IP Watchdog: Universities are NOT Patent Trolls, by Gene Quinn
This post originally appeared in IP Watchdog on June 6, 2014.
Several weeks ago I had the opportunity to speak with Jane Muir, who now serves as President of the Association of University Technology Managers (AUTM). At the time of our conversation there had been a number of so-called “news reports” that were characterizing universities as trolls. That, of course, is utter nonsense. The role of the university is to push technologies into the marketplace and work with those who license university innovation, which is the antithesis of what a patent troll does. Still, some in the popular press who obviously have their own agenda see it otherwise, which is both curious and sad.
In this segment of the interview we talk about concerns over patent trolls and Muir explains exactly how and why universities are NOT patent trolls.
QUINN: There’s this belief that innovation just happens. And that if you do come up with a great invention it’s 1, 2, 3 and you’re done and there’s going to be checks starting to arrive. And you’re going to be laying on a beach somewhere living a life of luxury. And that’s just not true. It’s not true for the individual, it’s not true for the startup, and it’s not true for the university.
MUIR: That’s absolutely correct. When you talk to an entrepreneur as an investor and the entrepreneur shows their plan with how long it’s going to take or how much money it’s going to require, you always take that and multiply by two or three, right?
QUINN: Exactly, because things are going to go wrong. Estimates are going to be wrong. I remember the first business I ever started. And this is, you know, many, many, many years ago. It was a shock to me that the electricity cost more when it was being sold to a business. Just silly things like that, you know, that if you’ve never started a business you don’t really understand that on every level, no matter how insignificant, it seems there’s a hurdle.
QUINN: And now let’s maybe tie this into some of the stuff that’s going on at the Capitol. One of the things that has been a large lightening rod is the debate over patent reform. I almost hate to call it “reform” any more because it’s really nothing more than “patent change.” I just think the title “reform” suggests it is better, which seems at least a little bit misleading. But one of the concerns driving this latest version of patent reform, which is likely to come up again at some point in the future, is a concern about patent trolls, and universities get lumped into this pile by a lot of folks because you guys are non-practicing entities. Meaning that what you do is you research and invent and then you license so that you can repeat. But somehow universities get vilified because you’re not actually making anything. And I wonder how it is that people can be confused, but I really wonder how anyone can think that the “reforms” urged by some large tech companies will actually lead to more innovation. When you’re making it so much harder, putting so many more hurdles into a process that is already full of hurdles both known and unknown, how is that going to lead to greater amounts of innovation?
MUIR: Yeah. I think you’re absolutely right on that. There’s a lot of misinformation out there. And as you mentioned earlier we have a strong patent system in the United States. It’s been the envy of other countries for years. What I see happening is instead of trying to fix the problem and focus on what really is the problem, we’re trying to fix something that isn’t broken. And you know, the problem is so often the case that you have a subset of people who will take advantage of a system or a program for their own personal benefit without regard to the greater good. So really what needs to happen here is focusing on how you address those real trolls who are doing it for personal gain as opposed to reforming and revamping a complete system that again has generated the success that it has to date in terms of the new drugs and all of the new products that are making the world a better place.
QUINN: I agree with you100% because I don’t think anybody who is in the industry would pretend that there aren’t some really, really bad actors out there that are doing things that just give everybody in the industry a bad name. And that some federal courts have gone as far as to call extortion-like behavior.
MUIR: Yes. And for some reason they’re making it sound like the universities are in partnership with them. And that could not be farther from the truth.
QUINN: Well, talk about that because there has been some stuff out there in the media that has said universities are going to be going down this patent troll path. And there was a big I guess there was a law review article that said that the biotech and pharmaceutical industry better be ready because if the university patent troll machine is heading their way.
MUIR: Once again there’s a lot of misinformation out there. If you really drilled down on some of the reports that are coming out and some of the basis upon which they’re drawing their conclusions, it leaves you scratching your head a bit. If you look at where the abuses are taking place right now with respect to the trolls and the patent litigation, 80% of that is in the software industry. If you look at the number of patents in the software industry versus the biotech industry, it’s a ratio of about 10 to 1. Within the biotech industry, the majority of those new discoveries that are being developed are at universities, right? Because those biotech discoveries are being generated with federal funding. Once again the universities are not collaborating with the patent trolls to sue their licensees. I mean it just doesn’t connect on many levels.
QUINN: That’s right. Because your job is to get this stuff into the market. Licensing to a troll is not getting this into the marketplace.
MUIR: That’s correct.
QUINN: And the other thing that strikes me about all of this is that when you’re talking, particularly with like the pharmaceutical industry, your point that the number of patents that are relevant is so much smaller is a great one because the pharmaceutical industry really is only going to care about largely one claim in one patent and that’s the claim that covers the version of the drug that the FDA approves. You know, and so to think that there’s these massive patent portfolios out there that could just reign down on companies is I think a little bit naive. It just isn’t the way the industry works.
MUIR: I think you’re absolutely right.
QUINN: And then the other thing that strikes me is—and I’d like to get you to talk about this—how does your typical biotech and pharmaceutical company work with the university? Because it seems to me in that space at least from the outside looking in that that’s probably where we’re getting the greatest collaboration. And it’s an important collaboration between the scientists at the university and the private sector.
MUIR: Yes. Because that goes back to the fact that so many of these discoveries are early stage. When a company licenses one of those early stage technologies, a lot of what the license is based on is not just the patent itself, but also the expertise and the credibility of the scientists who’ve developed the patent. Once they license it oftentimes they will fund additional research in that faculty member’s lab to help further develop that technology because those scientists are the ones best suited to do that.
QUINN: Right. And I know you can’t say in any specific way that this is the way it always happens. But isn’t the more general way that this happens is once that kind of collaboration starts then the private company that’s collaborating with and giving resources to the university— they have a vested interest in any patents that come from further research usually, right?
MUIR: So that depends. If I understand your question correctly, if they fund the research that doesn’t automatically give them the rights. However, it goes back to what we were talking about earlier in terms of what a university is trying to do. Their ultimate goal is to get that discovery into the market. And if there’s a company that is that interested, that’s already licensed one of the patents and there’s a related patent that comes out of it and they’ve got the plan and they’re moving forward, they’re working with your scientists, they’re logically the first person that you would go to and say, hey, let’s execute the license because everybody wins.
QUINN: Okay. So now when you hear that universities, and maybe we’ve already addressed this, but maybe this just so we’ll tie it with a bow here. When you hear that universities are the new patent troll, what do you think and how would you if somebody were to bring that up to you at, I don’t know, say at a dinner party or something, how would you in a short timeframe explain to them no we’re not and here is why?
MUIR: The universities are not the next patent troll because at the end of the day, university tech transfer offices were put into place to ensure that the new discoveries that happen in the research laboratories ultimately get out into the marketplace by way of product and services that improve the human condition. The big difference is with patent trolls. They’re not interested in commercializing discoveries. They’re interested in using those patents to sue legitimate companies who do want to move those products into the market. From the commercialization standpoint that really is the fundamental difference. Patent trolls have no real interest in commercializing. Their interest is in litigating.