Academic Institutions’ Patent Infringement Claims Lead to Hundred Million-Dollar Settlements
 
February 14, 2002
 

In 1980, Congress enacted P.L. 96-517, the Patent and Trademark Law Amendments Act, commonly known as the "Bayh-Dole Act," to encourage technology transfers from academic institutions to the marketplace. The Bayh-Dole Act enables colleges and universities to maintain exclusive licenses for inventions, with the proviso that any resulting income should remain on campus. One purpose of the Bayh-Dole Act is to promote academic collaboration with the private sector as well as to encourage greater competition and enterprise. Subsequently, research activity and patent applications by educational institutions have greatly increased.

According to the U.S. Patent and Trademark Office, colleges and universities held nearly five percent of U.S. corporate-owned utility patents in 1999. Many colleges and universities maintain technology transfer offices to nurture and license inventions. Also, in a new philanthropy trend, many corporations now donate patents to educational institutions. As a result of the increased patent ownership by colleges and universities, patent infringement claims by academic institutions are also on the rise. After first contacting the other party in writing regarding the alleged patent infringement and attempting to reach a settlement, the holder of the patent may file suit in federal court.

In 1999, in the first major case brought by an educational institution, the Regents of the University of California obtained a $200 million settlement from Genetech, Inc. for alleged patent infringement. Throughout nine years of litigation, the University claimed that Genetech infringed upon a patent for a sequence of genetically engineered DNA. To date, the settlement was the largest amount ever received for alleged infringement of a biotechnology patent. In another 1999 case, the Regents of the University of Minnesota claimed patent infringement by a large pharmaceutical company based on their alleged breach of a licensing agreement. As part of a settlement, the pharmaceutical company paid $300 million in royalties to the University.

Since the fall of 2001, several other academic institutions are seeking millions in damages arising from patent infringement from large corporations. Baylor College of Medicine, Cornell University and Columbia University are three institutions claiming patent infringement in filed suits that are still pending. Another closely watched case from last year pitted the University of Rochester against Pharmacia Corp. Filing suit on the same day that their patent was granted, the University of Rochester claims that its patent rights to the drug components were used in Pharmacia's painkiller Celebrex. Consequently, the University claims that it is entitled to royalties from the drug sales. Most recently, the Massachusetts Institute of Technology, filed suit with its licensee against 94 companies alleging patent infringement of its image editing software over the past six years. In August 2001, M.I.T. filed a separate suit against Sony Electronics, Inc. for infringement of four of its 18 digital-television related patents.

While the outcome of these cases is still pending, it is clear that academic institutions are pursuing patent infringement claims more seriously. To protect their interests, universities should develop a patent policy to ensure that a clear contract exists between the university, inventors and any research sponsors, especially regarding property interests and the distribution of any royalties among the parties. Academic institutions also need to be vigilant of their patent portfolios. After a careful review of the value and significance of institution-owned patents, colleges and universities can decide whether it is worth it to enforce claims of patent infringement.

For more information, contact Christine M. Leonard 888-688-8500 or by e-mail at cleonard@hklaw.com.