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Jacob Rooksby is an assistant professor of law at Duquesne University’s law school. His research looks at the intersection of intellectual property law and higher education, and he is a contributor to the newest issue of Academe. His article is “Sue U.” and explores what happens when universities get into the game of developing, licensing, and protecting patents. I spoke with him by e-mail about the issues raised in his article.
What do you think every faculty member or researcher should know about university-owned patents?
As a general matter, they should know that patents are different from copyrights, a concept more familiar to most faculty. Universities historically have not claimed copyright ownership in books, articles, and other scholarly works created by their faculty. The same is not true for patentable inventions, the ownership of which faculty members must assign to their university employers, per the terms of employment contracts & related institutional IP policies.
Patents that stem from faculty research can be very valuable assets. With this value often comes difficult decisions with ethical consequences: whether to seek patent protection, and how to license patents once issued. For example, is it appropriate for the University of Utah to own patents on the “isolated” genes BRCA 1 and BRCA 2, which account for most inherited forms of breast and ovarian cancers? Many would argue that genes, as fundamental building blocks of nature, should not be eligible for patent protection in any form (although to date, courts have disagreed with that proposition as a matter of law). Further still, is it appropriate for the University of Utah to exclusively license its isolated gene patents to only one company, as it has done, which charges monopoly prices to perform clinical diagnostic testing? Would it not better serve the public good, and the mission of the publicly-supported University of Utah, to allow any interested party to use the patents cheaply for any commercial or non-commercial purpose?
Courts tend to shy away from these issues, drawing a distinction between patent eligibility (a legal issue they decide) and patentability (a policy decision for would-be patentees to decide). Given the policy and ethical considerations inherent in this debate, it deserves the attention and participation of all faculty concerned for the evolving role and function of research universities in an innovation-based economy.
It seems logical enough that diverting resources to developing and maintaining patents can be bad for faculty and staff at a university. But, one argument you make is that even though it can bring in money, these patents can end up being bad for a school’s finances. Can you explain how that works?
The thrust of my argument is that if universities are in for a penny they should be in for a pound. Seeking to obtain and license patents is a labor-intensive and costly activity that is not best played with half-measures. University research goals shouldn’t be exclusively patent- or revenue-driven, but for those patents a university does own, it should treat them as the serious assets they are. That means being willing to sue infringers when necessary so ongoing licensing efforts are not undermined (in short, why should one company pay if others get away with not paying?). Universities that are unwilling to take such action — a hesitancy which, to be clear, I sympathize with — need to seriously question why they seek patents in the first instance. Rights accretion for the sake of playing in the university arms race is a costly proposition that makes little economic sense in the long run if an institution is unwilling to stand by those rights when they are infringed. As a TTO director interviewed in a previous study I conducted on this topic told me, “A patent without enforcement is a piece of paper with Dave Kappos‘s signature on it. That’s all it is, you know. It’s a very expensive piece of paper. If you’re not willing to enforce it, that’s all you’ve got.” And I agree.
Legally, is there a distinction between public and private schools when it comes to patent licensing? In your opinion, is there an ethical difference?
As to the first question, the more relevant distinction concerns the research dollars going to universities that give rise to patents, and where that money comes from. Most research conducted by faculty at universities is funded by the federal government. The Bayh-Dole Act applies to all university research funded by federal grants from (for example) the National Institutes of Health, the National Science Foundation, the Department of Defense, and other such governmental agencies. This law allows universities to claim ownership of any patent-eligible discovery that flows from such research so long as certain conditions are met. Universities then have an obligation to commercialize the research findings through licensing arrangements intended to benefit American industry and the consuming public. Universities and their faculty also often enter into private research agreements, known as sponsored research. Which party enjoys ownership of any patents that may result from such research is up to the individual institution and research sponsor to decide, although typically any patents resulting from these relationships go to the university.
As to the second question, ethically I see little difference. If we believe that non-profit higher education exists to serve the public good, then our expectations for university behavior should not vary depending on whether an institution is publicly- or privately-funded. Both types of institutions benefit from the public purse (and other favorable treatment society confers on them). In turn, we should expect them to benefit us.
Under what circumstances would it make sense for a university to invest heavily in protecting and licensing its patents?
As a general proposition, I think it makes sense for a university to invest heavily in protecting and licensing its patents if it already has a hearty research infrastructure in place. Some institutions seem convinced that if only they throw more money at their TTO, windfall returns eventually will be realized. Research shows it doesn’t work that way. Windfalls are rare because the most valuable patents don’t get created out of thin air. Laboratories, equipment, sizable research grants, and most importantly, a deep pool of talented, research-oriented faculty, all need to be in place before it’s reasonable to think that a university will do anything other than lose money or at best break even through technology transfer.
My corollary to this point is that universities — even ones well-equipped to achieve successes in patenting and licensing — shouldn’t invest heavily in these activities unless they are willing to stand by them in the face of public outcry and potential backlash from lawmakers, faculty, alumni, students, and donors. The University of California — mentioned in my article for Academe as having recently lost a patent infringement lawsuit in Texas against many “brand name” companies — is an example of a university committed to its patents no matter the fallout. Just this past week it again filed suit with its alleged “patent troll” licensee, Eolas Technologies — this time against Wal-Mart, Facebook, ABC, ESPN, and Walt-Disney.
But not every university that seeks patents has the same stomach — or budget — for litigation. All the more reason for each university active in this space to consider whether it’s willing to affirmatively litigate in order to protect its patents. Those that aren’t committed or effectively able to do so might be better served to invest money elsewhere. Indeed, they might better serve society by doing so.
Read Jacob Rooksby’s full article here.