When Universities Sell Patents to Trolls, Publicly Funded Research Is Compromised
There’s been a lot of talk lately about the state of publicly funded research. Many, including EFF, have long called on Congress to pass a law requiring that publicly funded research be made available to the public.
With strong support for FASTR (the Fair Access to Science and Technology Research Act) in both parties, Vice-President Biden making open access a major component of his Cancer Moonshot initiative, and presumptive presidential nominee Hillary Clinton including access to research in her platform, signs are looking good that Congress will finally pass an open access mandate. It’s just a matter of when.
Even if we pass an open access law this year, though, there’s still a major obstacle in the way of publicly funded research fully benefiting the public: patent trolls.
Universities and Patent Trolls: A Twisted Romance
Wait, patent trolls? Those obscure companies that just amass patents and sue people instead of actually making or selling anything? What do they have to do with publicly funded research? Quite a lot, it turns out.
Research universities represent one of the primary recipients of federal government funding for science. Many of those universities routinely file patents on technologies they develop, and unfortunately, many of those patents end up in the hands of trolls. There are dozens of universities, both public and private, with standing agreements to sell patents to patent assertion entities. When patent trolls’ intentions are so often at odds with the mission of research benefiting the world, it’s worth asking: why do universities sell to them?
A recent Planet Money episode explored a company that’s sued nearly every workout supplement manufacturer in the U.S. over a patent on an amino acid that occurs in nature, a patent that originated at Stanford University.
And just last month, we gave our Stupid Patent of the Month award to My Health, a company that appears to do very little besides file patent and trademark infringement lawsuits. Like the arginine patent, My Health’s patent originated at a university, the University of Rochester.
We don’t even know how many university patents trolls control. That’s because a lot of the time, the university is still listed as the owner of the patent, but it gives the troll a broad, exclusive license to litigate it.
Keep in mind that the federal government funds a lot of that research. Even as we move toward a time when most publicly funded research is publicly available, patent trolls make it more difficult for practicing companies to use that knowledge (subscription required, ironically).
Even for research that’s not federally funded, the public has still invested in it in the form of grants, donations, state funding, and tuition fees. If you’re in college right now—or if you’re still paying off your loans—how would you feel found out that patent trolls are using that money to bully innovators into paying licensing fees?
Bad for Both Innovation and the Bottom Line
Universities filing patents for federally funded research is a relatively new phenomenon. Thanks to a law enacted in 1980, commonly known as the Bayh-Dole Act, universities can apply for patents for their inventions even if those inventions were funded by the federal government.
Before Bayh-Dole, the government itself was responsible for patenting federally funded inventions; when it did so, it would let others use them only under nonexclusive licenses.
The years following Bayh-Dole saw a major uptick in patents filed by universities (PDF). In 1980, 394 utility patents were granted to universities. By 2010, that number had increased tenfold (for comparison, the number of patents issued altogether increased fivefold over the same 30 years).
Today, it’s unusual for a research university not to have a technology transfer office, an office whose job it is to file patents and sell or transfer them to third parties. Here’s something else a lot of people don’t know about tech transfer: the vast majority of these programs lose money for their schools.
Some defenders of the technology transfer system say that that’s to be expected: the purpose isn’t to make money; it’s to bring their important inventions to market. But again and again, tech transfer programs seem to undermine their own goals. For every patent that gets licensed to a company that actually intends to carry the university’s work forward, many others either go unlicensed (putting a strain on the university’s resources) or are sold to trolls (putting a strain on practicing companies).
Is the purpose of a tech transfer program to make money for the university or is it to stimulate innovation? Either way, many aren’t doing a very good job.
Can Tech Transfer Fix Itself?
Several universities have admitted that selling or licensing patents to trolls is a big problem. The Association of University Technology Managers (AUTM) maintains a document called Nine Points to Consider and a list of over 100 institutions that have endorsed it since 2007.
AUTM’s “points” include prioritizing transferring to companies that are committed to active research and development in the patents’ areas of technology, not those that will simply sit on the patents and wait to extract licensing fees from others. The document even explicitly warns of the dangers of transferring to patent-holding companies:
Universities would better serve the public interest by ensuring appropriate use of their technology by requiring their licensees to operate under a business model that encourages commercialization and does not rely primarily on threats of infringement litigation to generate revenue.
The way for universities to make sure patented inventions actually get used is to partner with companies committed to making advancement in those areas of technology, not those with business models based on litigation. We’d add that before filing a patent at all, a university ought to consider whether a patent will support the goal of bringing that particular invention to market.
The Nine Points were a big step in the right direction, but many of the universities that signed it have continued to sell patents to companies that do nothing but sue.
Who Is Your University Listening To?
Learn more: Patents: The Next Open Access Fight
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