Schools that sue: Why more universities file patent lawsuits

(Reuters) - During Apple’s most recent annual tech-fest, the company unveiled new iPhone features in front of a packed arena in San Francisco. Some of its lawyers, meanwhile, are preparing for a different stage: A courtroom in Madison, Wisconsin.

There Apple will defend itself before a federal jury against allegations that it used technology from the University of Wisconsin-Madison in the iPhone’s microprocessors without permission.

It is the latest court action to date over patents involving universities, now-familiar players in suing over intellectual property.

The Wisconsin Alumni Research Foundation (WARF), the university’s licensing arm, sued Apple in federal court last year alleging that Apple infringed its 1998 patent for greatly improving chip efficiency with the A7 processor, found in devices such as the iPhone 5S and iPad Air.

Apple declined to comment. In court papers it denied infringing the patent and claimed it is invalid.

Apple’s sheer size, deep pockets and willingness to adopt and buy technologies from other companies make it a prime target for infringement litigation by patent owners, including universities, and the iPhone is one of the most commonly accused products.

But other tech giants have also faced such allegations from universities. For example, WARF sued Intel Corp over the same patent in 2008. The case settled on the eve of trial. Boston University sued about 40 tech companies in 2013 alleging infringement of a professor’s patented technology for producing blue light-emitting diodes. Most of the defendants in that case, including Apple and Sony Corp, have settled.

In one of the most high profile cases pitting a university against a tech company, Carnegie Mellon University successfully sued semiconductor maker Marvell Technology Group in federal court in Pittsburgh for infringing two hard disk drive patents. An appeals court in August said Marvell must pay at least $278 million in damages.

According to unpublished numbers compiled by University of Alberta professor Tania Bubela using data from patent analytics firm Lex Machina, educational institutions file between 45 and 50 patent-related suits each year in the U.S.

“Almost every major university has a lawsuit or two in process,” said Calvin Chu, former licensing officer of Columbia University’s tech transfer office, Columbia Technology Ventures.

The litigation has led to debate over the role of universities, which receive government money for research that often leads to patents.

Critics say some universities have become too aggressive in suing or demanding license royalties for their patents, behaviors that they say are more akin to so-called patent trolls - companies that make money solely by enforcing patents, rather than making products.

“The question is, will the universities maintain their positions as good stewards (of taxpayer money), or are they going to be drawn towards behaving more like trolls? I think we’re at a turning point,” said Robin Feldman, a professor at the University of California Hastings College of Law.

Universities, like any patent owner, say they must protect their intellectual property rights. And legal experts note they are sometimes contractually obligated, in a joint venture, for instance, to litigate over patents.

They are also not solely after the money like trolls are, said Jason Schwent, an attorney at Thompson Coburn in St. Louis, Missouri.

“They do want to keep the white hat in the process,” he said. “They can’t be ruthless.”

Universities are increasingly licensing their technologies or partnering with companies to bring ideas to market, according to a recent survey by the Association of University Technology Managers (AUTM), the umbrella group for intellectual property officials for more than 300 universities and other research institutions.

Just like a lawsuit, however, licensing can be used to enforce a patent. This comes in the form of demands that another company pay for a license to a patent, based on a product it has on the market. These demands are often made under the threat of litigation.

Researchers are casting doubt as to whether this leads to innovation.

A new study by UC prof Feldman and Stanford Law School’s Mark Lemley surveying 181 in-house company lawyers found that when a patent owner, whether a troll or a university, demanded the company take a license to its patents, it rarely led to new products or other kinds of innovation, such as joint ventures.

The study, to be published later this year in the Iowa Law Review, acknowledged that universities generate a large number of new inventions, and strike deals with companies better able to bring ideas to market. But in most cases, it is the technology that is being sold, often before a patent is granted or an application for one is even filed.

“The more recent university practice of suing or demanding licenses from existing companies appears much less likely to be driving innovation,” the authors said. (Additional reporting by Elizabeth Woyke)