A recent story in The Chronicle of Higher Education covered the complex relationship between academic research institutions and companies that purchase patent rights, but do not actually produce products. Known variously as “non practicing entities” and “patent trolls” these companies accumulate portfolios of patent claims; however their business model is based on litigation rather than development, generating revenue almost exclusively through lawsuits against other companies that appear to use features under their control.
Earlier this year, we asked what purpose is served by academic technology transfer offices, and used a couple of quotes from “Managing University Intellectual Property in the Public Interest” published by the National Research Council of the National Academies as a framework:
The first goal of university technology transfer involving IP is the expeditious and wide dissemination of university-generated technology for the public good. The public good might include inputs into further research; new products and processes addressing societal needs; and generation of employment opportunities for the production, distribution, and use of new products. Although the transfer methods will vary from institution to institution depending on the history, location, and composition of the institution’s research portfolio, the goal of expeditious and wide dissemination of discoveries and inventions places IP-based technology transfer squarely within the research university’s core missions of discovery, learning, and the promotion of social well-being.1
Patenting and licensing practices should not be predicated on the goal of raising significant revenue for the institution. The likelihood of success is small, the probability of disappointed expectations high, and the risk of distorting and narrowing dissemination efforts great.2
In the same posting, we noted that current economic conditions have changed the approach that many institutions take to technology transfer, as they turn to new and creative ways to identify markets.
In concept, patent aggregators could provide a beneficial function, acting as middlemen to explore markets and expose technologies to a broader audience than an academic institution could do on its own.
The definition of a “non practicing entity” therefore needs to be distinct from a true “patent troll”.
In practice, however, the leading patent aggregator, Intellectual Ventures, is able to identify only two universities for which they were able to develop commercial results, out of sixty with which they have arrangements, and a portfolio of over 30,000 patents.
One of the first questions I ask when working with a new institution is how they define the mission of their technology transfer office. While this may have little to do with the administrative mechanics behind the processing of invention disclosures, patent applications and contracts, it helps me to understand some of the culture at the institution.
Looking back at my notes, there have been different answers:
- identifying opportunities to work with industry to stimulate regional economic activity
- identifying licensing opportunities that will generate royalty income to support research at the institution
- protecting our institution’s knowledge base, to ensure that all inventions are used in a manner consistent with the goals of our researchers and the integrity of our institution
- establishing and mentoring spin-off companies, to provide entrepreneurial opportunities for our researchers and employment opportunities for our graduates
While fundamentally different in focus, all of these are consistent with the intent of the Bayh-Dole Act that effectively established academic technology transfer. The government funds research for the public good, and academic institutions are entitled to royalties only because they assume the responsibility to make sure that the results find practical use.
Members of the Association of University Technology Managers (AUTM) are currently reviewing a 2007 statement of ethics that rejected the practice of patent trolling, as some institutions that signed the 2007 statement now appear to have relationships with Intellectual Ventures or similar patent aggregators.
The question that all institutions face, is whether the current economic pressures, and the ability to quickly generate revenue that supports ongoing research, justify the occasional use of patent aggregators – even though this is at odds with not only the intent of Bayh-Dole but the purpose of granting patent rights to encourage innovation and commercial activity. This comes as patent reform legislation is regularly discussed in terms of impact on business and the economy, and proposed legislation aims to discourage abusive patent litigation.
This message will not self-destruct. I am interested in seeing how AUTM responds.
1 National Research Council. Managing University Intellectual Property in the Public Interest . Washington, DC: The National Academies Press, 2010. p. 2.
2 Ibid. p. 4