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Who counts as an inventor? The answer could be worth millions

For most scientists, the move from being a postdoc in a university lab to taking a job with a promising biotech startup is the path to higher income. For chemist Alexander Arefolov, however, an unconventional switch in the opposite direction appeared to offer a better route to financial success.

In 2011, after spending 8 years as an industry researcher, Arefolov took the seemingly backward step of becoming a postdoc in the lab of Harvard University chemistry professor Matthew Shair to work on developing a promising—and potentially lucrative—new approach to treating acute myeloid leukemia. And in March 2016, when Harvard licensed compounds that Shair’s lab had developed to Merck for an initial payment of $20 million, with the potential of additional payments as the compounds progress and royalties if a resulting drug eventually comes to market, the inventors stood to hit the financial jackpot.

But Shair did not name Arefolov as an inventor on the relevant patents, meaning that Arefolov hasn’t seen any of the financial benefits he had hoped for when he traded in his industry job for a much lower-paying postdoc position. The lawsuit that followed illustrates potentially life-changing possibilities that any graduate student or postdoc working on a research project with commercial possibilities needs to take seriously.

Serious money

Patents on discoveries made in university laboratories bring in hundreds of millions of dollars annually, which are split among the institution and the researchers named as inventors on the relevant patents in accord with each university’s intellectual property (IP) policy. In 2007, for example, universities earned $1.88 billion in IP net royalties, writes economist Paula Stephan in How Economics Shapes Science. She estimates the inventors’ take for that single year was $650 million. Only a “limited” number of faculty members share in this kind of wealth, but “on more than half of the research-intensive campuses in the United States, there are a handful of faculty who earn more than their salaries each year from royalties”—some a great deal more, she notes.

Universities establish their own IP policies, which vary somewhat from institution to institution. Under Harvard’s policy, the persons listed as inventors on a patent split approximately 30% of the patent royalties. Unless the inventors unanimously agree otherwise, they all get equal shares. The standard for determining which members of a research group count as inventors for the purpose of a patent is “hard to articulate,” says intellectual property attorney Brian O’Reilly, but it requires making an inventive contribution to the discovery of something new.

Based on this criterion, Arefolov, represented by O’Reilly, sued Shair and Harvard in May. Arefolov alleges that he was wrongfully denied inventor status on patents related to the Merck licensing deal and is claiming a portion of the proceeds from the deal, plus damages, amounting to $1 million. Arefolov contends that he “made significant contributions to the successful completion” of the project to develop novel analogs of a compound called Cortistatin A that went on to be licensed by Merck. “From the conception of a broad category of Cortistatin A analogs, to the creation of numerous specific analogs, Dr. Arefolov was part of the creative team that created theoretical as well as actual Cortistatin A analogs,” the complaint alleges.

As a specific example, the complaint describes Arefolov’s contribution to developing three compounds included in a patent application that lacks his name. It claims that Arefolov suggested one to Shair during a discussion and Shair “agreed that testing [it] made sense.” Arefolov suggested another by email, the complaint continues, and “devised the method for creating, and in fact created,” the third. He claims to have documented and signed this work in his lab notebook.

Beyond Arefolov’s alleged contributions, “[o]n multiple occasions,” the complaint continues, “Dr. Shair made statements such as ‘Alex, the inventors at Harvard University receive 35% of any license fee, if the project is successful—you will receive your fair share.’” Indeed, “it was that very reliance on future royalties that Dr. Shair used to convince Dr. Arefolov to stay on as post-doctorial [sic] scientist.”

Shair also “understood that Dr. Arefolov would not have agreed to accept a reduced share of royalties,” the complaint adds. This, it suggests, created “an incentive to remove Dr. Arefolov as an inventor to increase [Shair’s] ability to seek an increased share of the patent royalties.” Those listed as inventors include a research associate currently in Shair’s lab, two of Shair’s former graduate students, and a former postdoc from the lab.

The two sides in the Arefolov suit are “talking,” O’Reilly says. Harvard declined to provide any information on the case. “As a matter of policy, Harvard does not comment on pending litigation,” university spokesperson Tania deLuzuriaga told Science Careers by email.

Second-class researchers?

Arefolov’s case echoes a similar suit filed in 2013 by former Harvard graduate student Mark Charest. Charest, also represented by O’Reilly, filed a $10 million suit against the university, claiming that he had been coerced into accepting less than his fair share of the proceeds of an antibiotic patent. In 2016 the parties reached a settlement, the terms of which are confidential and undisclosed.

Regardless of the outcomes of Charest’s and Arefolov’s cases, they highlight a deeper issue. As O’Reilly told the Boston Globe, these cases are about “recognizing the contributions of students and postdoc researchers at institutions such as Harvard. They’re treated as second-class researchers when they do most of the day to day work in the labs.”

Doing that work as just a “pair of hands … working at somebody’s direction and not making a contribution intellectually” isn’t enough to be named as an inventor, O’Reilly tells Science Careers. But, he continues, “to the extent that somebody argues that a postdoc is a pair of hands, I would argue that they are violating the terms that they used federal funds for [to hire] these researchers. … Postdocs are hired [for] a learning experience, an educational experience, one that's partially funded by the federal government. It’s not intended to be a job that benefits either the university or the professor in terms of making inventions.” Universities “can’t have it both ways,” claiming to employ postdocs for intellectual purposes until they want money for their creative contributions, he insists.

The resolution of Arefolov’s lawsuit could be years away. O’Reilly is optimistic, however, about more than an eventual payout for his client. In a statement that now applies equally to postdocs, he told Chemistry World at the time of Charest’s settlement that “I think that there is a sea change coming with respect to students’ willingness to stand up to the power imbalances they face at large universities. Their willingness to stand up for their rights will fundamentally alter the way that universities operate and ensure that the inventive contributions of all students are recognised [sic] and rewarded.” 

In more practical terms, the issues these cases raise make it clear that, for some scientists, the grad school and postdoc years can be a time of huge economic opportunity. It’s “very” common for postdocs and grad students to be inventors on Harvard patents, according to Caroline Perry, a spokesperson for Harvard’s Office of Technology Development. Though major disputes over inventorship or royalties don't appear to arise very often, Arefolov’s and Charest’s cases illustrate why all researchers working on projects that could become commercial products need to know and understand their rights. Or, as the Chemjobber blog advises, “Students [or postdocs] who have made big, commercialize-able discoveries in the laboratory”—or are working on something that could become one—“might want to find out what your university's IP policy is.”

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