INNOVATION AND LITIGATION: TENSIONS BETWEEN UNIVERSITIES AND PATENTS AND HOW TO FIX THEM

Abstract

Universities that own patents have a problem. While nearly all are keen to enhance their revenue generated from patents, few are eager or prepared to enforce them in court, alone or with their exclusive licensees, should a third party deploy a product or process covered by a university-owned patent. Yet strict prudential standing requirements imposed by the United States Court of Appeals for the Federal Circuit (“CAFC”) effectively require university participation as plaintiffs in enforcement lawsuits over their exclusively licensed patents, regardless of a university’s effective ability or enthusiasm to participate in a given action. Supported by forty years of lawsuit data and original survey and interview data collected from high-level administrators at universities that litigate patents, this Article explores in depth the complicated legal and policy tensions presented by university participation as plaintiffs in patent infringement litigation. I offer two proposals for alleviating these tensions. The first proposal urges universities to move toward a coherent position on patent ownership and enforcement, particularly in light of recent trends in higher education finance. The second proposal outlines a potential legislative amendment to the Patent Act that would allow universities to enjoy the revenue-generation aspect of patent ownership while freeing them from the legal compulsion to participate as co-plaintiffs with their exclusive licensees in enforcement actions. This novel tweaking of the CAFC’s prudential standing requirement would save universities untold time and money that they currently spend pursuing litigation. By permitting universities to focus more on innovation and less on litigation, this proposal also would better align societal expectations for university commercialization efforts with the public interest.