The Innovation Act’s Influence on University Developed Patents

The Innovation Act, or House Resolution 9, is awaiting a vote in the House and Senate. This bill would significantly alter the rules and regulations of patent infringement lawsuits in order the make enforcing patents more difficult. Companies including Google, Facebook, and Verizon have all voiced their support of the Innovation Act, as has President Barack Obama, but critics have voiced concerns over how it would affect universities and academia.

The concern is that universities and tech startups would form fewer partnerships due to the nature of the Innovation Act, which expands the definition of the term “patent trolls”. Currently, that term applies to an individual or company who holds a patent for the sole purpose of limiting the use of its subject. A troll doesn’t actively use the patent, but attempts to enforce their patent’s rights against infringers to the fullest allowable extent.

Under the Innovation Act, many who develop innovations at universities would be labeled and treated as patent trolls while they are “non-practicing entities”, which simply means they aren’t actively using their patented technologies. Typically, patents developed in academia are the only collateral available for these parties to use when securing investors and further funding, which would then allow them to become practicing entities.

These patents created using federal funding are currently protected under the Bayh-Dole Act, which enables them to be used to form partnerships with established companies, or launch start-ups.

The Innovation Acts expanded definition of a patent troll would remove many of these protections and make it more difficult for a patent of this nature to be enforced. Because taking infringement cases to court would be more risky under the Innovation Act, the belief is that fewer companies will be willing to partner with those who have developed their patents at universities, and fewer start-ups will be launched.

This is explained by Association of American Universities Associate Vice President Jessica Sebeok:

“If companies think universities or their licensees aren’t willing to enforce their patents by filing infringement lawsuits when those lawsuits are necessary, they’re much more likely to infringe on those patents. And investors are much less likely to invest in patented university discoveries and bring them to the public if they perceive them as weak patents that other companies can ignore.”

The proponents of the Innovation Act wish to stop patent trolling in order to allow more innovation to be fully developed, but Sebeok and other critics believe the bill does so with too heavy a hand. From the perspective of a university, which isn’t expected to create products and services for market, the Innovation Act instead stifles innovation and limits the rights of legitimate patent holders.

The Innovation Act was initially introduced to the House in 2013 but was voted down.

If you have questions about your rights as a patent holder, or need protection from claimed infringement, contact us at Brown Patent Law by calling 918-615-3357.