State Immunity from Patent Infringement: Bargaining for Grant Money

In 2000, Todd Dickinson testified before Congress that the state immunity from patent infringement was unfair – especially because states are such major players in the patent system. Since then the situation has become even more dramatic. States and their entities (largely university systems) have obtained thousands of patents and have recovered hundreds of millions of dollars in royalties.

In his testimony, the then PTO director suggested what he saw as a “reasonable and equitable approach” to condition the ability of state institutions to obtain federal protection of intellectual property on their waive of sovereign immunity for patent infringement.

“A legislative solution which elicits state waiver of sovereign immunity in exchange for the right to own federally-protected intellectual property must respect, and be in harmony with, the commercialization goals of the Bayh-Dole legislation.”

Clearly, this type of activity is anti-federalist, but it is not far afield from current practices in other areas of government.

Notes:

21 thoughts on “State Immunity from Patent Infringement: Bargaining for Grant Money

  1. I think any type of “immunity” from the patent system negates the entire purpose of having it at all. What is needed are stronger patents to minimize patent infringement and increase patent enforcement.

  2. Thanks for the enlightening, if repulsive, info, Jon.

    Taking this line of thinking another step leads to the “logical” conclusion then that we; and the companies any of us work for; also operate under the umbrella of state immunity … since we also provided portions of grant money … by paying our state taxes (whether income, business, or sales).

  3. “One panelist said prior art must be ignored to foster creativity.”

    LOL. Once again we see the business folks engaging in the Big Lie, equating the generation and filing of patent applications with innovation itself.

    Disgusting.

  4. Mr. Cameron, assuming the startup is separate from the university and is not a state entity, it has no immunity for its actions (cf. the more complex situation with federal government contractors). Sue ‘em back to the Stone Age if the facts and law permit.

  5. I read an article about the University of Rhode Island who received a grant to invent a patent we already owned. They won awards and more grant money. I called the professor to introduce myself. He seemed alarmed but claimed he had never heard of our company. When I asked him if he googled the name of his “invention” (which would have shown dozen of links to our company), he informed me that they do not Google “because of prior art issues.”

    I then discovered they had licensed the patent to a startup who now claims state immunity because they are only licensees. This startup also claimed they provided a portion of the grant money. So, state immunity is now a private business practice. It is difficult to imagine this fraud is not being practiced by more than this one company.

    At an Ocean Tomo conference, I addressed this issue with a group of Universities. One panelist said prior art must be ignored to foster creativity. The rest of the panel gravely nodded their heads in agreement. I assured them creativity did not rest in copying existing technology.

  6. Regarding where the states make their money, yes, the big bucks are in pharmaceuticals and some IT/software. Quite often a handful of patents are responsible for the lion’s share of an entire university systems’s licensing revenue.

  7. “Perhaps anti-federalist is a current buzz word with which I am unfamiliar…”

    I don’t think you missed a meeting, Mr. Slusher. Rather, I think Dennis’ usage is weak. I think he means that proposed legislation runs counter to the principles of federalism. “Federalist” had a pretty clear meaning in the U.S. in 1787, and still has a pretty clear meaning in Canada and some other places, but I think these various meanings can be almost diametrically opposed to one another.

    I’m certainly no expert, though. Any of you Ron Paul-type intellectuals care to weigh in?

  8. Does anyone know how often States knowingly infringe patent rights? It seems to me this is, at the moment, an interesting academic issue with little practical importance.

    Nonetheless, SJE makes a very good point – it may be short sighted and self-defeating for technology rich states to defend infringement claims by asserting sovereign immunity.

  9. That’s a great point, SJE…

    Anyone know what happens if/when the fed gov tries to assert one of its patents (or trademarks or copyrights for that matter) against a state? Has this ever occurred?

    …and in related news, word has it that my esteemed CA gov and legislators are working on a patent that would actually prevent the fed gov from stopping the feds from discontinuing bailout $$$ once they start sending it our way.

  10. “Just out of curiosity, in what areas of technology are those patents distributed and how are they distributed?”

    One example is Missouri. Here is an excerpt from “Mo. patent fight shows perils of `tech transfer’” AP, Feb 7, 2009.
    “Missouri says it is among those schools profiting from technology transfer. In the most recent fiscal year, the campus spent $1.4 million marketing intellectual property while earning $6.2 million in licensing income.”

    More details are available in “Research and Economic Development 2008″
    link to umsystem.edu

    Here are the highlighted research areas in the report. Not all of these are named specifically as prolific invention areas.

    - Discover ways to prevent and treat bone loss by looking at osteocyte bone cell function
    - Microwave/Millimeter wave nondestructive testing and evaluation of composite structures
    - Range of optical technologies to increase sensitivity of spectrophotometers
    - Computer software that analyzes the gait patterns of horses to identify lameness

  11. It seems very short sighted of California, or all places, to assert sovereign immunity in patent cases. If the governments of other states decided to ignore patent rights, California would be a big loser. For example, EPO is a billion dollar drug for Amgen (Thousand Oaks, California). If New York directly imported Roche’s version for use by State employees or those receiving State medical benefits, and then claimed sovereign immunity, it would not be long before every other state started to do the same. That would not be good for California.

  12. I’m confused by the conclusion that “[C]learly, this type of activity is anti-federalist…” Anti-federalist in what sense? Clearly it is not anti-federalist in the traditional meaning of the movement that opposed ratification of the Constitution in 1787. Perhaps anti-federalist is a current buzz word with which I am unfamiliar, but I fail to understand how the federal government coercing states to waive sovereign immunity as a condition precedent to receiving a federal benefit (the right to own patents) is anti-federalist.

  13. Mark, as I recall U of C made a killing off patents (maybe just one?) that covered basic recombinant DNA technologies. Anyone else out there remember?

  14. “Just out of curiosity, in what areas of technology are those patents distributed and how are they distributed?”

    The money (no pun intended) is in pharamceuticals.

  15. “States and their entities (largely university systems) have obtained thousands of patents and have recovered hundreds of millions of dollars in royalties.”

    Just out of curiosity, in what areas of technology are those patents distributed and how are they distributed?

  16. Mr. Dhuey’s right. Leahy’s been working on a Florida Prepaid fix for a while. Like many other pieces of patent reform legislation, it never seems to go anywhere.

  17. Whether such legislation would violate the 11th Amendment is very likely to remain a hypothetical case. Congress tried and failed to pass the Intellectual Property Protection Restoration Act three separate times. On one side of the lobbying: major state university systems, including the University of California. On the other side: me. Don’t bet on the likes of me.

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