UC Berkeley to make $160m per year on its patents

University patent policies are, these days, entirely about money, and specifically about the university making money by exploiting patent positions taken from faculty, students, staff, and others. But as money-making policies, they are generally incompetent, foolish, and wasteful. It is not that there is not money to be made in exploiting patent positions. Indeed, there is good money there, and done well, with a good feel for litigation strategies, one can see a consistent 3x return over costs. So if Berkeley wants $40m a year, then it should be budgeting at least $15m per year in litigation expenses on top of its other costs to operate a patent profit office, and it should do just fine.

I have come up with a simple plan for getting to $40m per year in royalties. No, check that, $160m per year in royalties. It’s easy to do this. You just have to hire the right person from business, from some big company in industry, with wealthy and powerful friends, with a track record of kicking ass. I have highlighted the key words for folks less familiar with the technical vocabulary we use here at Research Enterprise.

Here’s the plan.

1) File 10 infringement cases. Expect to pay $1m or so each.  Ask $200m, settle for $20m.  Win one and you are home free for five years. Settle with 2 a year and you’ve made your quota with hardly a fight, just sabre rattling really. Expect to have a number of patents declared invalid. Who cares? They are just sitting there now, like bombs that will never get dropped. Tear-water tea. Good lord, it’s obvious  isn’t it? But it just keeps getting better.

2) Some infringement suits can drag on and on, and even longer when those big judgments are being appealed. So there needs to be a second program going in parallel. Choose weaker companies to start, give them the picture of the company-destroying terror that awaits them, and they will jump at the chance to settle for pennies on the dollar, or, say, a license reflecting past infringement paying, er, $200K per year. They will pay that much or more for legal help anyway when you sue them. More for bigger companies with more infringement guilt. Now you need only 200 of these sorts of deals, and you have another $40m per year, easy. A decent patent will have 10 or more infringers, so we are looking at maybe 20 patents to put into play every year. Remember, UC Berkeley presently has over 1000 inventions under management, even before we amp up the project to industry-grade levels.  We are being conservative here. Done right, the small fry can be granted the added benefit of saying they’ve got a license deal with UC Berkeley. (California law otherwise prohibits such a thing, without UC’s approval.) That’s not just any license deal.  It’s with UC Berkeley for goodness sake. That right there ought to be worth $150K a year in advertising. There are hundreds and hundreds of these companies. You only need 200 of them in five years. It’s like bullseyeing womp rats in your T-16.

3) Offer protection to companies that sponsor research at UC Berkeley, or don’t want to run afoul of such a resourceful, resolute re-commitment to public benefit. These folks can agree to participate in a research reconciliation pool, for only $1m a year. Forty of these companies gets you $40m per year, and $1m a year is cheap compared to facing the likelihood of a $200m infringement case with the prospect of treble damages and attorney’s fees. And heck, $150K of that fee is just the thrill of having a deal with UC Berkeley. As a kicker, throw in access to a range of inventions that come with the pool, so this is a prospective win-win for everyone. Companies acknowledge the yoke of public benefit, and UC Berkeley receives funds to power its litigation program and support more research. Since this pool includes all the patents you are suing over anyway, there are no new patents that have to be committed, unless you feel the need to sweeten the pot from time to time.

4) Right there we are at $120m per year. And we haven’t even touched exclusive licensing directed at feeding the wealth-making needs of speculative investors in startups (just flip them like flapjacks, guys) and licensing exclusively to those hungry biotech, pharma, network, and energy companies. Just 40 licenses at $1m per year. Any one of these licenses can scale to $10m or $20m per year.  So it may be that only 2 or 3 licenses are really needed. But we are being conservative, and overkill is a virtue. So, 2 or 3 patents, but aim for 40 here.

20 can be startups, like, um, yeah, like Utah has been doing, except at UC Berkeley we will get actual investment in these companies because they aren’t just there to bamboozle the state legislature for more subsidies. They are there to turn a profit for UC Berkeley. Good grief, Utah is so lame.

20 can be licenses to the big companies ready to develop real products from research rather than the pathetic efforts they are making on their own. Pay no attention to the weak stats from Stanford, where they have only got 1 in 400 inventions generating $5m cumulatively. When they see this new method in action, they will innovate, too.

At UC Berkeley, you are finally going to do things right, like proper hard-nosed business folks do. Like business folk do who have a big legal budget and have been cut free to cut loose and give industry a whumping it deserves. Once folks see what happens when UC Berkeley holds a patent that is infringed and yikes, they will be lining up to take proactive, prophylactic licenses. That’s another $40m per year.

So, looks like $160m per year, easy, in five years. Just 10 lawsuits, 200 settlements, 40 protection partners, 2o startups, and 20 prophylactic licenses with the big players. Maybe involving 50 patents, maybe 75. UC Berkeley gets 175 invention reports per year. We are talking 75 patents out of 1000 or more new inventions, not counting over 1000 inventions Berkeley already has under management. All we need is 2.5% effectiveness in the portfolio. Expect to spend $100m to $300m, but then you are looking at $2b in return. If you want to scale back to a mere, modest $40m a year, fine. But then we are only looking at half a percent of the portfolio. One will have to build in artificial delays and stuff to keep near such a low target.

First things first, of course. UC Berkeley has to hire someone for say $350K/year perhaps with some incentives and perks on the side. Make that someone with a hard nose and steel-toed boots. Someone with a history of getting what s/he wants by going and taking it from whomever has it. Get into two or three of the all-hell-breaks-loose lawsuits right off.  It might be that you will be down ten million before the bucks start rolling in. But my attorney friends assure me that in a perfectly just world, it’s about 50-50 for every lawsuit, so there’s bound to be an upside, if UC Berkeley just, uh, invests in the program I’ve laid out here and stays with it. This is a plan that cannot go wrong:  attack, settle, protect, repeat, and everyone else will just get it. The only losers will be the loser companies that don’t think prophylactically.

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