In the new arena of nutriceuticals, research has led to discoveries about properties in fruits and vegetables that prevent disease and reduce pain.
Often research at land grant universities is funded partially by growers in the hopes of creating a demand for a commodity to boost price and profits to growers.
One recent discovery by a Michigan State University (MSU) researcher has sparked debate and some controversy about who benefits from the sale of a licensing agreement by a university and what role commodity groups who donate research money should play when licensing agreements on university patents are sold.
Commodity groups want a seat at the table when licensing agreements are being negotiated between universities and companies looking to use the research for a future product to introduce to the marketplace.
Muraleedharan Nair, professor of horticulture, has been studying tart cherries since 1992. Research done on tart cherries has shown that the pigment of cherries contain anthocyanins, which give 10 times the anti-inflammatory relief in a natural way with no side effects compared to aspirin. Cherries also contain bioflavonoids which are strong antioxidants and a possible protection against colon cancer.
After obtaining patents on Nair’s research, MSU entered into a licensing agreement this year with Amway Corporation, the global direct marketing company, based in Ada, Mich. Through this agreement, Amway is essentially renting the patents and expected to use the research to develop a product or products from cherries, possibly in pill form.
Robin Dykhouse, director of nutrition product development at Amway, who is supervising the research said, “We haven’t yet gotten to the point where we’re ready to commercialize.” She said within the next three months Amway hopes to decide what product or products will be developed with the research findings.
Amway paid MSU an initial fee of approximately $100,000 to purchase the patents, according to Terry Denbow, MSU’s vice president for university relations. Depending on the success of any product that is developed, MSU will share in the profits and could receive more than $1 million in royalties over a period of years, according to Bob Huggett, vice president of research and graduate studies. MSU will be paid royalties based on the profits from any product that is developed from the research.
The cherry industry was surprised it was not part of the negotiations when the licensing agreement took place. They wanted to make sure the technology MSU developed and then sold would benefit the U.S. cherry industry that helped fund the research. They also wanted to make sure Amway would buy U.S. cherries if they developed the product.
Because these provisions were not in the agreement with Amway, other Michigan commodity groups became concerned about the possibility that they could fund research meant to better their industry and an outside party could come in and buy it away from the group.
Although there is no provision stipulating that Amway buy only cherries from the United States, Huggett said Amway has already purchased some cherries from Michigan. “At this stage we’re very hopeful. The project has great potential. The fact that Amway is a Michigan based company makes us very happy,” Huggett said.
Fruit and vegetable commodity leaders would not talk on the record for this story, during the negotiations of a new “master agreement” that will guide where money made off of future research will be used.
Commodity groups feel MSU has broken a trust built up over many years where the groups considered themselves research partners with the university. Their funds served as seed money enabling MSU to go after more research dollars, they believe. Some of the groups say they will not fund any more research until a written agreement is signed.
Norm Pollack, new assistant vice president in MSU’s Office of Intellectual Property, said that patents last for 20 years from the time of filing. “If they want a product produced they license it and then the company pays royalties to the university,” said Pollack.
Pollack said royalties are paid after the cost of getting a patent. The first $1,000 goes to the inventor. For the next $100,000, 1/3 goes to the inventor, 1/3 to the academic unit and 1/3 to the university. Of the next $40,000, 30% goes to the inventor, 30% to the academic unit and 40% to the university. The next $500,000 is divided similarly.
Pollack said MSU is in the process of changing the policy, primarily for clarification. The Michigan Agricultural Experiment Station (MAES) is working with MSU’s Office of Intellectual Property on a master agreement, according to Gary Lemme, associate director of MAES. “We want to make sure all commodity groups are dealt with uniformly,” Lemme said. He said everybody involved in working toward an agreement would like to see it done as soon as possible and all are taking it very seriously.
Commodity groups want to receive royalties on any product developed from research they helped fund. They want to plow any royalties received back into research on their specific commodities.
Bob Green, executive director of the Michigan Bean Commission, said his organization was looking at funding research on the health properties of beans. His organization, representing 2,500 growers in Michigan, typically spends 20% of its budget, more than $100,000, on research.
“We’re sitting and watching and waiting to see how things turn out,” Green said. “Every dollar we spend comes from growers.”
Most of the research the commission funded in the past was seed research. Green said the biggest issue is who owns the right to the research when something is discovered and who should be involved when the patents are sold.
