Most higher ed institutions leave it up to their licensees to enforce the patents or, worse yet, think it is beneath them to enforce their patents. The proponents of this philosophy claim that a university’s mission is to serve the public and the greater good and not to litigate.
This position makes little sense. Universities invest millions of dollars in R&D and produce much of the cutting-edge science that eventually makes its way into drugs and new technologies. It behooves them to obtain a return from this investment that can be put back into research to produce more cures and cutting-edge science for the greater good. The patent that resulted in the $1.67 billion settlement for NYU and its exclusive licensee, Centocor, was for an arthritis medicine sold under the Remicade and Numira brands.
Although a patent is a right to exclude others, it doesn’t come with its own police. It remains the responsibility of the patent owner to identify infringers and enforce the patent. The greatest obstacle facing an institution—or any patent owner—is identifying who is infringing its patents. There are a number of policies and procedures that can be implemented to identify possible patent infringers. These include reverse patent citation analysis, market studies, and interviews with the university researchers who are identified as inventors on the patents.
Although a patent is a right to exclude others, it doesn't come with its own police.
In countless conversations with tech transfer managers, most have expressed to me the same frustration: They must cut through red tape and work their way through layers of bureaucracy when it comes to enforcing university-owned patents. One needs approval of the general counsel, the president or the provost, and possibly the board of trustees. Such approvals are hard to obtain, since various constituencies have different reasons not to approve filing a patent infringement lawsuit. It’s no wonder that relatively few are ever filed by higher ed institutions.
Patent Enforcement Help
Hiring a law firm that specializes in patent litigation to represent the university can be a solution, although the cost of patent infringement litigation can be millions of dollars. In addition to legal fees, there are disbursements. These are out-of-pocket litigation expenses such as filing fees, as well as costs for document production and discovery, taking depositions, expert witnesses and jury consultants, audiovisual services, trial demonstratives, and travel. These expenses quickly add up to hundreds of thousands of dollars and can easily exceed a million dollars.
Companies such as mine specialize in patent enforcement without being law firms. They can manage the entire process—hiring and managing a patent litigation law firm to actually litigate the lawsuit—and cover all expenses. Patent enforcement firms operate on a 100 percent contingency basis, recouping the fees for the law firm and all out-of-pocket expenses and their management fee from any proceeds produced by the lawsuit (or lawsuits, if there happen to be multiple infringers). Should a patent infringement action fail, the patent enforcement company absorbs all of the losses and the university pays nothing.
Patent enforcement firms offer another subtle but significant benefit: They transfer the patent to a special-purpose entity. The patent enforcement firm sets up an LLC that owns the patent, and the new entity is the plaintiff in the lawsuit. This is no different from creating a university spin-off with a mandate to monetize specific university patents. If litigation ensues, it is the spin-off, not the university, who will be the plaintiff in the lawsuit. This reduces the involvement of the university and any negative publicity that could result from the lawsuit.
The member lists of The Association of University Technology Managers (www.autm.net), Licensing Executives Society (www.lesusacanada.org), or the Intellectual Property Owners Association (www.ipo.org) can provide ideas about who to work with.
Remember, a patent is a wasting asset. Sooner or later it will expire. An important factor in computing patent infringement damages is the remaining years on the patent. Leaders at higher ed institutions with a patent portfolio of any size must take a serious look at those assets to determine if there’s revenue that could be realized with minimal effort, modest costs, very little risk, and some old-fashioned gumption. After all, to paraphrase the crusty old prospector in the 1948 western Yellow Sky, “Thar’s gold in them thar patents!”
Alexander Poltorak is chairman and CEO of General Patent Corporation (www.generalpatent.com), an IP management firm focusing on patent licensing and enforcement. He can be reached at apoltorak@generalpatent.com.
