also supported by the Institute for Genome Sciences and Policy Summer
Fellowship. I thank Robert Cook-Deegan and Bhaven Sampat for their support and help, Dick Nelson and Michael Cleare for their input and openness, and Dr. Michael Wigler, Dr. Saul Silverstein, and
Dr. Paul Marks for their courtesy and wealth of information during interviews.
September 26, 2007

The Axel Patents: A Case Study in University Technology Transfer
September 26, 2007
2

Abstract:
The Axel Patents are among the most lucrative university patents in history, earning $790 million in royalty revenues for Columbia University. This paper tells the story of the Axel Patents, from the initial scientific discovery, through the decision to patent, to the non-exclusive licensing strategies Columbia used to spread the technology, the measures Columbia took to extend the life of the patents, and the controversy that erupted when another patent was issued in 2002. Columbia plowed most of the revenues back into research, including Richard Axel’s work that earned him a
Nobel Prize. Columbia’s aggressive pursuit of extended patent duration, however, also led it to considerable legal expenditures that have proven fruitless to date, and brought criticism for behavior unbecoming a nonprofit academic institution.
Keywords: Biotechnology, History, Intellectual Property
Background:
On February 25, 1980, at Columbia University, three scientists (Dr. Michael Wigler, Dr. Saul
Silverstein, and Dr. Richard Axel) filed a patent application claiming a biological discovery that was to change the pharmaceutical world profoundly. Cotransformation, as they named their discovery, harnessed mammalian cells’ power to translate and fold proteins made from inserted genes.
Dr. Axel was an Assistant Professor in the Institute for Cancer Research and the Department of Pathology, and Dr. Silverstein was an Assistant Professor in Columbia’s Microbiology department.
1 Michael Wigler had transferred into Columbia’s Ph.D. program in Microbiology after his third year at medical school, and was doing a rotation in Silverstein’s lab.
2 The initial idea for cotransformation is credited to Wigler, who “…had come to the conclusion that we weren’t going to make progress in animal cells unless we could manipulate the genetic content of the animal cell.” 3 As such, the cotransformation method is sometimes called the Wigler Method.
3

Cotransformation refers to manipulating the genetic content of a eukaryotic cell (a cell with a defined nucleus) by adding two genes: one, a marker gene, is used to detect whether the foreign DNA has been successfully taken up and expressed. The marker gene serves as a screening tool. The other gene can encode any protein to be studied or produced. A bacterial analog of cotransformation, recombinant DNA, was developed and patented in the early 1970s by Herbert Boyer (UCSF) and
Stanley Cohen (Stanford). It allowed scientists to “cut and splice” bacterial DNA. It was a powerful biotechnological tool used with great success in molecular biology labs and pharmaceutical companies, and widely used in research and production of biologics to this day. For researchers attempting to produce functional proteins from eukaryotic cells, however, recombinant DNA posed problems. Some proteins required cellular “processing,” which bacterial cells did not perform. When genes encoding those proteins are inserted into nucleated cells, they produce a fully functional protein. The Wigler Method provided a way to introduce genes into nucleated cells.
Earlier attempts at transforming eukaryotic cells had been thwarted by low transformation efficiency—few cells took up the foreign DNA (Szybalska and Szybalski 1962). Wigler’s method reduced this problem: by using a high concentration of the protein-producing DNA and a low concentration of the marker DNA, it was more likely that the protein-producing DNA would be taken up in cells expressing the marker. When the DNA became incorporated in the host’s chromosomal
DNA, it created a stable, self-replicating line of cells.
The process allowed the incorporation of any known gene, prokaryotic or eukaryotic, into any mammalian cell. The Wigler technology turned mammalian cells into protein-producing machines, a much more efficient way to produce a target protein than slow, expensive, and laborious synthesis reactions that yielded paltry results.
Proteins produced by microbes are not usually exported from their place of translation within the cell into the cell’s medium, because bacteria are single-celled organisms that use the protein within their own membranes. Eukaryotic cells, by contrast, are themselves a part of more complex organisms that require cell-to-cell communication. Thus, they have hormones, receptors, transporters,
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and other cellular machinery to facilitate export of the proteins that they produce. Eukaryotic proteins are often secreted from the cell in which they are produced, for transport to other locations within the organism. The Wigler Method allowed production of such proteins (Fox 1983).
The Wigler Method:
Wigler approached Silverstein with the idea of inserting a purified copy of the tk gene (which codes for a metabolic protein necessary for cell survival called thymidine kinase) from the Herpes
Simplex Virus genome into mammalian cells which lacked their own copy of the gene. The cells would then be grown on a medium that inhibits the de novo synthesis of thymidine so that the only cells to survive would be those who had taken up the viral gene.
Cell published the original paper in
May 1977 (Wigler et al. 1977).
By 1979, the Axel group realized they could pair a selective marker (as they had done in
1977 with thymidine kinase) with a gene that could not be readily selected, using a process which they called cotransformation. They cultured cells with a large amount of the non-selective gene and a small amount of the thymidine kinase gene, which increased the likelihood that the cells would take up both genes together, if they took up any DNA at all (see Figure 1). The cells were then grown on a selective medium as they were in the 1977 experiments, and probes were used to confirm that the non-selective gene had in fact been incorporated into the host cell’s chromosomes. The abstract of a
1979 Cell paper showed the breathtaking power of the new technology: “This cotransformation system should allow the introduction and stable integration of virtually any defined gene into cultured cells” (Wigler et al. 1979).
5

Figure 1: Cotransformation schematic. This image is from the original patent application (US
4399216), entitled “Process for Inserting DNA into Eucaryotic Cells and for Producing Proteinaceous
Materials.”
Citation trends of these two seminal cotransformation papers show how influential they were.
Figure 2A shows citations of the 1977 paper “Transfer of Purified Herpes Virus Thymidine Kinase
Gene to Cultured Mouse Cells.” Figure 2B shows the citation trends for the 1979 Cell paper,
“Transformation of Mammalian Cells with Genes from Procaryotes and Eucaryotes.” Figure 2C combines citations to the 1979 and 1977 papers.
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Axel 1977 Paper Citations
100
80
60
40
20
0
1975 1980 1985 1990
Year
1995 2000 2005 2010
A.
Axel 1979 Citations By Year
120
100
80
60
40
20
0
1975 1980 1985 1990
Year
1995 2000 2005 2010
B.
1977 and 1979 Cumulative Citations
200
150
100
50
0
1975 1980 1985 1990 1995
Citations
2000 2005 2010
C.
Figure 2: These citation graphs show that cotransformation was being cited approximately 175 times per year at its peak, compared to a Cell Journal Impact Factor (reported by ISI Citation Research) of
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39 and 36 in 1998 and 1999, respectively (Journal Citation Report 2007). Citation trends tend to taper off between fifteen and twenty years after initial publication, when the method either is replaced by a more advanced one or it becomes common knowledge. A few caveats must be taken into consideration when interpreting the graph: accuracy of the data, typographical errors or other mistakes in citation, and intention of citation—whether the lab is actually using the process or simply describing the process in a background section.
The Axel Patent:
According to Dr. Wigler, the initial idea to patent the discovery came from Dr. Richard Axel, and it struck Wigler “as a rather odd thing to do… it seemed like a long shot, but it wasn’t any effort on our part, since the patents were based on manuscripts that we had prepared.” 4 Aside from the trouble applying for and being granted a patent, the scientists had no guarantee that the work would pay off:
“We all agreed on the scientific importance of what we had done. Whether this thing would become useful or not—we’re all very objective people, and I think we all would have said
‘Yeah, there’s some probability of being useful, but there’s no certainty.’ It was not clear at the time whether bacteria would be useful for producing all proteins, all medicinal proteins.
And it was clearly a possibility that they were not, in which case this would be a better method… but there wasn’t a guarantee that it would be valuable.” 5
Even after the first patent issued, Silverstein wasn’t sure that it would be valuable: “When it was issued, everybody said ‘Gee that’s terrific,’ and I pointed out to them, ‘Yeah, it’s terrific if we get somebody to actually license it.’” 6
The inventors informed Paul A. Marks, then the Vice President of the Health Sciences at
Columbia, of their decision to patent. Their decision to go to Marks was most likely because
Columbia did not have a technology transfer office at the time. As Marks recalled in an interview, “I don’t think the Columbia University industrial licensing group was very sophisticated, and they were
8

not encouraging or enthusiastic about going forward to try to get a patent on this work.” 7 Marks then went to the provost, Michael I. Sovern, who referred the inventors to Cooper-Dunham, where attorney John White (who had received his BS in chemical engineering, MA in chemical biology, and
MPh in biophysical chemistry from Columbia) handled the patent prosecution. The major involvement of the scientists was in the initial drafting process; both Wigler and Silverstein confirmed that their role was negligible after the initial draft was completed. Silverstein recalled, “I do remember the hours spent with John White, who was the lead attorney at that time on this series of patents… he asked us lots of good questions, and we had to figure out answers.” 8
On February 25, 1980, the patent application was filed. The claims in the application, which included any cell transformed via the method of cotransformation, were progressive for the time, given that they predated the landmark Supreme Court decision in Diamond v. Chakrabarty by about four months.
Diamond v. Chakrabarty was a watershed for biotechnology patenting, because the
Supreme Court made clear that living organisms could be patented, arguing that patents applied to
“… anything under the sun, that is made by man.” 9
Another important event that month was the Bayh-Dole Act, which Congress passed on
December 12, 1980. The Act was meant to clear the way for nonprofit institutions and small businesses to get title to inventions made using federal funds, an effort to resolve the contentious debate “over the propriety of transferring to private entities the title to inventions developed via public subsidy” (Dudzinski 2004). Columbia applied for the first Axel patent ten months before
Bayh-Dole was enacted. Interestingly, the patent may not have been crucial in facilitating technology transfer, in the sense of being necessary for commercial use. Skilled researchers at universities and biotechnology companies alike could replicate cotransformation based on scientific papers alone, and had in all likelihood begun to do so by the time the patent application was filed (Mowery et al. 2004).
In a September 2, 1983, Science article, author Jeffrey Fox noted that “the procedures developed by
Axel and his colleagues are being used extensively in basic research” (Fox 1983). The main effect of the patent was that Columbia got a slice of the pie when commercial use met with success.
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Because Bayh-Dole had not yet been passed, the NIH could still take title to the patents, or decide not to allow the patent at all. Columbia University had to ask permission of the NIH for the title to any potential patents (Mowery et al. 2004). Columbia sent a letter to NIH on April 4, 1980, six weeks after it filed the patent application, asking for permission to patent, to take title of the patent, and to have the right to license the technology exclusively. On February 24, 1981, NIH wrote back to
Columbia giving title, but denying the request for an exclusive license unless Columbia could demonstrate that nonexclusive licensing was not viable (Miller 1981). The NIH also required that
Columbia provide copies of any licensing agreements to the Department of Health and Human
Services (HHS), as well as a detailed annual report
“…regarding the development and commercial use that is being made and is intended to be made of the invention, including the amounts and source of money expended in such development and such other data and information as the HHS may specify. After the first commercial sale of any product embodying the invention, such report shall specify the date of the first commercial sale and shall include information relating to gross sales by licensees, and gross royalties received by the University” (Miller, 1981).
NIH also specified that the any potential licenses must “include adequate safeguards against unreasonable royalties and repressive practices” (Miller 1981).
While Columbia did request an exclusive license, this was by no means the only option they were considering. Paul Marks noted that the exclusive license was just one option of many, and
Columbia’s attitude was that it would not hurt to ask. In retrospect, Marks commented, “I think it’s very fortunate for a number of reasons that we didn’t succeed because I don’t think we fully anticipated the sort of impact that this discovery would have on drug development.” 10
In 1982, Columbia formed the Office of Science and Technology Development (OSTD), which took over the administration of the patent application (Mowery et al. 2004). The office has since gone through two name changes, and is now called the Science and Technology Ventures
Office. The first of five patents was granted a year later, on August 16, 1983 (U.S. patent number
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4,399,216). The patent broadly covered the cotransformation process. Its claims included the method, specific markers, any proteins produced with the process, and the end cell product, called a transformant (Dudzinski 2004).
Five days before its first patent was granted, the OSTD filed a divisional application, which covered the cotransformation process using a phage or plasmid vehicle. A divisional application claims priority from a previously filed patent application in which more than one invention was disclosed, and the divisional application claims a separate invention that was a part of the original patent application. Divisional applications are generally a response to the patent office’s objection that the application claims more than one invention. The applicant then chooses to pursue a subset of claims as one invention from the original application, and can opt to file a divisional application containing claims for another invention.
11 Divisional applications are distinct from continuation applications. Continuation applications also claim priority from some earlier application, but they are filed when the applicant wants to revise the claims again.
12 The application filed on December 7,
1980, was the first of nine divisional or continuation applications that Columbia was to file stemming from the original 1980 application.
The divisional application that they filed became the second patent on January 6, 1987 (patent
4,634,665). Because this patent was very similar in claims to the original ‘216 patent, Columbia agreed to a terminal disclaimer, which made the second patent’s expiration date the same as the first patent’s expiration date. On the basis of the ‘665 patent, Columbia filed divisional and continuation patent applications in 1986, 1989, and 1991. The applications in 1986 and 1989 were abandoned, while the 1991 application turned into Columbia’s third Axel Patent on January 12, 1993 (patent
5,179,017, or the ‘017 patent). The ‘017 patent was also subject to a terminal disclaimer, expiring at the same time as the first and second patents. On the basis of that application Columbia filed more divisional and continuation applications in 1992 (1 application), 1994 (1 application), and 1995 (3 applications). The timing of the two June 7, 1995 applications was significant: on June 8, 1995, amendments to U.S. patent law were to take effect. The effect was as follows:
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“For applications filed on or after June 8, 1995… provide that the term of a patent (other than a design patent) begins on the date the patent issues and ends on the date that is twenty years from the date on which the application for the patent was filed in the United States or, if the application contains a specific reference to an earlier filed application or applications, twenty years from the filing date of the earliest of such application(s). This patent term provision is referred to as the ‘twenty-year term.’” 13
The old practice was to allow the inventor a patent term extending 17 years from the date of issue .
The new patent term was 20 years from the date of filing , which would make the practice of filing numerous continuation and divisional applications to keep the application open effectively useless.
However, because Columbia’s last two continuation applications were filed a day before that law took effect they were able to extend their patent on the Wigler Method.
On September 22, 1992, Columbia was granted a patent from a different set of original applications (in other words, it was not a divisional or a continuation of the original 1980 application.) That patent is US 5,149,636 (the ‘636 patent), and was the third continuation application stemming from an original application filed March 15, 1982. This patent will expire in 2009, as it was not subject to the terminal disclaimer that Columbia agreed to with the previous three patents. The
‘636 patent was licensed as part of a package with the other Axel patents.
14
On September 24, 2002, a fourth patent was issued (patent number 6,455,275, the ‘275 patent, expiration date September 24, 2019). Because the application on which it was based beat the patent law amendments by one day, Columbia had effectively extended the time it could collect royalties on the Axel patents by seventeen years, until 2019. Another continuation application is still pending. Figure 3 shows a schematic of all divisional and continuation applications made from the original 1980 application, as well as all patents that issued from that original application.
15
12

Figure 3: Schematic of Columbia’s Patent Applications and Patents
Patent 5,149,636 stemmed from a different set of original applications and is not included in this schematic.
Licensing, Commercialization, and Revenue:
After the first patent issued, Columbia began to license the technology. By the time the patent was granted, however, many research laboratories were already using cotransformation, which posed a potential problem for licensing: if academic laboratories were already using the process, pharmaceutical R&D laboratories were probably using it too. Furthermore, because the patent primarily covered a process rather than a product, infringement would be difficult to prove. The prospect of a patent on this process was considered offensive by much of the research community, even though Columbia never enforced the patent against a fellow research institution. As Harvard
University molecular biologist James Barbosa put it,
“The patent’s process has been in use all over the academic world since ’77… it’s been such a boon in getting mammalian cell gene transfer off the ground that it has almost become a
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laboratory reagent… that the process has been patented just doesn’t seem right” (Mowery et al. 2005)
However, as Columbia never tried to license the technology to research institutions, Barbosa’s implicit fear went unrealized.
In the beginning, Columbia’s licensing strategy was to identify firms that were already using the technology, and advise them to take a license. To do this,
“… Columbia licensing personnel examined the patents, end products, and scientific publications of industrial firms… and informed these firms that if they were using the cotransformation process to produce proteins, they must pay royalties to Columbia” (Mowery et al. 2005).
The OSTD made it clear that if infringing companies did not comply, they would face legal action.
Columbia also recognized, as Stanford University did with the Cohen-Boyer patents, that they could not charge an exorbitant fee for the licenses. Instead, they charged a rate of $30,000 in the hopes that companies would choose to take out a license rather than challenge the validity of the patent in court.
To encourage companies to sign up early, Columbia took another lesson from Stanford’s handling of the Cohen-Boyer patents, and offered reduced license fees to firms that took a license before June 1, 1984 (Sampat, 2000). The “early bird” terms were $20,000 annually, with royalty rates of 1.5% of sales for finished products, 3% of sales for bulk products, 12% of sales for basic genetic research products, and 15% of cost savings from process improvements. The standard terms were
$30,000 annually and royalties of 3%, 6%, 15%, and 18% for the categories listed above. Ten firms did so, and Columbia continued to identify potential users and advise more companies to take a license until at least the 1990s. As inventor Dr. Saul Silverstein put it in an interview, “They
[Columbia] were fairly aggressive at pursuing some of the companies who we knew were making pharmacologically active drugs that would require using this technology.” 16 All in all, 34 firms licensed the cotransformation technology. Ten companies signed up for the special early deal, and twenty-four signed up under the regular license agreement (Sampat, 2000).
14

Columbia’s threats of litigation were not idle—in 2000, Columbia brought action against the company Roche Diagnostics (formerly Boehringer Mannheim) for patent infringement in a complicated case also involving the therapeutic protein erythropoietin (EPO). Columbia alleged that some of GI’s old EPO was shipped to Roche in 1985, allowing Roche an upper hand in the production of EPO which earned them more than $1.5 billion in drug sales.
17 Judge Nancy Gertner ultimately awarded Columbia $1.2 million in damages from Roche.
Over the Axel patents’ 17-year term, Columbia earned $790 million in royalties.
18 Year-byyear data were not available from Columbia’s office of Science and Technology Ventures, but we can say with reasonable certainty that most of the royalty revenues were earned in the last few years of the patent’s life, when derivative products had hit the market and were generating royalty-relevant revenue for the licensees.
Columbia’s current policy regarding profit sharing is as follows: 20% of the gross income is deducted for expenses, and the remainder is divided between the inventor, the inventor’s research activities, and the university. However, because the patent application came before Bayh-Dole,
Columbia was obligated to follow the royalty-sharing scheme outlined in the NIH letter they received denying their request for an exclusive license (Miller 1981).
According to that letter, the inventors would share 50% of the first $3,000; 25% of the income between $3,000 and $13,000; and 15% of the income exceeding $13,000. The remaining royalty income, after deducting expenses, would “be utilized for the support of educational and research pursuits” (Miller 1981). Following this policy, the three inventors would have divided approximately $118.5 million for personal use. An unnamed fourth person also receives a share of the personal-use profits, according to Silverstein, but it is unclear what percentage the fourth person receives.
19 After deducting 20% of the remainder for expenses, approximately $537.2 million would remain for use in the inventors’ laboratories and general university funds. It is unclear how the rest of the royalty income was divided between the inventors’ laboratories and the university.
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Expiration and Controversy:
On August 16, 2000, the first three Axel patents (‘216, ‘665, and ‘017) were set to expire.
Columbia’s administrators spoke of an imminent drop in the university’s revenue. “‘In the near future, our revenues are likely to drop sharply,’ warned Jonathan Cole, then Columbia's provost, in an
October 2000 internal document” (Wysocki 2004).
In an effort to keep the revenue stream alive, Columbia began to take measures to extend the patent’s term. In March of 2000, Columbia turned to Senator Judd Gregg, R-N.Y., a Columbia alumnus, to insert language into a bill granting them a 15-month extension on the three patents that would expire later that year (Rosenberg 2000). If the bill went through, Columbia would be able to continue collecting royalties for another 15 months, which could yield approximately another $125 million in royalties. The effort caused a significant backlash because it became public. Gregg and
Columbia received “a storm of criticism from drug manufacturers, consumer groups, and members of
Congress, including Senator Edward M. Kennedy” (Rosenberg 2000). Henry A. Waxman, coauthor of the Hatch-Waxman Act, which was cited as a rationale for the patent extension, “insist[ed] that
Columbia and Gregg [were] misinterpreting the law” (Rosenberg 2000). Waxman felt that Gregg’s proposal “ha[d] nothing to do with the original intent of the act… On the contrary, it [ran] counter to what we accomplished” (Rosenberg 2000).
Despite opposition from the press, Columbia officials stood by their decision to try to extend the life of the patent. Michael Crow, then Columbia’s executive vice-provost (and a professor of science and technology policy in Columbia’s School of International and Public Affairs) noted, “We are the only university that has come forth and raised our hand about remedying the patent policy situation and we are getting whacked pretty hard” (Rosenberg 2000). He defended the measures that the University was taking to protect its source of income by pointing to the fact that much of the money went back into research:
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“…The three inventors split 20 percent of the royalties, he said, so each reaps millions annually. The rest - minus some administrative costs - goes to research. ‘It's not like we're taking the money and buying hotels’” (Fram 2000).
Richard Axel went on to earn a Nobel Prize in 2004 for his study of the molecular neurobiology of olfaction (Axel 2004). In his Nobel Lecture, Axel acknowledged the Howard
Hughes Medical Institute, U.S. National Institutes of Health, and the Mathers Foundation for funding this work. While patent royalties were not explicitly cited, some of this Nobel-quality research may have derived from his or Columbia’s patent royalties.
In May, Senator Gregg tried unsuccessfully to insert a 350-word clause into an agricultural spending bill that would grant Columbia’s request; he repeated the attempt in June, trying this time to get the amendment into a military spending bill (Rosenberg 2000). After both of these attempts failed,
Gregg gave up. In retrospect, legal scholars reflected that if the extension had become law, it would have established a dangerous precedent (Dudzinski 2004).
After the bill failed to pass in Congress, Columbia stated that there was not a “next step in this patent extension story… there’s just no way to go back after it expires” (Dudzinski 2004). The university, however, was still pursuing the divisional applications filed on June 7, 1995. On
September 24, 2002, two years after the expiration of the original Axel patents, Columbia’s persistence paid off: US Patent 6,455,275 (hereafter ‘275) was issued. The patents claims were similar to the prior Axel patents (Ravicher 2004), but because there was no terminal disclaimer on this patent, Columbia legally had the right to enforce royalties on the cotransformation technology until 2019. Columbia sent letters to licensees alerting them to this fact.
Licensees who thought they paid their last royalty payment two years before were nonplussed. They reacted strongly: in 2003, Genentech, Immunex, Amgen, Biogen, Genzyme,
Abbot, Wyeth, Genetics Institute LLC, Johnson and Johnson, Serono, Baxter, and Ares all filed suit against Columbia for double patenting, asking the judge to find the ‘275 patent invalid and
17

unenforceable (Dudzinski 2004). Thomas Bucknum, then-executive vice president of Biogen, said,
“It's the same invention, and that's why we decided we just wouldn't pay” (Wysocki 2004).
In court, Columbia was represented by eight lawyers, prompting Judge Mark L. Wolf to say,
“I thought Columbia was a nonprofit organization who couldn’t afford this litigation” (Wysocki,
2004). Judge Wolf’s conclusion was that:
“The timing of its [the ‘275 patent] issuance strongly suggests that Columbia deliberately delayed obtaining a patent that it always intended to secure in order to make it effective just as the other Axel patents expired and thus increase its commercial value by maximizing the period in which the public would have to pay Columbia royalties for the use of the Axel patents.” 20
The press got hold of the story, and began to liken Columbia to “an aggressive U.S. corporation”
(Wysocki 2004), accusing them of “submarine patenting” (Marshall 2003).
Dan Ravicher also took aim at Columbia’s new patent. Ravicher is a patent attorney and founder of PubPat, a non-profit organization that seeks to “protect the public from the harms caused by wrongly issued patents and unsound patent policy” (Ravicher 2004). In February 2004, PubPat filed a request for re-examination ex parte of the ‘275 patent, asserting that “none of Axel et al.’s four patents are patentably distinct from one another,” and that the ‘275 patent had been issued only after numerous rejections for double patenting and seven years of “unreasonable and unexplainable delay on the part of Axel et al. and changes in the personnel examining the application” (Ravicher 2004).
The request for re-examination was granted.
Faced with these lawsuits and re-examination requests, Columbia signed a covenant not to sue, effectively relinquishing their right to enforce the ‘275 patent. On October 12, 2004, they agreed not to sue not just the plaintiffs involved in the lawsuits, but any potential plaintiff. They maintained that the ‘275 patent was valid, however:
“In granting this covenant to plaintiffs, Columbia in no way concedes plaintiffs’ allegations that the
‘275 patent is invalid, unenforceable, or not infringed. To the contrary, Columbia categorically rejects
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all such claims by plaintiffs” (Attorneys for the Trustees of Columbia University in the City of New
York, 2004). This claim is undermined by the March 15, 2007, Final Rejection decision, resulting from the re-examination proceedings [need ref].
Columbia’s final continuation application (application 477, 159) of the original Axel patent application, filed on June 7, 1995, is still being prosecuted and may therefore result in the issuance of a patent. Dan Ravicher, founder of PubPat, wrote, “To my knowledge, they are still pursuing [the second application] vigorously, as they are a reissue of the ‘275 patent.” 21 If the reissue does occur, many of the plaintiffs from the earlier double patenting case have indicated that they will challenge the validity of such a patent.
22
Concluding Remarks:
Columbia’s decision to file divisional and continuation applications on the same invention for fifteen years is a good example of a wider trend. Numerous patent applicants have used this tactic, and it is not without consequence. Mark Lemley details some of the potential problems with continuation applications:
“First, at a minimum, continuation practice introduces substantial delay and uncertainty into the lives of a patentee’s competitors, who cannot know whether a patent application is pending in most circumstances. Second, the structure of the PTO suggests that continuations may well succeed in “wearing down” the examiner, so that the applicant obtains a broad patent not because he deserves one, but because the examiner has neither incentive nor will to hold out any longer. Third, continuation practice can be—and has been—used strategically to gain advantages over competitors by waiting to see what product the competitor will make, and then drafting patent claims specifically designed to cover that product. Finally, some patentees have used continuation practice to delay the issuance of their patent precisely in order to surprise a mature industry, a process known as ‘submarine patenting’” (Lemley and
Moore 2004).
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Lemley’s second and fourth points are applicable to the Axel patents. Had more stringent USPTO restrictions against continuation applications been in effect, Columbia would never have been able to obtain the ‘275 patent, and much of the controversy surrounding the Axel patents could have been avoided.
Why would an institution like Columbia fight so hard for a patent extension and new patents beyond the term of the originals? One answer is patent royalties, shown in Table 1. In a ranking of the top 18 hospitals and universities by how much of their research and development money derived from royalty revenues, Columbia was tied at second place with the Sloan-Kettering Institute for Cancer
Research: 41% of Columbia’s research expenditures came from patent royalties. It could be argued, from these data, that Columbia’s dependency on royalty-based research funding made it work hard to maintain the revenue stream. This is indicative of a problem: if universities depend on patent revenue, the may be more vigorous, taking extreme measures in pursuit of patent royalties. The problem with this “winner’s curse” is that most patent royalties come from “blockbuster” patents like the Cohen-
Boyer and Axel patents, which are few and far between. Furthermore, the harder universities push the industry to continue paying patent royalties, the more likely it is that they will incur ill will, bad reputations, and even steep legal fees in court battles.
Table 1: Percentage of total R+D funding accounted for by licensing revenue for top 18 US and
Canadian institutions. Data compiled by Bhaven Sampat, Columbia University, using FY2002 licensing revenue data from the Association of University Technology Managers.
Institution Licensing Revenue/
Rank Institution Name Total R+D Expenditures Institution Type
1 City of Hope National
Medical Ctr. & Beckman
Research Inst. 42%
Hospital/Research
Institute
20

2
3
Sloan Kettering Inst. for
Cancer Res.
Columbia Univ.
41%
41%
Hospital/Research
Institute
University
4
5
6
7
12
13
14
8
9
10
11
15
16
17
18
New York Univ.
Florida State Univ.
Univ. de Sherbrooke
St. Elizabeth's Medical Ctr. of
Boston
Wake Forest Univ.
Univ. of Rochester
Brigham Young Univ.
Emory Univ.
Tulane Univ.
TRIUMF
Children's Hospital Boston
Michigan State Univ.
The Salk Inst. for Biological
Studies
Stanford Univ.
Univ. of Florida
35%
34%
32%
23%
17%
16%
14%
12%
11%
11%
11%
10%
9%
9%
9%
University
University
Canadian
Hospital/Research
Institute
University
University
University
University
University
Canadian
Hospital/Research
Institute
University
Hospital/Research
Institute
University
University
The cost of litigation in the Columbia case was undoubtedly substantial. Although the university earned nearly $800 million from the patents, they spent a significant amount of time and
21

money on legal fees after being sued by eight of their licensees. Many of the costs accrued after the original patents expired. Furthermore, the legal fees involved in pursuing the ‘275 patent—which earned few if any royalties, because Columbia signed a covenant not to sue—were likely significant, as were the legal fees involved in defending the university against the eight litigants. The costs to the innovation system as a whole also include the expenditures by those litigants. It is difficult to estimate the cost of pursuing a patent application for almost twenty-two years, but it would certainly be considerable. The money that paid for that legal assistance must be subtracted from the previously earned Axel royalties, according to Columbia’s policies regarding legal fees related to university patents.
To conclude, the Axel patents were very successful: they were nonexclusively licensed to a large number of companies, and a number of highly valuable derivative products were developed as a result of the initial invention (Table 2). However, because Columbia became dependent on the royalty revenues from the Axel patents, it was willing to attempt a congressional patent extension, which many judged unbefitting a nonprofit research institution. These tactics harmed Columbia both in terms of their public reputation and financially, because they had to pay to fight eight companies suing them in 2003. Other university technology licensing programs might take a lesson from
Columbia, learning to be cautious in how far they go to preserve patent royalties after an initial patent term has expired.
Interview Methods:
The author conducted three interviews in the summer and fall of 2005 during the preparation of this paper. Interviews with Dr. Saul Silverstein, Dr. Michael Wigler, and Dr. Paul S. Marks were on the record and were recorded using a standard tape recorder. Interviewees gave oral consent to a prepared informed consent statement (appendix 1). All three interviewees were given the opportunity to respond to their statements and points attributed to them; two made minor comments which were honored by the author, and one did not respond. The interviews were conducted Duke University IRB
22

protocol 1277. Drs. Silverstein and Wigler were chosen as interviewees because they are listed as inventors on the co-transformation patents; Dr. Richard Axel did not respond to repeated requests for interviews. Dr. Paul A. Marks was chosen based on the interview with Dr. Silverstein, because it became apparent that Dr. Marks had played a significant administrative role in the early life of the patent.
Table 2: Commercial Drugs Using Cotransformation Technology
Drug names and manufacturers (Dudzinski 2004); target diseases (Drugs.com 2007)
Generic Name Brand Name Disease Manufacturer
Adalimumab
Agalsidase beta
Alefacept
Alteplase
Bevacizumab
Chorionic
Gonadotropin alfa
Darbepoetin alfa
Dornase alfa
Efalizumab
Epoetin alfa
Etanercept
Factor VIII
Factor VIII
Humira
Fabrazyme
Amevive
Activase and Cathflo
Activase
Avastin
Heart Attacks and
Stroke
Colon, Rectal Cancer
Ovidrel
Aranesp
Pulmozyme
Puberty induction,
Fertility
Anemia
Cystic Fibrosis
Raptiva
Epogen, Procrit
Enbrel
Advate
Recombinate
Rheumatoid Arthritis
Fabry Disease
Psoriasis
Psoriasis
Anemia
Arthritis
Hemophilia A
Hemophilia A
Abbott
Genzyme
Biogen Idec
Genentech
Genentech
Serono
Amgen
Genentech
Genentech
Amgen, J&J
Immunex (now
Amgen)
Baxter
Baxter
23

Factor VIII
Factor IX
Follitropin alfa
Ibritumomab Tiuxetan
Imiglucerase
Interferon beta-1a
Interferon beta-1a
Laronidase
Omalizumab
Rituximab
Somatropin
Tenecteplase
ReFacto
BeneFix
Gonal-f
Zevalin
Cerezyme
Avonex
Rebif
Aldurazyme
Xolair
Rituxan
Serostim
TNKase
Thyrogen
Herceptin
Hemophilia A
Hemophilia B
Reproductive Health
Non-Hodgkins
Lymphoma
Gaucher Disease
Multiple Sclerosis
(MS)
Multiple Sclerosis
(MS)
Mucopolysaccharidosis
1 (MPSI)
Asthma
Non-Hodgkins
Lymphoma
Growth Hormone
Acute Myocardial
Infarction
Thyroid Cancer
Breast Cancer
Wyeth
Wyeth
Serono
Biogen Idec.
Genzyme
Biogen Idec
Serono
Genzyme
Genentech
Genentech
Serono
Genentech
Genzyme
Genentech
Thyrotropin alfa
Trastuzumab
24

References:
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December 8, 2004. Available at: http://nobelprize.org/nobel_prizes/medicine/laureates/2004/axellecture.pdf
(accessed September 25, 2007).
Dudzinski, DM. Columbia, Cotransformation, Commercialization & Controversy: The Axel Patent
Litigation. Harvard Journal of Law and Technology 17(2): 584-618.
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Endnotes:
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1 Author’s interview with Dr. Saul J. Silverstein, Professor of Microbiology, Columbia University, 2005.
2 Author’s interview with Dr. Saul J. Silverstein, Professor of Microbiology, Columbia University, 2005.
3 Author’s interview with Dr. Michael Wigler, Professor, Cold Spring Harbor Laboratory, 2005.
4 Author’s interview with Dr. Michael Wigler, Professor, Cold Spring Harbor Laboratory, 2005.
5 Author’s interview with Dr. Michael Wigler, Professor, Cold Spring Harbor Laboratory, 2005.
6 Author’s interview with Dr. Saul J. Silverstein, Professor of Microbiology, Columbia University, 2005.
7 Author’s interview with Dr. Paul A. Marks, Sloan-Kettering Institute, former Vice President for Health
Sciences at Columbia University, 2005
8 Author’s interview with Dr. Saul J. Silverstein, Professor of Microbiology, Columbia University, 2005.
9 Diamond v. Chakrabarty, 447 U.S. 303 (1980).
10 Author’s interview with Dr. Paul A. Marks, Sloan-Kettering Institute, former Vice President for Health
Sciences at Columbia University, 2005
11 35 U.S.C. 121 “Divisional Applications.” Appendix L. Patent Laws. Available at http://www.uspto.gov/web/offices/pac/mpep/documents/appxl_35_U_S_C_121.htm
(accessed September 25,
2007) .
12 35 U.S.C. 120 “Benefit of earlier filing date in the United States.” Appendix L. Patent Laws. Available at http://www.uspto.gov/web/offices/pac/mpep/documents/appxl_35_U_S_C_120.htm
(accessed September 25,
2007).
13 35 U.S.C. 154 “Contents and Term of Patent, Provisional Rights.” Section 532(a)(1) of the Uruguay Round
Agreements Act (Pub. L. 103-465, 108 Stat. 4809 (1994)) amended 35 U.S.C. 154; 35 U.S.C. 120, 121, 365(c).
Available at http://www.uspto.gov/web/offices/pac/mpep/documents/2700_2701.htm
(accessed September 25,
2007).
14 Biogen Idec MA Inc., et al., Plaintiffs, v. The Trustees of Columbia University in the City of New York,
Defendant. 332 F. Supp. 2d 286; 2004. U.S. Dist. LEXIS 16315.
15 Columbia University was also granted thirteen international or world patents: WO8102426A1 (World);
JP57500410T2; JP07095880A2; JP06030588B4; JP02736502B2 (Japan); HK0059992A (Hong Kong);
EP0045809B1; EP0045809A1 (European Patent Office); DE3176369C0 (Germany); CA1179953A1 (Canada);
AU7037881A1; AU0558061B2 (Australia); and AT0029042E (Austria).
16 Author’s interview with Dr. Saul J. Silverstein, Professor of Microbiology, Columbia University, 2005.
17 Trustees of Columbia University in the City of New York, Plaintiff, v. Roche Diagnostics GmbH, formerly known as Boehringer Mannheim GmbH, Defendant. 150 F. Supp. 2d 191; 2001 U.S. Dist LEXIS 6383.
18 Personal Communication, Michael Cleare, former executive director of Columbia’s Science and Technology
Ventures Office, to Richard R. Nelson, Henry R. Luce Professor of International Political Economy at
Columbia University, and Bhaven Sam pat, Assistant Professor of Health Policy and Management, Mailman
School of Public Health, Columbia University;
2006.
19 Author’s interview with Dr. Saul J. Silverstein, Professor of Microbiology, Columbia University, 2005.
20 Biogen Idec MA Inc., et al., Plaintiffs, v. The Trustees of Columbia University in the City of New York,
Defendant. 332 F. Supp. 2d 286; 2004 U.S. Dist. LEXIS 16315.
21 Author’s communication with Daniel B. Ravicher, president and executive director of the Public Patent foundation, 2005.
22 Biogen Idec MA Inc., et al., Plaintiffs, v. The Trustees of Columbia University in the City of New York,
Defendant. 332 F. Supp. 2d 286; 2004 U.S. Dist. LEXIS 16315.
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