The rise of efficient infringement, a problem for universities


Recent overhauls to America’s patent laws have forced universities and other patent owners into a corner when asserting their rights. Last October, The New York Times reported on the rise of “efficient infringement” which has increased in the wake of the 2011 America Invents Act. Tools created by that legislation to challenge patent validity, such as through the Patent Trial and Appeal Board (PTAB), allow major companies with huge amounts of financial and legal resources to ignore reasonable licensing inquiries and to shift the burden onto the patent owner by challenging the patent’s validity.

Many say that hostility toward patents in the courts has reached new heights, with numerous cutting-edge innovations dealing with software, biotechnology, medical diagnostics and personalized medicine all being routinely found patent ineligible. Rather than take patent licenses, or even engage in negotiations, many companies have calculated that they are better served by ignoring patent rights and openly infringing. These efficient infringers dare universities and other patent owners to sue.

As the New York Times article notes, however, there has been a troubling pattern of associating universities with so-called “patent trolls”on the basis that, like other non-practicing entities (NPEs), universities don’t manufacture products but license their technologies to others. But universities are not patent trolls. In fact, the primary goal of the university is to make sure that as much research done at the university is commercialized as possible.

Indeed, universities are incentivized to work to push as much of their patented innovation into the market as possible so that it will be beneficial to the university and the public. That was the very purpose of the Bayh-Dole Act. Prior to Bayh-Dole, university technology would lay stagnant and not benefit anyone. The government gave universities control of their patents so that they could license the technology out and bring revenue in to continue further research. When efficient infringers choose to ignore patent rights and openly infringe, they are frustrating the Congressional intent.

Similarly, some raise their eyebrows when they see universities wading into the muck of patent infringement suits. Reuters reported on an Iowa Law Review study that will be published later this year, which was penned by faculty from Stanford University and UC Hastings College of the Law. Reuters published a quote from the upcoming study: “The more recent university practice of suing or demanding licenses from existing companies appears much less likely to be driving innovation.”

But it is not the fault of the universities that they are forced to sue willful and knowing infringers, nor that litigation is slow, expensive and time-consuming. The infringers who are engaging in efficient infringement are the ones to blame for the fact that time and money spent in courtrooms fighting over infringement is a distraction from innovating. Furthermore, efficient infringers who infringe university technology disrupt the innovation cycle and are to blame for the fact that universities are not innovating as much as they could and should. Had these efficient infringers taken a license to the technology rather than ignored the patent in the first place, there would have been no wasted time and money on lawyers and legal process, universities would have been paid a reasonable royalty for what was taken, and those funds would have been reinvested into research and educational programs. The infringers are the ones who need to look in the mirror, not the other way around.

Obviously, patent infringement lawsuits are not filed to drive innovation, they’re filed to protect the innovations made so that fair payments can be received from those who find it more convenient to ignore patent rights and choose to infringe with their eyes wide open. Ignoring license overtures and forcing patent owners to sue is rampant. Of course, fairly dealing with university patent owners would be far preferable for the society at large, so don’t blame universities when the efficient infringers ignore inquiries and refuse to return phone calls. Simply put, when an infringer doesn’t care to license at all, what is a patent owner to do?

The rise of efficient infringement is why Caltech and other universities are increasingly feeling the need to file patent infringement lawsuits to seek redress. See Caltech’s infringement lawsuit against Apple, Broadcom is latest in university patent suit trend.

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