Patent Law Practice Center

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.

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When “Patent Trolls” ARE Innovators

The term “patent troll” conjures up all kinds of images and ideas, but what is a patent troll?  Unfortunately, there is really no universally accepted definition of what a patent troll is, although if you are getting sued for patent infringement by a non-practicing entity, you probably think you are being sued by a patent troll.

My view has long been that companies that complain about patent trolls don’t really want them to go away. Patent trolls are extremely valuable to these big tech companies because they are an identifiable and unsympathetic villain, even if they cannot really be defined in any satisfying way. The image of a patent troll can be paraded about Capitol Hill whenever patent reform is being pushed, or even in front of the Supreme Court, which increasingly seems to be interested in taking them into consideration when reaching decisions, despite them not being involved in the case.

I personally hate the term patent troll, which may come as a shock to many because I use it all the time. I use it to attempt to crystalize the issue, because the term “patent troll” has over time become synonymous with “non-practicing entity,” and not all non-practicing entities are bad. In fact, many are good actors that diligently work against long odds to research and develop new technologies, treatments, drugs and therapies we all want.

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Patented University Technology Creates Jobs

On Monday, August 5, 2013, the Association of University Technology Managers (AUTM) released the highlights of the AUTM U.S. Licensing Activity Survey: FY2012. The full results of the survey won’t be available until later this year, but the “highlights” release does provide some interesting quantitative information about licensing activities at U.S. universities, hospitals and research institutions.

Institutions responding to the survey reported startup companies formed by 70 institutions employed 15,741 full-time employees. The survey also showed:

• 22,150 total U.S. patent applications filed (+11.3%)
• 14,224 new patent applications filed (+7.2%)
• 5,145 issued U.S. patents (+9.5%)
• 5,130 licenses executed (+4.7%)
• 1,242 options executed (+7%)
• 483 executed licenses containing equity (+16.1%)
• Total license income: $2.6 billion (+6.8%)
• 705 startup companies formed (+5.1%)
• 4,002 startups still operating as of the end of FY2012 (+1.9%)

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Defending Bayh-Dole Under Attack

By: Gene Quinn (IPWatchdog.com)

On February 28, 2013, I spoke at the annual meeting of the Association of University Technology Managers (AUTM), which was held in San Antonio, Texas. I spoke there about what universities can do to fend off the challenges to Bayh-Dole. As crazy as it seems, there are those who are advocating a change to what has been described by The Economist as the most successful piece of domestic legislation since the end of World War II.

Prior to the enactment of Bayh-Dole in 1980, it was virtually impossible to license University technology. In fact, a grand total of zero… that is 0… drugs developed with university funding from the federal government had been commercialized. Now, the pharmaceutical industry is enormously involved with universities and university research and dozens upon dozens of drugs have been commercialized. University basic science is the very foundation of many of the most exciting drugs, which provide tremendous cures and life-saving treatments. So dialing back the clock to when government-funded research was locked up so tight that it didn’t do anyone any good is simply ridiculous.

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Stanford v. Roche and Ownership of Federally Funded Research: Navigating the Vagaries of Contract Law

Mary Hess Eliason, an Associate with Birch Stewart Kolasch and Birch, sent in this article discussing the recent Supreme Court decision of Stanford v. Roche .  The article highlights key points in both Chief Justice Roberts’ majority opinion and Justice Breyer’s dissent and questions whether this case presented the appropriate fact situation to address the issues at hand.

When an invention is conceived, it is generally presumed to be owned by the inventor under U.S. patent law.[1] The Supreme Court Opinion of Stanford v. Roche reinforces this maxim in the context of federally funded research.  The issue brought before the Supreme Court was, in the context of federally funded research, whether the ownership of the invention automatically arises with the federal contractor (i.e., Stanford) or with the inventor under the Bayh-Dole Act 35 U.S.C. §§ 200-212 and whether the inventor can interfere with any right of the federal contractor by assigning the invention to a third party.[2]

In their recent majority opinion, the Supreme Court decided that, based on contract law, an Inventor could assign an invention to a third party, even if the invention was federally funded under Bayh-Dole. (more…)