Innovation and Litigation: Tensions between Universities and Patents and How to Fix Them

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C. Benefits to the Proposed Statutory Amendment

The legislative proposal presented above recognizes several important premises. First, many universities--which, unlike for profit companies, primarily owe allegiance to taxpayers when it comes to their research activities--do not want to litigate their patents, yet the CAFC's imposition of a prudential standing requirement on owners of exclusively licensed patents effectively mandates their eventual involvement in patent infringement lawsuits, no different than it would any for-profit enterprise. second, as a matter of policy, most universities are poorly suited to litigate their patents, no matter their motivation for doing so, and both universities (as owners and licensors of patents) and society (as funders of universities and university research activities) suffer as a result of this inefficiency. Third, shifting the legal burden of patent enforcement to exclusive licensees in most instances would do little to disrupt the current relationship between exclusive licensees and university patent owners with respect to patent infringement litigation.

As the entities (other than universities) most affected by this proposal, exclusive licensees would have no legitimate grounds for rejecting it. Companies that license patents typically are more accustomed to assertive litigation than universities. Regardless of any actual past experience in court, commercial licensees as a sector are better situated--financially and strategically--to pursue litigation. The deference they currently receive from universities with respect to matters of patent infringement would in a sense be codified. University-owned patents still would be litigated, but without the mandated involvement of universities, which would be freed to pursue more classically defined activities that further their research missions. Those who might argue that the proposed statutory amendment would expose universities to risks with exclusive licensees running enforcement litigation would have difficulty establishing that such a future would differ substantially from the current reality, as revealed by the findings from the study reported in this Article.

At its core, the legislative proposal would allow universities to enjoy the upside of patent ownership while limiting their involvement in one of the major downsides. Relieved of the expense and distraction of having to pursue infringers in court, universities could redouble their traditional research and commercialization efforts and focus more energy on their mandates to innovate. The proposal thus better aligns university activities with traditional societal expectations for university research. It also does so without compromising universities' increasing focus on market partnerships or undermining their innovation mandates. In short, the proposal recognizes that letting exclusive licensees litigate while universities innovate better serves the public good.

D. Limitations to the Proposed Statutory Amendment

Admittedly, the proposed statutory amendment only addresses those instances when a university is faced with joining an exclusive licensee (or co-owner) as co-plaintiff in bringing an enforcement action. It would not benefit a university in instances of infringement of patents the university either has not licensed or has licensed non-exclusively. However, as the research in Subsection I.C.3 of this Article reveals, instances of universities bringing suit as co-plaintiffs with their exclusive licensees represent the majority (n = 221, or 67.6%) of all patent infringement lawsuits brought by universities from 1973 through 2012.

The limitation with respect to the proposal's scope of application is also one of its strengths. If universities faced more freedom of choice as to whether to join an enforcement action brought in conjunction with an exclusive licensee, the nature of any university patent infringement action that gets brought after passage of the proposed amendment would be painted in high relief. …