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'The Ptashne Fiasco':

By Nancy F. Bauer

In the beginning, there was confusion. The money managers were neophytes in the world of "venture capitalism": the academics had never heard of "technology transfer": and almost no one could pronounce "dioxyribonucleic acid" or say anything substantive about it, Nonetheless, the prospect of garnering desperately needed funds came close last fall to luring top Harvard administrators to trade University patents for shares in a fledgling genetic-engineering company involving a senior professor in a key role. After seeing through dollar signs to the practical and academic questions concerning the prospect of going into business with a faculty member, President Bok announced that Harvard would pass up the risky, if potentially lucrative, foray. Although his decision seemed to satisfy the majority of the University community and especially the Faculty of Arts and Sciences, the flurry of activity leading up to Bok's thumbs-down stirred up a whirlwind of misunderstanding, resentment and other negative feelings. Six months later, the dust has yet to settle.

What developed into a front-page item for The New York Times and a sore spot for not-a-few University affiliates began with the discovery of the DNA molecule, considered a fundamental unit of life. The work of genetics experts and molecular biologists in recent years had opened windows through which scientists have envisioned amazing possibilities: cancer fertilizing plants, limitless energy supplies. While the development during the past few years of companies to research and develop ideas involving DNA has whetted the intellectual curiosity of the scientific world, it has simultaneously opened the eyes of specualtive investors and set them drooling. The technological application of DNA may be years away--indeed, there is no guarantee that any of the imagined miracles will come to be--but in the world of big money, big risks can come to mean big, big rewards. The idea with DNA is to get in early.

Not one to jump single-handedly into the world of venture capitalism--funding the establishment of companies--traditionally conservative Harvard nonetheless was enticed by the prospects of the DNA racket last spring. Coincidentally, the University's path of interest crossed with that on one of its Faculty members, Mark S. Ptashne, professor of Biochemistry and Molecular Biology, at what then seemed like an opportune moment: The brilliant young scientist was looking to set up Genetics Institute, a new genetic-engineering firm. Thus began an intense, albeit short-lived flirtation between a University looking to meet costs in the vace of inflation and a scientist interested in entering the business world.

Ostensibly, the proposed marriage of convenience looked simple and innocent. Harvard would lend its name to the search for sources of venture capital and would license the University's patents (on Ptashne's work) to the new firm. In exchange, it would become a minority shareholder in the company and would receive royalities on at least some of the patents without investing any money. Aside from promoting the development of patents that might have lain dormant, Harvard stood to win big, putting only its reputation on the line.

Visions of overflowing coffers at that time may have obscured some of the issues that would gradually come to eclipse the prospect of financial gain. How would business concerns affect the normal University-professor relationship? What if the prospect of making it in the business world were to entice Faculty members away from their primary academic responsibilities? How would Harvard decide between two similar business proposals from two professors if it only had the inclination on resources to pursue one of the plans? How would the University look if it played midwife in the birth of a flop? These seemingly obvious questions would have to wait; as one source explains it, "None of them had any professional experience with patents or technology transfer, but they thought they could do it better than everybody. People just don't behave rationally around money."

Although Bok insists that he began to ponder the deeper implications of what has come to be known as "the Ptashne case" immediately after he got wind of it, he does say that the idea of going through with the deal "reached me with some momentum" and that "everyone was quite enthusiastic about it." Otto T. Solbrig, professor of Biology and a member of the Faculty Council, a group that considers issues of interest to the Faculty, is somewhat more blunt in his assessment: "They had not thought the issues through--they saw dollar signs and got excited. In the beginning they were too enthused with the financial possibilities, when the issues through--they saw dollar signs and got excited. In the beginning they were too enthused with the financial possibilities, when the issue was the principle of the thing."

As some of the questions began to come to light last summer, Bok consulted with several Faculty members individually and organized an ad hoc committee to mull over the issue. "This was very much in the context of thinking. 'Let's see how we can work this out in a manner that will conform with academic values and benefit the University,'" Bok says now, recalling that professors who got wind of the proposal and came to him in opposition to it "weren't mad--they were just concerned." By the time the school year began, it had become evident that academic issues were pressing enough to bring what might normally be considered a financial matter to the Faculty. Bok stresses that "the Ptashne case was presented to the Faculty at the earliest possible date. I would say that when I first received the description of this it occured to me that this was the kind of investment decision which really had implications for the Faculty and for academic values."

It was at this point that the first seeds of Faculty discontent were sown, according to a number of professors. The politics of a university being what they are, many Faculty members knew something about the Ptashne arrangement before the administration let the official word out; and a good number of them even resented what looked like preferential treatment for Ptashne. ("There was a lot of lobbying in the sciences," Solbrig says. Others pointed out then that the University had not helped launch companies with other scientists such as molecular biologist Walter Gilbert, whose Biogen Inc, S.A. had been operating for about three years.) But instead of presenting the Ptashne case straightforwardly, administrators chose to cloak it in the framework of "technology transfer," thereby cluttering the consideration at hand. Consequently, when the Ptashne case sunk, it unnecessarily dragged an issue of crucial importance to the future of the University and society with it, in the minds of many observers.

Technically, the Ptashe case did involve the concept of "technology transfer," a buzzword indicating the process by which discoveries and inventions made in university laboratories are brought to the marketplace. The clarification of federal patent regulations in recent years has given universities the incentive to ferret out potential patents and to license them to developers. Toward this end, Harvard established a Committee on Patents and Copyrights (CPC), which began work in 1977 under the chairmanship of Henry C. Meadow, dean for planning and special projects in the Faculty of Medicine, and which, according to executive director Stephen H. Atkinson '67, has always put the goal of serving the public before that of financing the University. "The whole slant of the patent committee and particularly Meadow was been that we are doing this because we have an obligation to do so," Atkinson says.

But if public service was the beacon of the University's patent policy, it was clearly not the incentive that had originally attracted Harvard to the Ptashne case. Despite this discrepancy, the administration first introduced the Faculty to the DNA company proposal in a nine-page, single-spaced discussion memo prepared by Daniel Steiner '54, general counsel to the University, and entitled, "Technology Transfer at Harvard University." Beginning with some talk of technology transfer in general, the memo equated the process with the specific Ptashne venture. Ending with a list of pros and cons concerning the proposal, the memo reinforced a widespread fallacy which sources say continues to persist: that the drawbacks of the Ptashne case constitute the hazards of all technology transfer.

Criticism of the Steiner memo comes from a broad range of sources, most of whom would agree with Faculty Dean Henry Rosovsky, who understates, "I don't think this was handled very brilliantly from an administrative point of view." Some are more specific: Peter M. Lange, associate professor of Government and a member of the Faculty Council, says he believes that "the financial implications were very poorly spelled out--people did not understand why it would be an advantage to take this particular relationship." Lange also believes that the administration waffled on other key points, citing, for example, the question of how much control Harvard would have had in Genetics Institute. At some times, he says, it seemed that the company would be entirely autonomous, with Harvard playing its proper role as a minority interest. But when it seemed advantageous, the administrators would stress the advantage of Harvard's hand in the process of "information diffusion." Says Lange, "Which of these points was brought up depended on the objective at the time."

The confusion generated by the Steiner memo was exacerbated by a general Faculty ignorance of technology transfer. "I really knew nothing about it," Rosovsky--from whom Steiner says he "benefited" in a blurb at the end of the memo--says, adding, "I tried to understand the principles." Professors also admit that the issue seemed to befuddle many of their colleagues when it was discussed at a full Faculty of Arts and Sciences meeting in late October. And because the Ptashne case and not technology transfer--which affects more than scientific research--seemed paramount, non-scientists were not particularly excited about the discussion. "My colleagues in the natural sciences, I think they were interested in it. Others in the humanities thought, 'Well, this is for the scientists,'" Solbrig says. Atkinson also recalls an air of suspicion among Faculty members because the memo never once refers to Ptashne--who characteristically refuses to comment on the whole affair--by name: "They wanted to say, 'Why don't you just put your cards no the table and tell us,'" he says.

Steiner and Bok continued to insist that they did everything possible to educate Faculty members on the issue. "When I was working on this, I thought the problem of informing them was a difficult one because of complicated and corporate language," Steiner begins. "I tried to set forth the problem and raise the issues in as straight forward a manner as possible, but I could readily understand why the Faculty members..."A pause. "I don't know how many read the memo." Bok justifies formally introducing the issue of technology transfer to the Faculty simultaneously with the Ptashne case by pointing out the problems with making a decision without Faculty discussion and then bringing the general issue to the body ex post facto. "I suppose one could have said something about it two years ago, but I didn't know about it two years ago," Bok adds.

In any event, the Faculty meeting reinforced Bok's growing conviction that Harvard and its professors would not make good business bedfellows. When he announced the breaking off of the engagement (speaking for the Harvard Corporation, which had rubber stamped the president's decision), Bok attempted to untangle the dead Ptashne issue from what he considered a number of thriving, viable technology transfer ideas. Saying that the obstacles in the Ptashne case were surmountable, Bok added that "the participation of Harvard and its professors in commercial ventures can be structured in ways that are wholly consistent with its academic values. If so, the University might obtain a badly needed source of additional funding to strengthen its teaching and research while also benefitting the public through hastening the translation of basic knowledge into useful products and knowledge."

But, with the exception of a Faculty self-examination of its policies on conflict of interest the events of last fall have not incited any novel ideas concerning technology transfer. "My impression is that no progress has been made," Rosovsky says. Harvey C. Brooks, Peirce Professor of Technology and Public Policy, ventures that the Ptashne case may have had a chilling effect on the discussion of technology transfer in general. "I am a little disappointed that the discussion hasn't continued," he says. "I was sorry to see generic issues settled in the contest of a particular case."

Bok has attempted to keep the discussion alive, most notably by devoting his lengthy annual report for 1979-80, issued last month, to technology transfer. Although professors call Bok's opus a better effort to lay out the general issues than the Steiner memo, it shies away from speaking in any but the most general terms about the future of technology transfer at Harvard. Bok insists that he has done his best, saying, "You can't please everybody," but his document has not obviated Faculty criticism of the way the issue was initially presented by the administration.

If anything, what one source calls "the Ptashne flasco" has alerted the Faculty and the public to the supposed dangers of technology transfer. Atkinson says that while his committee's work was basically unaffected by the administration's jump into the field (see sidebar), negative feelings among senior Faculty members may have hindered efforts to encourage the surfacing of patentable ideas. While almost all sources say they envision the evolutionary development of technology transfer at Harvard, some worry that the Ptashne case may have weighted down the progress of such a program rather than accelerated it. The key factor, most say, will be undoing any damage the Ptashne case might have effected and educating the University community as well as industry on feasible modes of technology transfer. Everyone has agreed upon the need for preservation of academic values during the implementation of any new system, but Atkinson stresses an equally paramount lesson from the Ptashne situation: "Everyone has to remember not to get intoxicated by the money."

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