of University California Berkeley Regional Oral History Office University of California The Bancroft Library Berkeley, California Program in the History of the Biological Sciences and Biotechnology Thomas D. Kiley GENENTECH LEGAL COUNSEL AND VICE PRESIDENT, 1976-1988, AND ENTREPRENEUR With Introductions by Rebecca S. Eisenberg James W. Geriak Interviews Conducted by Sally Smith Hughes, Ph.D. in 2000 and 2001 Copyright 2002 by The Regents of the University of California Since 1 954 the Regional Oral History Office has been interviewing leading participants in or well-placed witnesses to major events in the development of northern California, the West, and the nation. Oral history is a method of collecting historical information through tape-recorded interviews between a narrator with firsthand knowledge ofhistorically significant events and a well-informed interviewer, with the goal of preserving substantive additions to the historical record. The tape recording is transcribed, lightly edited for continuity and clarity, and reviewed by the interviewee. The corrected manuscript is indexed, bound with photographs and illustrative materials, and placed in The Bancroft Library at the University of California, Berkeley, and in other research collections for scholarly use. Because it is primary material, oral history is not intended to present the final, verified, or complete narrative of events. It is a spoken account, offered by the interviewee in response to questioning, and as such it is reflective, partisan, deeply involved, and irreplaceable. ************************************ All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and Thomas D. Kiley dated March 12, 2001. The manuscript is thereby made available for research purposes. All literary rights in the manuscript, including the right to publish, are reserved to The Bancroft Library of the University of California, Berkeley. No part of the manuscript may be quoted for publication without the written permission of the Director of The Bancroft Library of the University of California, Berkeley. Requests for permission to quote for publication should be addressed to the Regional Oral History Office, 486 Bancroft Library, Mail Code 6000, University of California, Berkeley 94720-6000, and should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user. It is recommended that this oral history be cited as follows: Thomas D. Kiley, "Genentech Legal Counsel and Vice President, 1976-1988, and Entrepreneur," an oral history conducted in 2000 and 2001 by Sally Smith Hughes, Regional Oral History Office, The Bancroft Library, University of California, Berkeley, 2002. Copy no. Thomas D. Kiley, 2002 photo credit: Doerr Studios Cataloguing information Thomas D . Kiley (b . 1 943 ) Patent Attorney/Entrepreneur Genentech Legal Counsel and Vice President, 1976-1988, and Entrepreneur, 2002, xi, 217 pp. Education in chemical engineering, law; early experiences as patent examiner and patent solicitor; intellectual property trial lawyer, Lyon & Lyon; outside legal counsel to Genentech, 1976-1980; vice president and general counsel, Genentech, 1980-1988: Genentech s IPO, 1980; Diamond v. Chakrabarty Supreme Court case; recombinant DNA; commercialization of biotechnology; intellectual property; R&D clinical partnerships, patenting and licensing; Genentech-University of California legal relationships; Bayh-Dole Act, 1980; Genencor; Geron; Intermune Pharmaceuticals; NIH-DOE Joint Committee on the Human Genome, 1992; comments on Herb Boyer, Dave Goeddel, Robert Swanson and others. Introductions by Rebecca S. Eisenberg, Professor, University of Michigan Law School; and James W. Geriak, Partner, Orrick, Herrington & Sutcliffe, Irvine, CA. Interviewed in 2000 and 200 1 by Sally Smith Hughes for the Program in the History of Biosciences and Biotechnology, Regional Oral History Office, The Bancroft Library, University of California, Berkeley. TABLE OF CONTENTS-Thomas D. Kiley BIOTECHNOLOGY SERIES HISTORY by Sally Smith Hughes i BIOTECHNOLOGY SERIES LIST iii iv INTRODUCTION by Rebecca S . Eisenberg INTRODUCTION by James W. Geriak vi INTERVIEW HISTORY by Sally Smith Hughes viii BIOGRAPHICAL INFORMATION ix I FAMILY BACKGROUND AND EDUCATION Grandparents Higher Education and Early Experience in Patent Law Undergraduate, Pennsylvania State University, 1961-1965 George Washington University Law School, 1966-1969 Choosing the Law over Chemical Engineering as a Career Attraction to Patent Law 4 Examiner, United States Patent and Trademark Office, 1965-1 967 4 4 Patent Solicitor, E. I. du Pont de Nemours and Company, 1967-1969 H INTELLECTUAL PROPERTY TRIAL LAW, LYON AND LYON, 1969-1980 5 The Firm Dealing with Scientists First Court Appearance 6 Impact of Biotechnology on Intellectual Property Law Patent Litigation Cases m GENENTECH, INC.: OUTSIDE PATENT COUNSEL, 1976-1980 9 First Encounter with Robert Swanson, June 1976 Previous Experience with Intellectual Property in Biology 10 10 DNA Synthesis of Somatostatin Commercial Application of Recombinant DNA 10 Somatostatin to Demonstrate Proof of Principle The Research Team and Its Approach Failure and Then Success Resistance to the Commercialization of Academic Biology 14 Fear of Biohazard and the NTH Guidelines for Recombinant DNA Research 1 6 Threat of Federal Regulatory Legislation, 1977-1979 Drawn to Swanson and His Corporate Mission 1 8 Company Policy on Patenting and Publication Strategies to Achieve Profitability 19 Initial Public Offering, October 1980 20 The Diamond v. Chakrabarty Supreme Court Case 20 Regents ofthe University of California v. Hoffmann-La Roche, Inc. 22 and Genentech, Inc. Peter Seeburg, Axel Ullrich, and Allegations of Stolen Cell Lines 23 Legal Counsel for the University 24 Genentech Settles with the University of California 25 International Nickel 26 IV GENENTECH 27 Swanson s Initial Vision of Genentech 27 Early Applications of Recombinant DNA Technology 28 Focus on Pharmaceuticals 28 Technological Risk-Benefit Ratio 29 Congressional Testimony 30 Locating Genentech in South San Francisco 30 Early Business Plans 3 1 Early Diffuse Corporate Focus 32 Negotiating Research Agreements 33 Recombinant Human Insulin 34 The Contract with Eli Lilly 34 The Gilbert and UCSF Insulin Projects 35 More on the Somatostatin Project 36 Contract with the University of California 36 Disagreement over Inventorship 37 Early Patents 38 Patents in Early Biotechnology 39 Role in Corporate Financing 39 More on the Chakrabarty Decision 39 More on Genentech s Initial Public Offering 40 The Interferons 41 Recombinant Human Growth Hormone 42 The Cloning Race 42 Patent Rights 43 University of California v. Genentech, 1999 43 A Settlement with UC, 1980 45 Genentech s Corporate Evolution 46 More on Swanson s Initial Vision 46 Hoffmann-La Roche Gains Controlling Interest 47 Ho-hos 48 Genentech Work Ethic 50 More on Kiley s Decision to Join Genentech 50 Kiley s Association with Hybritech 5 1 Kiley s Early Concerns at Genentech 52 Genentech and the Cohen-Boyer Patent 52 The Status of Patents in Biotechnology 53 More on Diamond v. Chakrabarty 54 U. S. Patent Office Handling of Biotechnology Patents Genentech: Growing the Business 56 Intellectual Property and Contract Partnering Models Syntex and Alza: Positive and Negative Business 58 Swanson: Organizational Development and Contract Negotiation Genentech: Patent Prosecution and Litigation Gamma Interferon 60 Tissue Plasminogen Activator Human Growth Hormone: The Hoffmann-La Roche Suit 62 Urokinase: The Abbott Laboratories Suit 63 63 Factor VET: Scripps Research Institute Human Growth Hormone: The Eli Lilly Suit 63 65 tPA: The Wellcome Trust Litigations tPA as a Possible Product 65 The Wellcome Suit in the United Kingdom 66 70 Failing to Patent Monoclonal Antibody Technology A Surfeit of Patents in Biotechnology Patents in Biotechnology: Issues Raised Patenting Nature 74 Utility Deleterious Effects of Patent Barriers 74 The Patent Prosecution Process 76 Working with Scientists 76 Scientific Publication Enablement Changes in the Patenting Landscape in Biotechnology 79 Looking Back at Early Patent Prosecution at Genentech More on Genentech in the Early Days Assessing the Company for Investment Road Shows Process Patents and Foreign Infringement The Changing Value of Patents 84 V GENENTECH LEGAL COUNSEL, 1980-1988 Intellectual Property Issues at Genentech The Interferons The Riggs-Itakura Patent Patenting and Licensing Strategies Fending Off Litigation from Licensees Academic Freedoms at Genentech 94 Concern about the Commercialization of Biology 96 The American Type Culture Collection of Microorganisms 97 Genentech Culture and Financing 100 R&D Clinical Partnerships The Agreement with Kabi Vitrum on Human Growth Hormone 100 Extraterritorial Licensing Rights Genentech-UC Legal Relationships 102 Observations on the Biotechnology Industry and Factors Affecting It 103 Biotechnology Clusters in the U. S. 103 The Bayh-Dole Act, 1980 104 Testifying at a Congressional Subcommittee, 1983 105 Court of Appeals for the Federal Circuit 105 More on the Commercialization of Biology 106 Comments on the U. S. Patent System 107 VI CORPORATE VENTURES BEYOND GENENTECH 109 Genencor 109 Leaving Genentech, 1988 110 Evolving Corporate Culture in Biotechnology 111 Athena Neurosciences 112 CellPro 113 Technology Platform 113 CellPro-Baxter Litigation 1 1 3 Two Catastrophes 114 The Bayh-Dole Act and an Aborted