Innovative Contracting for Better Material Transfers

Abstract

Empirical studies find that contrary to expected outcomes, it is not patents that most often impede research. Instead, it is access to tangible research inputs that is more likely to cause the delay or abandonment of promising research. Difficulty in the negotiation and execution of material transfer agreements (MTAs), the contractual agreements governing the transfer of materials, research tools, and data, is the cause. This Article addresses a new trend in MTA practice that is both exciting and problematic. In the past, MTAs largely functioned as a recording mechanism to track who had what materials and to set expectations in case of a laboratory accident or infringement lawsuit involving the transferred material. Now, however, some industry parties are using MTAs to gain more than just a record of the transfer and basic representations and warranties. These industry parties are using MTAs to develop and build relationships. This, in turn, is leading to more shared innovative activity, a key factor in moving scientific fields forward. Yet this progress towards more shared innovative activity is not without cost. Most notably, this modern MTA practice is increasing transaction costs and the likelihood of bargaining breakdowns because not all parties are using MTAs in this way. In order to facilitate access to materials, tools, and data while also furthering shared innovative activity, non-industry parties, most notably academic institutions, should join the modern MTA regime. Lawyers have an opportunity to improve the material transfer process through innovative contracting practices. This Article provides suggestions on how to accomplish this by overcoming contested terms and using a modern MTA to give access to materials and help develop collaborative relationships.