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Patent Protection

During the spring of 1922, with the Toronto team trying to restore Connaught Laboratories’ pancreatic extract production, Dr. J.J.R. Macleod was thinking about the unique challenges the University of Toronto would face once they succeeded. News was spreading about the remarkable restorative power of the extract in severe cases of diabetes, as were expectations from diabetics and their doctors for more extract. Solving the immediate production problems was one matter, but of growing concern was how to protect the discovery of the soon-to-be-named “insulin” from exploitation by a clever chemist or an enterprising, and perhaps disreputable, drug company. The only means of protection seemed to be a patent.

However, in the 1920s, there was significant hostility within the medical profession towards physicians taking out and personally profiting from patents on drugs they’d helped discover. More generally for the University of Toronto, the idea of privatizing the results of academic science through a patent clashed with university norms. There was also public misunderstanding about patents and medicines fuelled by newspapers cluttered with ads for a wide range of “patent medicines” for a litany of ailments, most of which were useless and/or dangerous, and certainly not patented. 

At the time, there was no government regulation of pharmaceuticals beyond a requirement that drugs not be “adulterated.” There were also no requirements that pharmaceutical firms prove the safety and effectiveness of the drugs they produced and sold. 

There have long been very strict rules about patents based on three key attributes of invention: novelty, non-obviousness, and utility. It was clear to the Toronto team that their insulin discovery fit the key criteria for a patent. But when the idea was first discussed, it was clear that patenting insulin would prove to be unlike patenting anything else.

Prior to insulin, there were few precedents for patenting a medicinal extract derived from a natural hormone. The first was adrenalin, a hormone extracted from the adrenal gland that acts as a neurotransmitter to regulate a variety of vital functions. It was discovered in 1900 by an industrial chemist in Japan, who granted an exclusive license to the pharmaceutical company, Parke Davis. The second such patent involved the discovery and isolation of thyroxine by American chemist, E.C. Kendall in 1914. Thyroxine is a hormone extracted from the thyroid gland used to treat thyroid hormone deficiency, which leads to a variety of symptoms. Kendall was based at the Mayo Clinic and arranged to share the patent with the Mayo brothers, who founded the clinic, and the University of Minnesota, provided that the university organize the commercial exploitation of the drug in the interests of the medical profession. To do so, the University of Minnesota established a special committee to administer the patent, transfer the invention to industry and grant an exclusive licence on thyroxine to Squibb and Sons, a pharmaceutical firm. U of M retained strict control over the preparation, sale and retail price of thyroxine. 

In looking for precedents for patenting insulin, Macleod sought out Kendall’s advice and found a compelling model for the University of Toronto to emulate. In an April 10, 1922, letter, Kendall detailed to Macleod how the thyroxine patent was managed, with Kendall recommending that U of T follow suit. However, the circumstances surrounding patenting insulin would prove more complicated than it had been for adrenalin and thyroxine. A key difference was the sense of urgency for the Toronto team to do something to protect their discovery before someone else stepped in to effectively steal and monopolize it.

As was outlined in an April 12^th letter from Banting, Best, Collip, Macleod and J.G. FitzGerald, director of Connaught, to University of Toronto president Robert Falconer, the Toronto group had been advised that it was “unsafe for us not to hold a patent for the method of preparation of such extracts.” Canada’s deputy minister of health, D. J.A. Calder, had further warned that others could quite readily piece together enough of the production method “to obtain a patent with which they could prevent or restrict our continuance of the work,” even though such persons could be shown not to be the originators. But it would involve costly and time-consuming litigation to prove the invalidity of such patents, “during which time our work in the preparation of the extract could be suspended.” 

While there were still many production challenges, as the letter to Falconer underscored, it “would be disastrous if the work should have to be interrupted, especially since it has already been scientifically proven, on a small scale, that the extract is of great therapeutic value.” In light of the high commercial value attached to the method of the extract’s preparation, the Toronto group decided to keep it as secret as possible until the details could be published in scientific journals, “and thus throw the method open to the professions.” After such publication of the method, “patenting would become impossible by anyone.” But in the meantime, there was a real danger “that a method approximating ours might secure a patent.” Thus, as the four inventors and FitzGerald told Falconer in their April 12^th letter, such a patent would not be used for any purpose other than to prevent the taking out of a patent by other people. And when the details of the production method were published, “anyone would be free to prepare the extract, but no one could secure a profitable monopoly.” 

A significant obstacle, however, was that everyone working on the extract was directly or indirectly connected with the medical profession, and thus “it would be improper and unethical to hold such a patent.” But, as was suggested in the April 12^th letter to Falconer, there was no reason why a patent “could not be taken out in the names of two lay members who have been mainly responsible for the detail work of the preparation of the extract, and then transferred to the University of Toronto.” The two lay members were Collip and Best, in whose names the initial Canadian patent application would be prepared. Banting was supportive of the patent proposal, but he did not want his name attached to it for ethical reasons. 

The sense of urgency to file patent applications, especially a U.S. patent, intensified after Macleod’s May 3^rd presentation in Washington, D.C., of a seminal paper on the clinical use of the extract, during which he first publicly used the name “insulin.” The sense of urgency was fuelled, in particular, by the efforts of Dr. George H.A. Clowes, director of research at Eli Lilly & Co., who offered the firm’s collaboration with the University of Toronto to help develop and produce insulin. Clowes had been closely following developments with the pancreatic extract since seeing Banting’s presentation in New Haven on December 30, 1921. He was especially impressed with what he heard from Macleod on May 3^rd about the progress that had been made that demonstrated the extract’s remarkable effectiveness in treating human diabetics. As Clowes noted in a May 11^th letter to Macleod, his paper had created an extraordinary amount of interest in the United States and Eli Lilly was anxious to duplicate Connaught’s results. Macleod appreciated the offer, but at this point was hesitant to work with a pharmaceutical company.

Macleod’s initial hesitancy to accept Clowes’ offer stemmed from the Toronto group’s interest in first trying to find an entity in the U.S. to which an insulin patent might be assigned. As Macleod later summarized, such an organization, preferably a university, could hold the patent “for the purpose of controlling the manufacture of Insulin in that country, on terms similar to those under which they had been assigned to the Board of Governors of the University of Toronto.” However, after it became clear that no U.S. organization was willing or able to accept such patent rights, the Toronto group decided that the University of Toronto would assume responsibility for controlling the manufacture of Insulin for both Canada and the U.S. The next step was to invite Clowes to Toronto on May 22^nd, along with several others from Indianapolis, including a chemist, a patent attorney, and the vice-president of the company, Mr. Eli Lilly, for a series of meetings that established the parameters for a unique partnership.

On May 25^th, following the meetings with the Eli Lilly delegation, Macleod, FitzGerald, Banting and Best wrote a follow-up letter to Falconer, formally recommending that the Board of Governors accept, in the name of the University of Toronto, patent rights for the U.S. as had already been done for Canada. The process for applying for a U.S. patent had begun in the names of Best and Collip, following unanimous advice warning “that unless it is done, patents are certain to be secured by commercial firms interested in the production of the extract for sale.” The Toronto team further recommended that the University also “undertake to issue licenses to those commercial firms that prepare ‘Insulin’ for sale, and to collect from them a royalty, the proceeds of which shall be used to establish a research fund in the University.” The first use of such funds would be to defray expenses associated with testing the efficacy of samples of insulin produced by licensed firms. It was “highly important for the successful use of insulin in diabetic therapy that strict supervision over its production be exercised by us.” 

However, of most immediate importance was expediting the development of large-scale insulin production methods. It was clear that the production of insulin on a moderately large scale at Connaught had proven challenging and that demands were beyond what could be accomplished in Toronto without further experimentation. Thus, the Toronto team decided that it would be much better to arrange to work with one pharmaceutical firm, rather than several, since a concentrated effort would likely prove more efficient than a divided one. Eli Lilly was chosen as the partner firm, although other entities, as well as hospitals and other non-commercial concerns, would soon be given every chance to produce insulin by publishing at an early date in a medical journal the full details of the production method developed at Connaught. “By this step, our proposed co-operation with the Lilly Co. cannot be criticized as unethical or unfair, or as in any way prejudicial to the free manufacture of insulin.” In addition, it was recommended to Falconer that the University of Toronto offer the Medical Research Council of Great Britain the patent rights for insulin for the United Kingdom and its colonies on the same basis that the patent rights for Canada and the U.S. had been offered to the University of Toronto.

Critical to the Toronto team’s preparation of patent applications and associated legal documentation was securing the services of Charles H. Riches, one of Toronto’s most prominent patent attorneys, who agreed to take on this work free of charge.

Although Eli Lilly began its insulin production development work on May 30^th, the University of Toronto’s agreement with the firm only formally came into effect on June 28, 1922. That agreement launched a unique and intensive one-year exclusive partnership focused on developing large-scale insulin production methods. The agreement also allowed Eli Lilly to take out U.S. patents on any improvements it made in the manufacturing process, but it would assign patent rights for the rest of the world to the University of Toronto. The agreement also briefly mentioned the use of Eli Lilly trade names, with “Iletin” (a modification of the “isletin” name Banting and Best gave the extract during their lab research) designated as Eli Lilly’s brand name for insulin. In fact, as the partnership began, Eli Lilly’s use of the “Iletin” brand name was of little significance to the University of Toronto, but it would become problematic later on.

On May 26^th, Macleod formally offered the U.K. insulin patent to the MRC and FitzGerald followed up with a visit to the MRC offices in London in late June. The MRC accepted the offer without hesitation, although the initial U.K. patent application submitted on June 13^th lacked sufficient practical details about the production process. The MRC needed to be fully confident that it could prepare insulin in its labs. And as the MRC informed FitzGerald in a July 4^th letter, there were concerns about any implied obligation that it might have to defend the patent rights. The MRC also wanted complete freedom of action in exercising the patent rights, especially with respect to managing insulin manufacture in the U.K. In late September, in fact, Henry H. Dale of the MRC’s Institute for Medical Research, and a colleague, biochemist Harold Dudley, visited Toronto and Indianapolis to more fully familiarize themselves with the latest advances in insulin production at Connaught and Eli Lilly.

During the summer of 1922, as the Toronto and Eli Lilly teams worked to scale up insulin production, the process of preparing the U.S. insulin patent application, led by Riches, underwent a similar pattern of progress and setbacks. In mid-August, Eli Lilly’s patent lawyer, George B. Schley, noticed U.S. press coverage about the compelling story of Elizabeth Hughes receiving insulin treatment from Banting in Toronto. As discussed elsewhere in this series, Elizabeth was the 15-year-old daughter of U.S. secretary of state Charles Evans Hughes. Her dramatic recovery from severe diabetes was closely followed by newspapers across North America, with an emphasis on insulin being discovered by two Toronto men, Banting and Best, and that Banting had initiated the project. 

However, as Schley noted to Clowes in an August 22^nd letter, the U.S. patent application did not mention Banting as the original inventor. Yet U.S. law required that a patent application be filed by the actual inventor or inventors and this right could not be transferred, otherwise the patent was void. There was clear evidence that Banting was one of the inventors. Unless his name was included, there were potential charges of perjury due to misrepresentation. Nevertheless, Schley was aware of the medical profession’s ethical concerns regarding patents and sympathized with Banting’s desire to not have his name on an insulin patent. From the U.S. legal perspective, however, Schley was confident there was no prejudice against a medical man applying for a patent, if such a patent was transferred to an institution, and he did not personally derive any benefit from it. Although this seemed to be the case with the U.S. insulin patent, Schley warned, “[i]n the strictest sense of the word, the law would not recognize ethical limitations of this type.”

The question of Banting’s name being included in the U.S. insulin patent was discussed at the September 1^st meeting of the University of Toronto’s Insulin Committee. This special advisory committee evolved out of the Board of Governors’ initial work with the insulin discovery group to manage development, patenting and licensing arrangements. While the Committee’s work began in June, its first formal meeting took place on August 17^th. At the Committee’s September 1^st meeting, a sub-committee, made up of Macleod, Best, Banting and Riches, was asked to determine the advisability of Banting’s name being included in the product patent. While Riches argued for including Banting’s name, Macleod sided with Banting, ultimately delaying a resolution of the issue. However, it was decided that Riches would visit Washington to personally investigate the progress of the U.S. patent, authorized to “take any steps that seem necessary to expedite the putting through of the patents for the U.S.” Riches was also authorized to “take similar steps to push forward the British and Canadian patents.”

A further complication in completing the U.S. insulin patent emerged at the end of September, when Eli Lilly advised the Insulin Committee of its intention to file its own U.S. patent based on a production process very similar to the still pending patent application from Collip and Best. While Clowes argued that the patent was based on an improved method and designed to safeguard Eli Lilly’s position against other U.S. firms, the Insulin Committee couldn’t understand why it was necessary. Moreover, as such a patent application from Eli Lilly would likely interfere with the Collip and Best patent, the Insulin Committee quickly informed the company of its disapproval. 

At the same time, the Insulin Committee was receiving inquiries from international diabetic specialists, asking whether, how and when insulin production could be established overseas. Riches was given the job of filing applications for insulin patents covering Australia and South Africa, and then investigating the costs involved in filing patents in all countries.

In mid-October, a Toronto Star reporter approached Dr. Duncan Graham of Toronto General Hospital, and a member of the Insulin Committee, requesting information about insulin. Of interest were details about the clinical experience with insulin, the relationship between the University of Toronto and the production of insulin under patents, whether insulin was being supplied by the University to U.S. physicians, and who sat on the Insulin Committee. The Committee drafted a statement that was initially published in the four Toronto daily newspapers. This statement, along with news of the University of Toronto’s gift of insulin patent rights to U.K.’s Medical Research Council, sparked further public discussion of the wisdom of such medical patents. There were examples cited in press reports as to why such discoveries should be offered as a free gift to the world. Examples included the human and animal vaccines discovered by Louis Pasteur, which were given as a free gift to the public, despite the potential for their fraudulent use. In response, Falconer and Macleod reaffirmed the special circumstances surrounding insulin, the University’s defensive approach to prevent any commercial monopoly, and their desire to ensure a standardized product.

Meanwhile, in November, the Collip and Best U.S. insulin patent encountered further legal turbulence prompted by Eli Lilly’s patent application, and the discovery in the U.S. patent office of an existing U.S. pancreatic extract patent that had been awarded to Georg Zuelzer in 1912. The Toronto group was advised to present all the clinical evidence they could muster about their production process. Macleod and Riches went to Washington and they also solicited supportive documentation from key diabetes specialists familiar with the use of insulin, including leading diabetes specialists, Dr. Frederick Allen and Dr. Elliott Joslin, as well as from Charles Hughes, the U.S. secretary of state, testifying about how insulin saved his daughter, Elizabeth. However, in early December, the final acceptance of the U.S. insulin patent seemed in jeopardy because Banting’s name was missing from the application. On December 18^th, he finally relented and allowed his name to be included in a generally written insulin patent application that now placed more emphasis on what the Toronto pancreatic extract did, physiologically and clinically, as a diabetes treatment, than on detailing a definitive method of its production. 

The next day, Banting, Best and Collip formally assigned their full patent rights to the pancreatic extract to the University of Toronto Board of Governors for $1; the Canadian patent filing completed on January 15, 1923. One week later, a U.S. patent covering both insulin and Toronto’s method of making it was awarded to Banting, Best and Collip, who similarly assigned their rights to the University of Toronto Board of Governors. In the U.K., the Banting, Best and Collip insulin patent would be assigned to the Medical Research Council. 

The next major, and seemingly impossible, challenge for the Insulin Committee, was determining how to expedite the securing of insulin patents and production in Europe and beyond on the same terms as in Canada, the U.S. and the U.K. Although the Committee was able to authorize the manufacture and distribution of insulin on a small scale in China through the Peking Union Medical College, the Committee’s primary focus was on formally establishing insulin production in Europe. 

The Insulin Committee discussed several strategies, including identifying prominent diabetes specialists in specific countries who would be asked to act as agents on behalf of the University of Toronto. They attempted such an approach with a Dr. Lux in Vienna, Austria, but it soon became apparent that an international effort by the University might interfere with its negotiations with the Austrian government, which had expressed an interest in taking over the control of insulin in that country. 

The Committee also sought to reach out to representatives of various governments, asking whether they would accept from the University of Toronto a detailed description of the insulin production method with the intention of patenting it, “so that this might not be done by individual commercial firms,” as was noted at the Committee’s January 16^th meeting. Yet, it was soon clear it would be impossible for the Committee to undertake such negotiations itself, especially since it was evident “that Consuls General in Canada would not be competent to deal expeditiously with such matters.” The Committee then decided to approach Sir Walter Fletcher, of the Medical Research Council, to ask if the MRC could assume responsibility for such negotiations with representatives of European countries. The goal was that each country could take out the necessary patents and then license local manufacturers to produce insulin. Alternatively, the governments could transfer the right to apply for patents to an approved institute or local organization. Fletcher, however, was not prepared for the MRC to assume such a responsibility.

By late February, to finalize the U.K. insulin patent, and to expedite the granting of patents in other countries, the Insulin Committee realized it would need additional resources. The Committee thus requested a loan of $6,000 from the Board of Governors, which would be repaid out of expected royalties made on companies licensed by the University to manufacture insulin. To resolve the outstanding U.K. patent issues, Riches was sent to London, since his British agent lacked experience with animal extracts. Riches was also instructed to apply for patents in many other countries, including others in the British Empire, and certain countries in South America, Cuba, Jamaica, Mexico and Japan. 

By mid-March, with the MRC unable to assist, the Insulin Committee decided it was best to refrain from further attempts to have patents taken out in European countries. Instead, the Committee would directly engage with physicians and institutions in the various countries willing and able to carry out the University of Toronto’s policies regarding insulin. The Committee would thus send detailed information about manufacturing insulin.

Just as the Insulin Committee settled on a policy designed to expedite insulin production internationally, it suddenly faced significant new complications in its relationship with Eli Lilly, including a request by Clowes to extend Eli Lilly’s one-year exclusive license by a second year. At the March 16^th meeting of the Insulin Committee, the request for an extension was quickly denied, primarily because the University had already announced its intension to license other U.S. firms after the manufacturing process had been worked out, which was now the case. 

The more significant complication was Eli Lilly’s application for another U.S. patent based on the application of a new insulin production process, known as the isoelectric point method, developed by George Walden, Lilly’s chief chemist, which significantly boosted insulin purity and yields. The method was based on precisely adjusting the pH of the extract to the isoelectric point, at which the purified internal secretion precipitated out of the solution. Of chief concern was that the Walden patent application, as Riches detailed to the Insulin Committee, was too broad in its claims and practically covered the entire insulin production process. If the patent were allowed, “it would give Lilly an absolute monopoly for the manufacture of Insulin in the U.S.” 

However, it appeared that Walden was not the only chemist to have discovered the significance of the isoelectric point in the production of insulin. During the fall of 1922, at Washington University in St. Louis, Dr. Phillip Shaffer also discovered that insulin could be precipitated at the isoelectric point. The news prompted Connaught’s assistant director, R.D. Defries, and Riches to promptly visit Shaffer. If Shaffer’s claim matched Walden’s, the University of Toronto could also apply for a patent in his name based on the isoelectric point, which would provide the university with something to offer other U.S. Insulin manufacturers to enable them to compete with Lilly. As was stressed by the Insulin Committee on April 2^nd, it would also “show these manufacturers that the University had done all in its power to place in their hands suitable methods for the manufacture of Insulin.”

After their meeting with Shaffer, Defries and Riches immediately went to Indianapolis for meetings with the Eli Lilly leadership, during which they agreed to a novel arrangement. As Clowes outlined in an April 8^th telegram to Macleod, despite emphasizing Eli Lilly’s moral right to take out “the strongest possible patents on our discoveries,” and a lack of concern about Shaffer’s claims, “we would not consider doing anything that might embarrass Toronto University.” Thus, based on a suggestion by Riches and Defries, Clowes agreed to a reworking of the Walden patent application, and more significantly, to a pooling of all future insulin patents. At its April 10^th meeting, the Insulin Committee agreed to the idea, certifying that “it shall be required of all licensees that any patents taken out by them shall be assigned to the University of Toronto, which may then authorize other licensees to use the methods patented, in other words the policy of pooling the patents was decided upon.”

The establishment of the patent pooling policy by the University of Toronto’s Insulin Committee secured the University’s essential goal of holding the primary insulin patent, which was ultimately based on insulin’s physiological and therapeutic effectiveness in treating diabetes and less on a specific method of production. That structure ensured that no person or organization could use a patent to establish a monopoly on its production. Thus, in the hands of the University of Toronto, the primary insulin patent served — in the absence of any government regulation to ensure the effectiveness and standardization of drugs — as a tool to discipline the industrial world, to organize the new drug’s distribution and use, and to guarantee its accessibility globally. The University’s remarkable success was based on a sound legal argument that prioritized its basic patent over any new process claim, established its moral authority associated with insulin’s discovery, and thus ensured the humanitarian goals linked to administering its insulin patent.