Universities are increasingly engaging in a grossly unacademic practice by partnering with patent trolls. In the last five years more patent-assertion companies have been buying patents from universities in the hopes of cashing in on them. In a recent study, nearly 400 universities were implicated in this type of partnership.
"Patent troll" is a less-than-cordial term used to describe Patent Assertion Entities (PAEs). PAEs are companies that act as a middleman in litigating patent infringement, and include companies like Intellectual Ventures, Lodsys, Acacia, and shell company Gooseberry Natural Resources. These companies generally operate by buying patents from individual inventors or bankrupt companies and then using these patents to assert that larger, producing companies are infringing upon it. PAEs threaten costly litigation, but often settle for a licensing fee. The money gained from either outcome is then split between the inventor and the PAE. As you can imagine this split is heavily in the favor of one party (I'll let you guess who benefits more).
The spirit of this process is a good thing. Individual inventors with less money than big tech corporations, like Apple, can monetarily benefit from their ideas, without having to produce anything. In a sense, it protects the intellectual property of the little guy. However, PAEs commonly sue companies for infringement on patents of questionable value or relevance. This behavior stifles innovation, hurts small businesses, and overwhelms the court system with frivolous lawsuits. In 2011 alone, PAEs cost U.S. companies more than $29 billion in legal fees and settlement costs.
So where do universities fall into this? Well, they are buying into this anti-innovation practice. In an effort to find new sources of revenue, universities are monetizing their research by patenting it with the intention to then sell it to companies like Intellectual Ventures. In fact, 400 universities have been implicated in this practice, and nearly 50 were named as clients of known PAEs.
Universities often state that licensing patents is a means to stimulate the economy by translating publicly funded research into products and start-ups, but the unstated aim is to make money to fund more research and the technology-transfer office itself, says Melba Kurman, a former technology-transfer officer at Cornell University in Ithaca, New York, who now works as a consultant. These two ambitions are often in opposition. “If the goal is to monetize the patent portfolio, then it would make sense to auction it off to the highest bidder,” Kurman says. “But when these patents cover taxpayer-funded research, that is not an acceptable solution.”
Nature points out in an article on the subject that these "decisions violate the spirit of a 2007 memo endorsed by more than 100 institutions. Offering guidance for ethical patent licensing, it cites the risks of dealing with patent aggregators."
By selling their patents to PAEs, universities devalue a core mission of serving the public through openly sharing knowledge, and instead become desperate paper-chasers.