Universities seek to ease the technology licensing process
A controversial new patent pool is designed to streamline the process by which big tech acquires the rights to use academic inventions.
David Kramer, 7-30-21, Physics Today
Fifteen prestigious universities have agreed to jointly license the patents they own in three physical sciences fields, aiming to become a one-stop shop where large tech companies can negotiate agreements to use their intellectual property.
The University Technology Licensing Program (UTLP) began operations in September 2020, when the University of California’s Los Angeles and Berkeley campuses signed on. They were joined by Caltech and Brown, Columbia, Cornell, Harvard, Northwestern, Princeton, and Yale Universities along with SUNY Binghamton and the Universities of Illinois, Michigan, Pennsylvania, and Southern California.
In January the UTLP received antitrust clearance from the US Department of Justice, which concluded that the arrangement was unlikely to harm competition. Nonetheless, the program has drawn criticism from some digital-rights advocates, who argue that the partnership could enable the universities to pressure companies into paying for flimsy patents.
The UTLP partners have agreed to pool their patents in the areas of big data, the internet of things (networks of sensors, smart home devices, and other physical objects connected over the internet), and autonomous vehicles. The organization will bundle as many or as few of those patents as the prospective licensee wants, says Orin Herskowitz, senior vice president of intellectual property and technology transfer at Columbia. A 15% share of the revenues from licensing will be split among all member universities regardless of whose patents are licensed.
The partnership is meant to make it easier for big technology firms to license patents that are held by the member universities, Herskowitz says. “What we heard from industry is that their products often require licenses for many patents from many universities. If they had to go door-to-door, the transaction costs would be too high, even if they like and respect the patents.” As a result, a company might decide not to launch a new product, Herskowitz explains, or simply to proceed without any of those licenses. “There might even be patents they are using,” he says. “I won’t take the bait on the question of whether they’d infringe on them, but I’ll let you draw your own conclusions.”
But before issuing a single license—and as UC president Michael Drake predicted—the UTLP has been labeled a patent troll. The influential digital-rights advocacy organization Electronic Frontier Foundation (EFF) argues that the UTLP is designed to extract fees for the use of patents whose validity likely wouldn’t stand up in a court challenge.
A patent troll, also known as a nonpracticing entity (NPE), is a company that purchases the rights to inventions it did not make for the sole purpose of monetizing them. Companies that may be infringing on those patents will often pay a licensing fee to an NPE rather than risk incurring substantial litigation costs to have them invalidated. NPEs typically contract with law firms that work on a contingency basis to defend the patents against court challenges, thereby keeping their own costs low.
The EFF, which advocates for digital user privacy, free expression, and innovation, maintains that the US Patent and Trademark Office issues lots of patents, particularly for software, that are not sufficiently novel or inventive. Since the technology areas selected by the UTLP involve software, “the inference is that the [tech] companies are going to be asked by this organization for licenses to patents that are junk,” says EFF senior attorney Kit Walsh. Worse, the EFF says, demands for payment and threats of litigation could prevent small companies and startups from bringing new technologies to market.
Herskowitz says the UTLP doesn’t meet the EFF’s own definition of a patent troll because the member universities are the sources of the inventions. “We’re sad to see this kind of characterization; we worked so long and hard to try and do the right thing,” he says, noting that discussions leading to the patent pool’s formation began in 2016. He argues, too, that the UTLP patents are “strong and useful” and that universities spend part of their limited patent budgets maintaining them.
Herskowitz adds that the UTLP’s primary audience is large tech companies, not small- and medium-size businesses. But Walsh says the UTLP has made no binding commitment to that effect. Asked whether the EFF opposed other patent pools that have been formed by universities, Walsh declined to comment.
In a September memo to the UC Board of Regents, Drake acknowledged that UC could incur negative publicity from a perception that the UTLP is a patent troll. Still, on balance, Drake wrote, the pros of joining outweighed the cons. In addition to raising money to support more research at their institutions, the universities expect their patent-bundling vehicle will attract commercial investment in technologies that have not been successfully licensed via a bilateral “one patent, one license” transaction, Drake wrote.
Shawn Ambwani, cofounder of Unified Patents, an independent membership organization that aims to deter NPE activity, doesn’t consider the UTLP a troll. Universities have checks—and a desire to avoid bad publicity—that discourage them from demanding licensing payments, he says. In addition, tech giants often support universities financially in other ways that would discourage the institutions from enforcing their patents. “There’s no long-term upside” for a university to take legal action, Ambwani says.
Herskowitz agrees: “Universities do everything possible to avoid infringement suits. That’s never been the preferred mode. It would be a last resort.”
Drake’s memo acknowledged the potential drawbacks to the university should the UTLP initiate enforcement or other action against an entity “with which UC has a significant relationship.” Negative impacts could occur even if UC were to exclude its own patents from the litigation.
It’s unlikely that member universities would threaten small companies with demands for payment, Ambwani says. “It hasn’t happened in the past, and universities don’t have the bandwidth to focus on small companies.” Since UTLP members retain ownership of their patents, he notes, it would be up to individual universities to pay the costs of litigation. Herskowitz says the question of legal standing would have to be resolved on a case-by-case basis...
Full story at https://physicstoday.scitation.org/do/10.1063/PT.6.2.20210730a/full/.
