Apr 16, 2013Science and Technology
NPE licensing and tech transfer

In the past we’ve written pretty extensively on some of the problems plaguing the patent system, from the USPTO to NPEs, and some possible solutions for them. Aside from promoting and protecting innovation, an auxiliary goal of the patent system is to facilitate technology transfer--finding commercialization routes to get patented inventions from the lab bench out to the consumer’s store shelves. In an increasingly developed and widespread tech marketplace, the importance of careful patent licensing is increasingly salient and warrants greater attention from existing research institutions.

Patent licensing becomes an industry

“Patent troll” was the IP industry’s favorite pejorative of 2012, but in 2013 the popular perspectives are changing. In this past year the term "patent troll" has lost ground  the almost euphemistic “non-practicing entity” or “patent assertion entity” as the lines have become blurred between the good guys and the bad guys in the IP game. The common theme in this storyline is licensing, and the moral is that there’s a lot of money in it. According to WIPO, licensing “is perhaps the most likely, and therefore most common commercialization pathway” next to actually making a patented product. In hindsight, the rise of the licensing industry isn’t too surprising. There’s money in it, and business will go where there’s money to be made (and will become very good at making it).

In October of last year, defensive patent aggregator RPX estimates that there were 500 non-practicing entities in the US. A 2012 report found that NPE activity is growing rapidly. In the current system, which seems unlikely to change substantially in the near future, the “NPE regime” of intellectual property monetization is a lucrative one. And as this model becomes increasingly ubiquitous, our understanding has become more accepting: “don’t hate the player, hate the game.” Now, I believe the focus should be on how to get a bigger share of this money into the hands of researchers and inventors.

The game is here for good

A mid-2012 whitepaper by Jennifer Wolfe of Wolfe-SBMC points out that the licensing-focused, non-practicing NPE regime is here to stay -- “it is a burgeoning industry that will not go away, but will expand and evolve.” In fact, the classic division-of-labor-esque argument of “let the inventors take care of the inventing, and let us take care of the monetization” makes a lot of sense in light of the new licensing industry. The problem is that the inventors are getting the short end of the stick. The attorney-laden trolls aren’t paying what many would consider a fair cut back to the small companies and research institutions that drive this country’s innovation.

So what of the “other” non-practicing entities: universities and research institutions? On paper tech transfer offices share an important goal with corporate patent assertion entities: to generate revenue from a portfolio of patents so that researchers don’t have to. At the end of 2011 the University of California tech transfer office held a total of 2,104 active licensing agreements and generated a total revenue of $164.6M. By comparison, Acacia Research has completed more than 1,180 licensing agreements, generating $250.7M in 2012 alone.

This analogy is imperfect, to be sure, but I take this as an indication of the vastly under-exploited potential of the patent portfolios largely sitting dormant at research universities and other institutions around the country. Even at NASA, for whom tech transfer is an important strategic goal, a recent audit report found that “funding and staffing levels indicate that technology transfer is not a top priority.”

If there are so many patent licensing opportunities that NPEs are cropping up and making money hand-over-fist, I want research to get a bigger slice of the pie. Particularly research from the extensive and well-established network of research universities and labs across the country responsible for so much of the world’s innovation. I want the licensing revenue to go to those who have the researcher’s interests at heart. To me this means there is a lot more room for tech transfer offices to locate and pursue legitimate licensing opportunities for their existing patent portfolios. We need to figure out how to help research-focused non-practicing innovators work more effectively to monetize their assets. Don’t hate the game, just play it better than they do.

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