What to Consider in a Bioinformatics-Related Transaction
With sufficient fanfare, the race to sequence the human genome ended about a year ago when the publicly funded Human Genome Project and private company Celera made their research public. Likened to Watson and Crick's breaking of the DNA code in 1953, this biotechnological achievement will have (and has already had) farreaching implications.
Referred to as genomics, the study of the genome (all the genetic material in the chromosomes) involves processes such as DNA sequencing and gene function analysis. Proteomics, a related field of study, examines the proteins coded by the genes and how the proteins' structures and functions can be used, for example, to identify "targets" for new drugs. Research in these two fields generate prodigious amounts of complex data, and the emerging field of bioinformatics has become an increasingly critical adjunct in sustaining the level of scientific inquiry in these fields.
Residing at the intersection of life sciences and information technology, bioinformatics involves not only the scientific data (and the databases used to store the data) but also software designed to access and analyze the data and simulate biological processes, and specialized hardware designed to run the software and manipulate the data.
Business opportunities in the bioinformatics field are vast. Many companies are beginning to exploit the wealth of intellectual property related to the field. Some, like IBM and Compaq, have established life sciences divisions that sell specialized hardware and software specifically geared to bioinformatics; genomics and proteomics companies such as Celera sell access to data; technology companies like Affymetrix sell specialized chips that simultaneously identify genes and proteins; other companies are generating revenue streams through value-added transformation of the data, which can allow researchers quicker access to gene information and related protein functions; and additional companies are providing specialized tools and integration of these tools into the research and development of new products.
As these opportunities increase, more and more businesses will find themselves contemplating transactions relating to bioinformatics. Fully protecting your company requires not only an understanding of the technology involved but the special legal issues involved with bioinformatics-related transactions.
Some of these issues are common to many hardware and software transactions Â– major ones include acceptance testing and maintenance (which may include upgrades and enhancements and service level agreements). Because of the newness and complexity of the hardware and software geared specifically to the bioinformatics field, however, these transactions may also include a collaboration between the vendor of the hardware or software and the purchaser or licensee. In these cases, it is critical that intellectual property ownership be addressed up front during the negotiations.
In many bioinformatics-related transactions, access to data is a critical component to the transaction. The data may be covered by many different intellectual property protections. For example, genes, and thus the genomic data, may be patented, and methods of using or accessing the data may also be patented and protected by copyrights and trade secrets. Thus, ownership of products and intellectual property that results from use of the data, and any royalties to be paid, are paramount in determining the viability of the transaction.
Legal issues relating to bioinformatics transactions, especially in the realm of data, however, go beyond what is described above. In particular, a company must also consider the source of the data and the possibility that third-party rights may be implicated in the use of such data. Privacy issues must be considered if, for instance, the data was collected from individuals for a study. Also in this context, the licensor of the data may not have the right to license such data for uses beyond original study. Compliance with regulatory issues in the area of privacy and health care, such as compliance with the Health Insurance Portability and Accountability Act (HIPAA), should also be reviewed in these transactions.
Finally, hardware and software is often developed with U.S. Government grants and funding, as is the creation of data. In these cases, the Government retains certain rights that need to be considered. For example, 35 U.S.C. § 203(a) provides for march-in rights Â– that is, a federal agency may grant licenses to a patent under certain circumstances.
While this relatively new field offers compelling opportunities, companies need to consider the many issues in bioinformatics transactions beyond the usual hardware and software concerns, including issues involving privacy, governmental rights and restrictions on related intellectual property.