Attachment 27 Determination of Exceptional Circumstances.pdf

Determination of Exceptional Circumstances 1

DETERMINATION OF EXCEPTIONAL CIRCUMSTANCES

Under 35 U.S.C. 202(a)(ii) and 37 C.F.R. 401.3(a)(2) and (e), 48 CFR 327.3, and 48 CFR 327.409

National Institute of Neurological Disorders and Stroke (NINDS) Division of Translational Research (DTR) Division

Epilepsy Therapy Screening Program (ETSP)

The National Institute of Neurological Disorders and Stroke (NINDS) is seeking approval to restrict or eliminate the ability of contractors at all tiers to elect title to inventions made by contractor employees for specific classes of inventions in the Epilepsy Therapy Screening Program (ETSP) program. To that end, the NINDS is seeking approval of this Determination of Exceptional Circumstances (DEC) to the Bayh-Dole Act (35 U.S.C. § 200-212). The NINDS is concurrently seeking approval for incorporation of the following Health and Human Services (HHS) Acquisition Regulation clauses as edited to implement this DEC: HHSAR 352.227-11 Patent Rights-Exceptional Circumstances (Sept. 2014) and HHSAR 352.227-14 Rights in Data-Exceptional Circumstances (Sept.

2014) Patent Rights. It has been determined that there are exceptional circumstances that justify the limitation of the rights of all existing and all future contractors and subcontractors at all tiers in: (1) Subject Inventions that require use of any proprietary material ("Material" or "Materials")1 obtained from a third party (“Contributor”) and used under the contract, and (2) Subject Inventions that could utilize the Material, but are not limited to, the Material supplied by Contributors.

Federal funding recipients of grants, contracts, or cooperative agreements normally have the right to elect to retain title to inventions made by their employees pursuant to the Bayh-Dole Act. Under exceptional circumstances, however, the funding agency may restrict or eliminate the funding recipient's right to elect title to inventions if doing so better promotes or advances the intent of Bayh-Dole. Approval of a DEC by the Agency Head is required to justify the deviation from the typical flow of patent rights under Bayh-Dole to the funding recipient.

Overview of the Program The mission of the NINDS ETSP is to facilitate the discovery of new therapeutic agents that address the unmet medical needs in epilepsy. Historically, the ETSP has focused on identifying symptomatic treatments for seizure disorders, but based on recent recommendations from working groups of the National Advisory Neurological Disorders and Stroke (NANDS) Council, the program is now focused on addressing drug resistant epilepsy, disease prevention and modification. The program provides opportunities for Contributors (researchers from academia and industry) in the U.S. and abroad to submit compounds for screening in a battery of rodent epilepsy and seizure models. These tests

1 "Material" means any proprietary material, method, product, composition, compound or device, whether patented or unpatented, which is provided to the Contractor under an agreement by a Contributor. Typically material is provided to the contractor under various types of agreements, including but not limited to screening agreements and material evaluation agreements (MEA). The material may be provided to the contractor directly by the Contributor or the Government.

https://www.ninds.nih.gov/glossary?combine=NINDS

Determination of Exceptional Circumstances 2 are currently performed at a contract facility based at the University of Utah on a blinded and confidential basis and at no cost to the ETSP participants. The NINDS ETSP staff reports test results to the Contributors and provides advice on next steps for promising compounds.

The ETSP program is designed for academic and industry Contributors to test Investigational Agents without incurring the burden of budgetary concerns, financial risk and profitability or compromise of their intellectual property (IP). Since its establishment in 1975, the program has made important contributions to the development of several FDA-approved drugs for epilepsy, including felbamate (Felbatol), topirimate (Topamax), lacosamide (Vimpat), retigabine (Potiga), cannabidiol (Epidiolex) and cenobamate (Xcopri).

The ETSP contract, with these limiting rights, will require contractors to perform the following confidential pre-clinical activities: (1) Screening biological activities in animal and in vitro models of epilepsy and seizures; and (2) Pharmacokinetic and formulation studies.

Rationale for a DEC Screening services using rodent epilepsy and seizure models for the ETSP program can be provided by Contractors from non-profit organizations such as academic laboratories or for-profit research organizations such as small businesses. The Contractor may show interest in synthesizing analogs of the Contributor’s Investigational Agents to improve its efficacy or enhance upon the device technology or pursue patents and publications strategy based on data generated from screening the Contributor’s Investigational Agents in their institution. However, it is not expected that the Contractor would have interest in claiming the data and intellectual property generated in their institution while screening the Contributor’s Investigational Agents.

The potential of the Contractor to use or block access to generated screening data by the Contributor would have a significant impact on the Contributor’s intellectual property rights but also could hinder the development of promising alternative therapies to epilepsy. Thus, the restriction or elimination of the Contractor’s right to elect title to specific classes of inventions described in this DEC is essential to ensure that Contributor’s Investigational Agents can be effectively developed into new therapeutics for the treatment of epilepsy to benefit the public health.

Establishing a DEC for the ETSP program will allow the Contributors to retain and protect their intellectual property and encourage a broad participation to the program, which will help achieve effectively the program’s mission of advancing new therapeutic agents into preclinical and clinical development stage.

Scope and Implementation of the DEC The DEC will be narrowly implemented for the noted classes of Subject Inventions made by the ETSP contractor at all tiers via HHSAR 352.227-11 Patent Rights-Exceptional Circumstances (Sept 2014) and HHSAR 352.227-14 Rights in Data-Exceptional

Determination of Exceptional Circumstances 3

Circumstances (Sept 2014) as edited and attached. HHSAR 352.227-11 addresses three classes of Subject Inventions and the retention of pre-existing rights which third party assignees shall retain all preexisting rights to Material (compounds) in which the third party assignee has a proprietary interest:

Class 1: Subject Inventions related to the use of the Contributor's Investigational Agents or its analogs, therapeutic indications, method of syntheses or design, and molecular target(s) that mediate(s) the pharmacological action of the Contributor’s Investigational Agents or their therapeutic use are defined as Class I Subject Inventions. The Contractor shall assign to the Contributor without cost the entire right, title, and interest throughout the world to Class 1 Subject Inventions. If the Project Contributor declines offer of assignment, then NINDS may dispose of the invention rights as NINDS determines would be in the best interests of the program and public health (e.g., allow contractor to retain invention rights).

Class 2: Subject Inventions that do not fall into Class 1 above that relates to new methods of synthesis or design that would improve upon the Contributor’s Investigational Agents.

The Contractor retains full rights to any Class 2 inventions, subject to the standard HHSAR 352.227-11 Patent Rights-Exceptional Circumstances (Sept 2014) clause which directs ownership of said Subject Inventions to the Contractor pursuant to Bayh-Dole.

Provided, however, the Contractor shall grant a nonexclusive, irrevocable world-wide, royalty-free license in Class 2 Subject Inventions to the Project Contributor for all research or commercial use involving the Project Contributor's Investigational Agents.

Project Contributors shall have the right to grant sub-licenses to any Project Contributor's licensee(s) or collaborator(s) to enable further research, development and commercialization of the Investigational Agents. Class 2 Subject Inventions for which the Contractor does not wish to retain title shall be treated as Class 1 Subject Inventions.

Class 3: Subject Invention means a Subject Invention that does not fall into Class 1 or Class 2 as defined above. The ETSP Contractor Class 3 Subject Invention at all tiers will be subject to the standard FAR 52.227-11 -- Patent Rights -- Ownership by the Contractor (May 2014) which directs ownership of said Subject Inventions to the Contractor pursuant to Bayh-Dole.

The proposed DEC also requests incorporation of HHSAR 352.227-14 Rights in Data- Exceptional Circumstances (Sept 2014) as attached to ensure that proprietary data provided to the Contractor are used only for the purposes of the contract, and that data generated under the contract is not disclosed until there has been reasonable time for the applicable party to prepare and file patent applications as appropriate.

The timing of data publication will need to be restricted to allow adequate time for patent applications to be filed on Subject Inventions. This is accomplished using HHSAR 352.227-14 Rights in Data-Exceptional Circumstances (Sept 2014). Specifically, although NINDS encourages the publication of articles on research results, HHSAR 352.227-14 restricts the Contractor’s right to use, release to others, reproduce, distribute and publish data produced or used by the Contractor in the performance of the contract to

Determination of Exceptional Circumstances 4 allow adequate time, for the filing of patent applications and to protect data that will be submitted as part of a regulatory filing. NINDS will reserve the right to coordinate the timing of data publication so that appropriate domestic and international patent applications may be filed.

Policy Considerations As a result of the exceptional circumstances noted above, the NINDS has given extensive consideration to the program objectives, the Contractor rights under the Bayh- Dole Act, and the benefit to the public health. Under these exceptional circumstances, restriction or elimination of the Contractor's right at all tiers to elect title to specific classes of inventions is essential to provide the Government with the opportunity to advance therapeutics development effectively and efficiently into the commercialization pipeline to the benefit of the public health and to address the unmet medical needs in epilepsy. Thus, for these and the following reasons, a DEC is required:

(a) Deviation of the standard patent rights clauses is essential to achieve programmatic objectives.

The ETSP contract may generate Subject Inventions associated with the design, synthesis, and/or therapeutic use of the analogs or devices derived from the Contributors’ original Investigational Agent. Typically, federal funding recipients retain the right to elect title to all Subject Inventions made by its employees, pursuant to the Bayh-Dole Act. The NIH screening and drug development programs such as the Blueprint Neurotherapeutics Network (BPN) program, suggest that the status quo assignment of rights under Bayh-Dole may delay the goals of the ETSP program. This would, in effect, impede the desired outcome of Bayh-Dole legislation and thereby not maximize the possibility of public benefit. For this reason a DEC was recently approved for the NINDS Preclinical Screening Platform for Pain (PSPP). Potential Contributors from academic institutions and small companies, the same entities for which Bayh-Dole was initially targeted, have expressed their reservation not to participate to the programs like the ETSP if there is a risk that the Contractor will obtain automatic rights to Subject Inventions relating to Investigational Agents and/or Technology/Proprietary information that Contributors provide to the Contractor as starting materials for their projects.

Researchers have argued that contractor control of these patent rights would effectively prevent them from licensing products that emerge from the ETSP for further development and commercialization. In order to develop new therapeutics for the treatment of epilepsy, the ETSP program must attract promising, high quality investigational agents.

Thus, to be successful, the ETSP will need to be able to redirect certain patent rights as described herein from the Contractor to the Contributor.

(b) A DEC will better promote the policy and objectives of the Bayh-Dole Act and implementing regulations.

By enabling the development of new therapeutics for the treatment of epilepsy under the ETSP program, this DEC both facilitates: (1) the commercial development of the Project Contributors' and Contractor's Subject Inventions resulting from federally supported

Determination of Exceptional Circumstances 5 research and (2) further collaboration between Government and commercial enterprises, as intended by the Bayh- Dole Act.

(c) The proposed DEC is as narrowly tailored as possible to achieve the articulated programmatic objective.

The rights allocated to the Project Contributors under the DEC are the minimum required to encourage them to participate in the ETSP and to successfully develop and commercialize the Contributor’s Investigational Agent(s) into potentially beneficial therapeutic agents for the treatment of epilepsy. The DEC has been narrowly crafted to meet the programmatic needs while allowing prospective contractors to elect title to Subject Inventions falling outside the DEC scope. Also, in accordance with 37 C.F.R.

401.3(b), FAR 27.303(e)(2), and FAR 27.304-l(c), all prospective contractors have the right to request Greater Rights in Subject Inventions covered by the DEC.

(d) The proposed DEC provides for the Contractor to retain rights to subject inventions that are outside the scope of the DEC.

Rights to Class 3 Subject Inventions which do not fall into Class 1 or Class 2 as described above will be retained by the Contractor at all tiers under the standard FAR 52.227-11 Patent Rights -- Ownership by the Contractor (May 2014), pursuant to the Bayh-Dole Act.

Summary and Approval The NIH wishes to facilitate the success of the ETSP to address the public health need for new therapeutics for the treatment of epilepsy. This DEC will promote the policy and objectives of the Bayh-Dole Act to ensure that Subject Inventions made under the contract and subcontracts (at all tiers) are used in a manner to promote free competition and enterprise without unduly encumbering future discovery and development; to ensure that the Government obtains sufficient rights in federally supported inventions to meet its needs; to protect the public against nonuse or unreasonable use of inventions; and ultimately to benefit the public health. Accordingly, I approve this Determination of Exceptional Circumstances and the attached deviated clauses for use in the ETSP contract at all tiers.

Francis S. Collins, M.D., Ph.D. Date

Attachments:

Attachment No. 1 HHSAR 352.227-11 Patent Rights-Exceptional Circumstances Attachment No. 2 HHSAR 352.227-14 Rights in Data-Exceptional Circumstances