Cashing in on idle tech assets could help close campus budget gaps

Most schools of higher education 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, as institutions of higher learning, 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 research and development and produce much of the cutting-edge science that eventually makes its way into drugs and new technologies. It behooves universities to obtain a return from this investment, producing funds that can be put back into research to produce more cures and cutting-edge science for the greater good.

Identifying patent infringement

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 a university—or any patent owner—is identifying who is infringing its patent(s). 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 named inventors on the patents.

In my countless conversations with technology transfer managers, most expressed 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 to get approval from the general counsel, the president or the provost, and possibly the board of trustees. Such approvals are hard to obtain, because various constituencies have different reasons not to approve filing a patent infringement lawsuit.

It’s no wonder that relatively few patent infringement lawsuits are ever filed by universities. However, there is an approach that addresses many of these issues.

Hiring a law firm that specializes in patent litigation to represent the university might make sense. But patent litigation is very expensive. 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, document production and discovery costs, taking depositions, expert witnesses and jury consultants, audio-visual services, trial demonstratives, and travel costs. These expenses quickly add up to hundreds of thousands of dollars and can easily exceed a million dollars.

There are companies other than law firms that specialize in patent enforcement, however. These companies offer a comprehensive, seamless, turnkey patent enforcement program. The better patent enforcement firms manage the entire process.

General Patent Corp., for example, is an IP management boutique firm that focuses on patent licensing and enforcement. Patent enforcement firms operate on a 100-percent contingency basis. They recoup the fees for the law firm, all out-of-pocket expenses, and their management fee from any proceeds produced by the lawsuit (or lawsuits if there are multiple infringers). Should the 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 spinoff with a mandate to monetize specific university patent(s).