The patent system was enshrined in the American Constitution as a tool to promote innovation and invention. But as we have lamented again, and again, and again, the current system often has the opposite effect. In recent years, patent trolls—more politely known as non-practicing entities or NPEs—have hijacked the patent system, amassing hundreds and thousands of overbroad, low-quality patents with the sole purpose of suing and forcing companies into costly settlements. Unfortunately, this abusive patent litigation disproportionately impacts startups, entrepreneurs, and innovators (more than 80 percent of patent troll victims are small- and medium-sized businesses, and 55 percent of troll suits are filed against companies with revenues of less than $10 million).
There’s been lots of talk about ways to curb these abusive litigation tactics, but efforts to push legislative solutions through Congress have stalled for a variety of reasons. In response, advocates like us are working to come up with creative solutions and new approaches that combat the problem at an earlier stage: keeping trolls from acquiring patents in the first place. That’s why we’re partnering with the Electronic Frontier Foundation on the Reclaim Invention initiative, which aims to address one of the unexpected sources of troll behavior: American universities.
Thanks to a bill passed in the 1980s, universities are allowed to patent their inventions and may then choose to either sell or license those patents to third parties (a practice referred to as technology transfer). The intended purpose of this is to foster the commercialization of technologies so they can eventually benefit society. And often they do—countless successful startups were built around innovations born out of American universities.
But unfortunately, these patents often end up in the hands of patent trolls. While it’s difficult to determine exactly how many university patents trolls control, dozens of universities have standing agreements to sell patents to NPEs. Intellectual Ventures, a well-known patent troll, has relationships with some 400 universities and has acquired patents from at least 60 American schools.
So, this means that patents that originated at universities (and were paid for in a large part by the public) are now being used by companies whose business models rely on using predatory litigation to target and undermine companies whose business models are based on innovation and invention. That seems pretty backwards, right?
Fortunately, universities can do something to fix this problem: before selling or licensing a patent, they should assess the business practices of the potential buyer or licensee and make sure it doesn’t match the profile of a patent troll. This small step can ensure that university patents are used responsibly and don’t undermine innovation.
We are encouraging university leadership to sign the Public Interest Patent Pledge (PIPP), which enshrines the above principles. Universities should be making every effort possible to keep their inventions out of the hands of patent trolls. If you agree, you can encourage your university to sign the PIPP. Absent Congressional action on patent reform, there are still ways to combat troll tactics in the short-term. We hope that universities will join us in this fight.
