The United States Veterans Health Administration (VHA)1 recently issued VHA Directive 2007-044 (Dec. 26, 2007) setting forth agency policy relating to the use of Cooperative Research and Development Agreements (CRADAs). The directive, which clarifies existing agency policy regarding the use of CRADAs and informs the public about the VA’s new standardized model CRADAs, became effective last week.
The VA’s directive is meant to streamline and accelerate the process for establishing new CRADAs. Importantly, the directive does not require alteration of existing agreements. Additionally, the directive continues the VA’s standard approach with respect to the government’s rights in intellectual property created under its CRADAs.
CRADAs
CRADAs are designed to foster federal-private collaborations to bring new technologies to the public. Federal agencies derive their authority to enter into CRADAs under the Federal Technology Transfer Act of 1986 (FTTA).2 The parties to a CRADA typically are a Federal laboratory and one or more non-Federal parties. Under the FTTA, a Federal agency may contribute resources and personnel to a CRADA effort, but it may not provide funding. Given that the government cannot provide funding under these agreements, CRADAs are not cooperative agreements, grants, or procurements. Accordingly, they are not subject to procurement laws or standard non-procurement contracting authorities, such as those requiring pre-award competition.
One common scenario in which the VA enters into CRADAs is where an industry sponsor ("collaborator”) and a VA Medical Center (VAMC) team up for the purpose of conducting a clinical trial. The VAMC typically will provide resources such as facilities, personnel, and equipment, and the collaborator may provide resources as well as funding for the effort. Where funds are provided by the industry sponsor, a Non-profit Education and Research Corporation (NPC) associated with the VAMC typically is a party to the agreement and serves as the recipient and administrator of the funds provided.
Impact of the Directive
Mandatory Use of CRADAs: Under the directive, a clinical trial sponsor must use a CRADA to access VA resources, such as personnel, services, equipment, and facilities, if it desires precommitment of intellectual property (IP) licensing and ownership terms. That is, a CRADA must be used — not a standard Clinical Research Agreement3 — in all new research collaborations using VA resources in which a sponsor desires to establish IP terms for inventions.
Model Agreements: The VA Technology Transfer Program (TTP) is tasked with creating model agreements to form the basis for negotiation of all future CRADAs.4 Currently, TTP has approved5 five model CRADAs: (1) Clinical Trial Phase I & II, (2) Clinical Trial Phase III & IV, (3) Clinical Trial Investigational Device, (4) Basic Research, and (5) Material Transfer.
The model CRADA pre-approved language is designed to allow for ease of negotiation through relatively short and simple agreements that apply to the particular context of a given effort. TTP and the VA Office of General Counsel (OGC) have indicated that most terms of the model agreements are negotiable, other than those mandated by the FTTA (e.g., the Government Use License discussed below). Single-site CRADAs are negotiated through a VAMC NPC and approved at the local level by VA Regional Counsel. If, however, Regional Counsel determines in its review that substantive changes have been made to the model language, approval by TTP and the VA OGC will be required.
Master CRADAs: VHA strongly encourages industry sponsors contemplating multiple VA site research to enter into nationwide Master CRADAs with TTP. Once executed, a Master CRADA will govern the basic terms of all future VA collaborations undertaken by a sponsor except for the Statement of Work (SOW) and budget. TTP uses its model CRADAs as the starting point for Master CRADA negotiation.
Model Agreement Terms
As stated above, most, but not all CRADA terms are negotiable, and revision of substantive terms requires approval beyond the local level. Below is a general discussion of certain significant terms covered by the model agreement for Clinical Phase III & IV.
IP Terms: TTP broadly defines CRADA “subject inventions” to include any invention made in whole or in part by either party in performance of the SOW— i.e., sole collaborator, sole VA, or joint subject inventions. A collaborator retains title of subject inventions it solely creates, as does the VA for its sole subject inventions. Given the collaborative nature of CRADAs, however, the VA takes the position that sole inventions are unlikely. The VA and collaborators share joint title for jointly created inventions. Notably, an NPC acquires no IP rights in CRADA subject inventions.
CRADAs typically grant collaborators a non-exclusive royalty-free license to subject inventions created solely by the VA. For VA or jointly created inventions, collaborators typically can negotiate for an exclusive license subject to commercial license terms. Additionally, collaborators have the first opportunity to file patent applications for their sole or joint inventions, subject to payment of all related costs.
As is required under the FTTA, the VA retains a Government Use License in all subject inventions, regardless of whether they were created jointly. The license is a non-exclusive, non-transferable, irrevocable, paid-up license to practice the invention or have the invention practiced throughout the world by or on behalf of the government. Background rights, e.g., test articles and background IP, have been carved out in the model language and are not subject to the use license. While the existence of this license itself is non-negotiable, the scope of the terms “subject inventions” and “Background IP” may be narrowed through negotiation.
Confidential Information, Trade Secrets, and Data Use: The FTTA provides that all FOIA-protected or exempt information is protected from disclosure under a CRADA. In addition, the model agreements contain other detailed confidentiality and trade secrets provisions, including 5-year and permanent confidentiality requirements.
The model language allows either party to disclose confidential information to other entities when it has a prior legal or contractual obligation to disclose the information. It is important to note in this context that the VA currently holds many existing Cooperative Technology Administration Agreements (CTAAs) with universities that set forth rights with respect to invention licensing, patents, and other considerations and that require disclosure or sharing of information. The VA has executed, and is in the process of executing, amendments to CTAAs to protect information that otherwise would be required to be disclosed. Prior to entering into a new CRADA, it is necessary to confirm whether a CTAA, which could require disclosure of CRADA collaborator information, is implicated in the contemplated research and whether the VA has executed an amendment to any such agreement.
Liability: The model agreements contain broad indemnification and liability provisions under which the collaborator is to indemnify the VA, NPC, and their agents unless liability stems from the sole wrongful or negligent act of the indemnitees.
