A CRO, for those unfamiliar, is sort of a middle man. It contracts up with a sponsor, a company producing a new drug or device or what have you, and then contracts down with subcontractors to use and test the new technology. Subcontractors include clinics and clinical research assistants, who go to medical sites where the new drug or device is being used and make sure data are properly maintained.
Licensing agreements are made
between the sponsor and its subcontractors — sometimes passing through the CRO
as well — granting them the right to use the new technology for testing
purposes, but without conveying any ownership interest in it.
For example, right now I’m dealing with
a company that came up with technology that uses genetics to measure the rate
at which an individual metabolizes a drug. To test its device, the company will
grant a license to a clinic to use it, but the license won’t transfer any
patent rights, or any intellectual property rights.
Where I also get involved with a CRO is
when a sponsor sometimes tries to include some type of licensing fee, which, in
my opinion, is inappropriate in the context of a licensing agreement for
testing drugs or equipment. Think about it: CROs aren’t making a profit from
the use of a new technology, they’re simply testing it. If they're being paid
to test a device, why should they also have to pay a licensing fee while seeing
if it works?
Attorneys can also make a big difference
by ensuring that the contract language of a licensing agreement is consistent
between biotech companies, CROs, vendors, clinics and clinical research
assistants. In other words, if there is a licensing agreement between a CRO and
sponsor company, the subcontractors need to be similarly bound to the terms of
that licensing agreement. Otherwise, there could be situations where
subcontractors are using a particular device or software and think they have
ownership interest in it, maybe even modifying it and putting their name on it.
For instance, a client of mine
was running a licensed biostatistical software program to process data on the efficacy of
a particular experimental drug. The client hired a subcontractor, but didn't
tell him about its licensing agreement. He started tweaking the software and
wanted to use it for other clients. This
was not a good situation: the client did
not have a work for hire provision in its subcontractor agreement, so
technically the subcontractor had ownership, but that ownership was adverse to
the licensing agreement with the sponsor.
Fortunately, I was able to negotiate a
resolution to the competing claims of ownership, and draft licensing language
for my client to avoid this situation in the future. If you deal with licensing agreements in your
particular line of work, make sure to get legal advice.
