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IV. Collaboration and Inventions: The "CRADA"

A. Background

Uncounted collaborations occur every year that are never formally documented, that are never embodied in any kind of contract. When the collaboration becomes complicated, or when the nature of the research requires the employers of the collaborating scientists to commit significant materials, or when one or both parties is worried about how rights to inventions will be handled, some kind of written agreement is obviously required. For private parties, the possible terms are essentially limited only by each party’s policies and available resources. For the Government, matters are not so simple.

When a Government employee invents something, the employee must assign ownership rights to the Government. 38

See Executive Order No. 10096 (1952), as amended.

Yet, the core mission of the NIH is to conduct research to improve the public health, not to sell products and make profit. Therefore, when someone at the NIH discovers a new prognostic/diagnostic tool or a new therapy, the NIH is unable to commercialize products embodying the invention -- i.e., engineer mass production, tap distribution channels, market, and sell -- only private parties can do that. The law requires the Government to offer the opportunity to license Government inventions to all interested parties in open competition -- in a sense, the public owns each Government invention, so everyone (the public) should have fair access to every opportunity to acquire rights in each invention.

This arrangement is appropriate for NIH inventions made purely by NIH personnel, but what about inventions through a collaboration? Indeed, these laws made companies nervous about collaborating with Government labs, as the companies had no assurance that they would have rights in inventions their work enabled. For example, a company probably would be reluctant to collaborate with the government on an improved analog to the company’s main drug, if they feared the government would license the analog to another company to increase competition. In particular, small companies worried that larger companies could out-bid them, even though the small companies’ collaborative contributions made the invention possible.

So, in 1987, 39

The Federal Technology Transfer Act, P.L. 99-502 (1986) (amending 15 U.S.C. § 3710a).

and through updates in the ensuing years, 40 Congress further authorized Government laboratories to enter a "Cooperative Research And Development Agreement," or "CRADA," which provided the laboratories a measure of flexibility in arranging such collaborations. For this purpose, each Institute of the NIH constitutes a "laboratory." As of now, the CRADA is the only legal mechanism by which a Government laboratory can, in the present, promise a collaborator certain rights in inventions yet to be created by the Government as a consequence of the collaboration. The CRADA discussed in this chapter, therefore, is unique to Government/private collaborations (though the principles involved may have applicability beyond this particular scope).

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