The patent was developed at New York University and licensed exclusively to Centocor, which makes a medicine called Remicade that competes with Numira. The jury was out for five hours before returning the verdict, which specified $1.17 billion for lost profits and $504 million as a reasonable royalty.
Earlier in patent history, the second-highest patent verdict was a $1.5 billion award that Alcatel-Lucent won against Microsoft, but that was later overturned. The third largest patent award, and still the largest ever enforced, was a $910 million judgment for Polaroid in 1986, a suit that ultimately wiped out Kodak’s full line of instant camera products. Some report that this award was actually $925 million, the full amount of the settlement in 1991 that finally ended the litigation.
These landmark cases suggest it certainly would pay licensors, be they universities, corporations, or other owners of dormant U.S. patents, to look where they have not looked before for the money it takes to fulfill their organization’s mission or beef up the bottom line.
Two types of licensing
Licensing comes in two varieties: “carrot” and “stick.” A “carrot license” is a license taken voluntarily by a licensee that is not yet using the patented technology and is under no compulsion to license it. A value proposition in “carrot” licensing is, “License our patent(s) because our patented technology is better and you can make more money with it.”
Carrot licensees tend to be exclusive, as the licensor wants to be assured of exclusivity before investing in developing the patent technology. A “stick license,” on the other hand, is an exercise in assertive licensing that is appropriate when the patented technology is already in use by an infringer of the patent.
In this case, the value proposition is, “License our patent(s), or we’ll see you in court.” Stick licenses are usually non-exclusive. A non-exclusive license is, in essence, a covenant not to sue, and is usually taken to avoid (or settle) litigation.
Unfortunately, litigation cannot always be avoided. If the infringer refuses to take a license, assertive licensing turns into patent enforcement, i.e., patent infringement litigation.
In reality, every “carrot” license is a “stick” license in disguise—if not for the unspoken threat of litigation, who would ever license a patent, which, at the end of the day, is nothing more than a right to sue for infringement?
Technology transfer managers typically do carrot licensing. They promote and market the university’s patent portfolio to industry and find businesses to commercialize some of those patents. There are technology transfer managers and technology transfer departments that generate tens of millions of dollars—even hundreds of millions of dollars—a year in revenue that is essentially found money for the school.
The result of ignoring patents
Few universities get as aggressive as New York University, the University of California, the University of Colorado, Cornell, or Stanford and actually pursue patent infringers. Neglecting stick licensing, however, has two problems.
First, it results in a loss of potential royalty and damages revenues from infringed patents, which, as we have seen, could amount to hundreds of millions of dollars.
Second, it undermines carrot licensing of both infringed and non-infringed patents. If an industry perceives a lax attitude on the part a university in enforcing its patents, it will think it can infringe with impunity. Under these circumstances, taking a license would be tantamount to a charitable gift, which few in this economic climate are inclined to do.
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