Working with ‘Patent Trolls’ Could Bring Income, but at What Cost?

January 1, 2014 – In The News
Technology Transfer Tactics

Gerard P. Norton was quoted in the Technology Transfer Tactics article “Working with ‘Patent Trolls’ Could Bring Income, but at What Cost?” While the full text can be found in the January 2014, issue of Technology Transfer Tactics, a synopsis is noted below.

While there is no hard consensus about whether monetizing patents through patent assertion entities (PAEs) is a good move for universities, those involved say the decision should be made carefully and with an eye toward unintended consequences that could negate any financial gain.

PAEs, also known as “patent trolls,” are under fire from legislators and the business community. Some university TTOs do work with PAEs but are not eager to talk about it, while others have decided that PAEs pose too much risk and do not fit with their missions.

Norton notes that there are over 2,000 cases pending in U.S. District Courts in which a PAE has asserted infringement of a patent.

Norton understands that universities are faced with strapped budgets, and a PAE offering a deal for a group of patents could be hard to turn down. The trend is for universities to work with PAEs more than in the past, Norton confirms, but not without some negative consequences.

“It’s a double-edged sword. Working with PAEs can have a chilling effect on future development and on a university’s efforts to establish relationships in the business community,” he says. “Are large pharmaceutical companies going to want to work with a school known for using PAEs?”

Universities that take part in that litigation can benefit financially, but it may bring on a PR nightmare, Norton says. “If the CEO is a graduate of the university, that’s going to be an embarrassment,” he says. “The university can protect itself by exercising some control over which entities [can] be sued. At least have a right of first refusal.”