Are Universities Patent Trolls?

Abstract

The confluence of two significant developments in modern patent practiceleads me to write a paper with such a provocative title. The firstdevelopment is the rise of hold-up as a primary component of patentlitigation and patent licensing. The second development in the last threedecades is the massive surge in university patenting. At the confluence ofthese developments is a growing frustration on the part of industry withthe role of universities as patent owners. Time and again, when I talk topeople in a variety of industries, their view is that universities are thenew patent trolls.In this paper, I argue that Universities should take a broader view oftheir role in technology transfer. University technology transfer ought tohave as its goal maximizing the social impact of technology, not merelymaximizing the university's licensing revenue. Sometimes those goals willcoincide with the university's short-term financial interests. Sometimesuniversities will maximize the impact of an invention on society bygranting exclusive licenses for substantial revenue to a company that willtake the invention and commercialize it. Sometimes, but not always. Atother times a non-exclusive license, particularly on a basic enablingtechnology, will ultimately maximize the invention's impact on society byallowing a large number of people to commercialize in different areas, totry out different things and see if they work, and the like. Universitypolicies might be made more nuanced than simply a choice between exclusiveand nonexclusive licenses. For example, they might grant field-specificexclusivity, or exclusivity only for a limited term, or exclusivity onlyfor commercial sales while exempting research, and they might conditioncontinued exclusivity on achievement of certain dissemination goals.Finally, particularly in the software context, there are many circumstancesin which the social impact of technology transfer is maximized either bythe university not patenting at all or by granting licenses to thosepatents on a royalty-free basis to all comers.Finally, I think we can learn something about the raging debate over who'sa patent troll and what to do about trolls by looking at universitypatents. Universities are non-practicing entities. They share somecharacteristics with trolls, at least if the term is broadly defined, butthey are not trolls. Asking what distinguishes universities from trolls canactually help us figure out what concerns us about trolls. What we ought todo is abandon the search for a group of individual companies to define astrolls. In my view, troll is as troll does. Universities will sometimes bebad actors. Nonmanufacturing patent owners will sometimes be bad actors.Manufacturing patent owners will sometimes be bad actors. Instead ofsingling out bad actors, we should focus on the bad acts and the laws thatmake them possible.