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Patent lawsuit victories are turning heads at Pittsburgh universities

Andrew Russell | Tribune-Review
Newell-Simon Hall, an office building at Carnegie Mellon University, was built with the proceeds of the sale of Lycos, an early search engine that was developed at CMU in the 1990s.

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By Debra Erdley

Published: Tuesday, Jan. 22, 2013, 12:01 a.m.

Universities are finding there may be gold in the patents their researchers produce, but the mother lode is in lawsuits to protect those patents.

The eye-popping $1.17 billion a jury awarded Carnegie Mellon University one day after Christmas and the $85.8 million a judge awarded the University of Pittsburgh last spring are turning heads in academia.

“After the CMU award, I'm sure there are a lot of university deans who want their tech transfer offices to get a little more aggressive” protecting patents, said Chris Barry, a certified public accountant and forensic accountant who tracks patent cases for PricewaterhouseCoopers.

Officials at Pitt and CMU declined to discuss their court cases, citing ongoing litigation.

In the Pitt case, a federal judge ruled that Varian Medical Systems, a California medical device maker, infringed on Pitt patents for a respiratory device. A jury in the CMU case found a Bermuda-based chip manufacturer, Marvell Technology Group LTD, appropriated CMU research for a computer chip used in high-speed drives.

It's unclear how much either school could collect if they prevail in appeals.

Dr. Allen Black, a physician-turned patent lawyer who teaches biotechnology patent law at Pitt, said that could vary depending on legal costs and what the universities pay their researchers.

The Bayh-Dole Act, a 1980 federal law designed to funnel the fruits of federally funded research to the marketplace, stipulated that money from licensing and royalties should flow to the researcher and the university to encourage innovation and fund research.

Although the Pitt and CMU awards are being challenged, their impact is evident.

“Universities have increasingly looked to exploit the financial potential of their patent portfolios. Part of this stems from university administrators' hopes of generating new revenues. ... Part of this also stems from the desire to emulate high-profile cases, such as the CMU case, in which universities have hit a ‘home run' by receiving significant damage awards or licensing income,” said Peter Lee, a professor who teaches patent law at the University of California at Davis.

A recent survey by PricewaterhouseCoopers found those who sue to protect patents win about two-thirds of the time.

University patent lawsuits accounted for only 18 of the 1,751 cases that made their way through the courts between 1995 and 2011, the accounting firm found.

Michael Shamos, a lawyer and computer science professor at CMU who testifies as an expert in patent infringement cases, said part of the growth in patent litigation stems from the economic downturn.

“There is a saying in the patent field that it is recession-proof. When times are good, companies have no trouble spending a lot of money for patents. Whenever times go bad, companies start scrounging around for money, so if they own a lot of patents, they start litigating,” Shamos said.

Combined, the two schools pulled in more than $1 billion in government and corporate research grants last year.

Pitt has 490 patents in a portfolio that dates to 1996. CMU has had 457 patents issued to it since 2002.

“It's a huge step to go from an issued patent to actual money. Most patents that are granted never produce anything,” Shamos said.

Indeed, university earnings on patents from research often are paltry compared with research spending.

Last year, CMU's best by far in a decade, the university technology transfer office pulled in $19.9 million in income from licensing. A significant chunk of that came from the sale of Carnegie Learning, a spinoff company in which CMU held a stake.

When Lycos, an early search engine developed at CMU, went public in the late 1990s, the proceeds were sufficient to underwrite the $20 million construction of the building that houses computer science department offices and facilities.

But Lee said many research schools barely break even on patent and licensing revenue and some lose money trying to capitalize on research.

Jonathan Parks, a patent lawyer with Pietrogallo, Gordon, Alfano, Bosick & Raspunti in Pittsburgh, wrote the patent for which CMU won its case. He declined to discuss it, but said it's important for universities to take their patents seriously.

“Universities spend a lot of money innovating and it is important that they protect it. Patents are the only legal monopoly the U.S. government grants,” Parks said.

Debra Erdley is a staff writer for Trib Total Media. She can be reached at 412-320-7996 or derdley@tribweb.com.

 

 

 
 


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