Fault-Finding to Success

Consumers are always seeking a quality product – no matter what industry the product is intended for. However, the complexities of most products today bring about an inherent problem: one industry does not necessarily control production up and down the chain. Thus, it is generally difficult to ensure quality control beyond one’s own company. This lack of control could be unnerving, if not for an unexpected, guiding principle: fault.

This principle of accountability holds true within the realm of Clinical Research Organizations (CROs). Liability drives companies to create better products, and fault is an ever-present motivator. In the case of CROs, these organizations find themselves in a delicate position of having to be cautious about whom they are dealing with in both upward and downward directions: medical sites, clinical research assistants, sponsors and subcontractors.

Every step of the way, your contracts must stipulate that the quality of work is guaranteed, and allocating fault and responsibility is a key element to that.  No matter who is involved in the process, though, there must be assurance that quality is assured, starting at the top and running straight to the bottom. 

My yard, like many yards, is inhabited by a number of squirrels who assume they belong on my property. My dog will bark, informing them that this is, in fact, not their yard. While an audible yap is not necessarily a powerful deterrent to the squirrels and their trespasses, the constant threat and physical presence of the dog keeps them on their toes. People in contracting relationships can think of the dog’s bark as “fault.” While the persistent threat looms, there is always the possibility of greater danger – such as a loose dog that can chase you.

The liability associated with a bad drug reaction – or even worse, introducing a dangerous or deadly drug to market – is huge. To prevent this from happening, CROs must have clearly defined guidelines and expectations for all the organizations and individuals involved. This runs deeper than being a blueprint for the “blame game.” This means establishing a method to ensure data integrity, which, in the realm of CROs, ultimately translates to public safety and health. CROs are not just trying to indemnify themselves, but they are making sure that every step along the way preserves the highest quality work.

The world of life science is a challenging and competitive ecosystem of tests and trials. Fortunately, there are some governing principles that help ensure the safety of those within it. For CROs, they can feel assured that the threat of fault will ensure that the best product possible can come from the system, and the greatest good can be done so that the consumer can have the maximum benefit.

Deeper Into the Licensing Abyss

In an earlier post I touched upon the importance of proper contracting language, but I barely poked the surface. Today I thought I’d delve a little deeper so you can better understand some of the ways licensing agreements can affect a business.In life sciences, one area where attorneys can be particularly useful is helping Clinical Research Organizations (CROs) with licensing agreements.

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.