Dealing with university patent accumulation

A while ago I worked through the idea of patent accumulation as a problem for economic development. See What Happens Here Is Excluded Here.

The gist is, if one accumulates research patents primarily in one’s own jurisdiction and these go generally unlicensed (or otherwise made available), then the overall effect is to give *all other jurisdictions* an advantage globally in the development and use of the invention.

This is particularly important for research inventions because they often are so disconnected from commerce already (and that’s one of their virtues!).  This means, however, that there is an even longer latency than in commercial settings for any use.  At least a company can decide pretty quickly whether it is going to use what it has invented, hold it to trade with others, or drop it altogether.  A university with research patents can’t do that–it depends on the decisions of others to adopt, and can’t take the first no for a final answer.

The primary market that is constrained by research patent accumulators is their local jurisdiction, where the existence of unlicensed patents creates uncertainty, overhead in gaining access, and  the prospect of lower margins (due to royalty claims).  US universities typically cannot afford the cost of foreign patent filings (and translations) and so generally take it only through the PTO stage and then drop everything but the US filing.

The effect is *exactly the opposite* of a national competitiveness program.   We have been working on linking this problem of patent accumulation by non-ops like universities with economic development programs, where one licenses under general public terms for make/use and under semi-structured terms for commercial sale to counter this effect.

Thus, while there is an argument that monopoly positions allow for charging higher prices (than there would be with competition–or, er, at least competition w/out price fixing), that argument itself isn’t particularly compelling where the proposed product has to compete with existing stuff on the market–alternative ways of doing things, for instances.  It does not matter that one can charge $80K for a plug-in car because of a monopoly position if the primary market for cars is at $40K and under.   The margin advantage of the patent position is utterly useless in such a situation.

We can be blunt.  The present model of university research invention administration–patent accumulation–is entirely opposed to regional or national economic development.   Perhaps more than anything else, this needs to be called out.  University TLOs don’t even accept that this is a problem.  It isn’t discussed.  The only thing that matters is how to figure a better way of shaking down industry.  Unlicensed patents under Bayh-Dole in particular need to be set free.

How do we go about opening up university patent portfolios so they do not work against local and national economic development?

One way to do this is with make/use commons for regional access with no formalities.  Want a license? open up shop in the region and you have it.  A second way to do it is with semi-structured standard licenses on an exchange, such as Science Commons is developing with GreenXchange.  This removes the uncertainty and delay in negotiating all the various details of a patent license.   A third way to do is to dedicate rights forward to a standard-setting body, and at least grant a general license for essential claims.   A fourth is to grant free licenses to targeted companies who one aims to collaborate downstream.  Rather than making them pay, why not get them to pay attention?  Provide them with a tactical interest up front.

Universities now are reaching the point that their unlicensed patent portfolios are beginning to look a lot like the federal agency portfolios in the 1970s.   The operating difference appears to be not a reduction in the administrative overhead of obtaining a license, but the greater exposure to litigation now run by US companies in dealing with US universities rather than with federal agencies.   And shakedown litigation where there is no other line of development to defend is clearly a university attack on innovation, not a use of the patent system to promote innovation.

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