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Think California creations and you might envision movie stars, seasonal cuisine or computer chips. But if you ask Assemblyman Gene Mullin, the South San Francisco Democrat is more likely to list energy-saving gizmos, Alzheimer’s treatments or a thousand other past and potential inventions nurtured by taxpayers’ dollars. Just don’t ask how many of those inventions are out there, who’s using them or who’s protecting them from infringement. “We really don’t have an accessible inventory of what the state’s intellectual property is,” says Mullin. The lawmaker would like to change that by creating a state Office of Intellectual Property. Mullin envisions a central clearinghouse that would track state-funded inventions, set policies for research transfers and, in some cases, ensure that taxpayers receive some benefit from resulting products. Mullin’s proposal wouldn’t apply to any intellectual property agreement tied to California’s $3 billion stem cell initiative. But that still leaves an estimated $300 million in annual state-funded research in areas such as agriculture, geothermal resources and breast cancer � not all of it taking place at California’s universities. Mullin’s legislation to create an IP office has been moving quietly through the Legislature. That’s left IP experts to ponder the bill’s potential results, with mixed reviews so far. A frequently repeated concern is that the bill’s language is ambiguous, requiring contractors to act within “a reasonable period of time” or referring to “appropriate cases” that might allow the state to dedicate IP rights to the public domain. “It could be an invitation to litigation,” says John Wetherell, a partner in Pillsbury Winthrop Shaw Pittman’s San Diego office. Patent attorney James Pooley, a partner in Pooley & Oliver, credits Mullin for attempting to put one agency in charge of state-related IP rights “because if you leave things the way they are, you’re leaving everything on the table.” Pooley was part of a legislatively created IP task force that earlier this year recommended many of the proposals found in Mullin’s proposal, AB 2721. The bill, however, includes two significant differences: State agencies could grant exclusive licenses only to organizations that agree to provide any developed therapies to uninsured patients and also to the state at a reduced rate. Also, the state would be entitled to a proportional share of any money earned on a product developed with taxpayer-funded research. Pooley and others worry the royalty requirements could have a chilling effect on companies. “Unless the state is willing to finance the rest of the process that occurs on the way to getting to a product that sells � it’s hard to justify the insistence in every case of a direct payback,” he says. “We thought the state should focus on the indirect paybacks: taxes, jobs, the increased attraction of the state’s universities. These are all legitimate state benefits. You get that by seeding research and development.” But Mullin thinks the state would only be taking a share of royalties that, in many cases, are already paid to research universities. And, he adds, the state may actually attract more businesses if it has a single, uniform IP policy. “The UCs already have a royalty stream and what we’re saying is that royalty stream should include the state,” says Mullin. “This is not a new thing.” UC officials have yet to take an official position on the proposal, and the bill’s backers say the IP office would not try to take over any school’s existing tech-transfer operations. But Wetherell questions whether the bill’s provisions might lead research universities to hike their royalty requirements to offset any state take. “I could envision a situation where the royalty rates get too high and a company says, ‘No, we’re sorry, we can’t do that.’” Mullin’s proposal also is vague on what happens when researchers spend both state and federal money. Federal IP law doesn’t require grant recipients or licensees to pay back the government. Also, federal regulators have never used their “march-in” rights to seize IP from an inactive contractor or to address a public health issue. Would a more liberal California be less hesitant? “That is a last resort and my sense is that it [would be] rarely, if ever, used,” says Mullin.

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