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TechRoadmap Directions
Intellectual Property Issues of Interest to High Tech Companies
Vol 2 Issue 9 October 2002

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Taking Technology Out of the University

You CAN take it with you

Tip of the Month

IP Links of Interest

On-Line Patent Glossary


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Directions, is a newsletter from TechRoadmap Inc. discussing intellectual property issues and ideas. We hope to stimulate you to examine and improve your own IP practices.

Many technology companies are founded by university professors based on the advanced research that is the natural outcome of their relatively unfettered opportunity to pursue basic research, unconstrained by a business plan and profit goal. While professors often find themselves the producers of intellectual property that has commercial value, who owns that IP depends on who paid for the research, what facilities were used and so on. The question of what intellectual property goes with them when they leave the confines of academia and what stays behind is sometimes a thorny issue. For that matter, the IP relationship between employee and employer is always subject to negotiation. To learn how one professor successfully took his IP with him, read "You CAN take it with you."

  • Taking Technology Out of the University
  • According to the MIT News Office: "MIT: The Impact of Innovation," which was prepared by the BankBoston Economics Department, presents the results of a major [1997] study on the national economic impact of companies founded by MIT alumni and alumnae. Among other findings, the study reveals that MIT graduates have founded 4,000 companies, creating 1.1 million jobs worldwide and generating annual sales of $232 billion.

    MIT: The Impact of Innovation

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  • You CAN take it with you
  • University professors are in the unique position of being paid to perform basic research without a direct business goal. Not surprisingly, many professors become inventors and, depending on how their research was supported, they often own the patent rights as well.

    When Dr. Madey, a professor at Duke and Director of a laser laboratory there, departed, Duke continued to use the Free Electron Laser (FEL) he left behind, even though the FEL included some of his patented technology. Madey sued to stop them and although he lost the first battle he won on appeal. To learn when your patent rights can be ignored by a previous academic employer...Read on...

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  • Tip of the Month
  • Always understand and negotiate your patent rights and your employer's patent rights before you sign on the dotted line:
    • Bringing it with you - Inventions you developed before being employed are rarely assigned to a new employer, but be careful if your invention gets built into a piece of capital equipment or product. Negotiate a license agreement with your new employers before letting them use your IP.
    • When you're there - Typically you will have to agree to assign all patent rights to your employer for inventions developed while on the payroll (for exempt employees even inventions developed "at home" are usually covered). Try to negotiate an exception for inventions not in the employer's line of business, particularly if developed after hours.
    • If you leave - Typically, even after you leave you will have to assist your (former) employer in prosecuting any applications you generated and you will be expected to "leave" your unapplied for ideas behind too. On the plus side, you may be able to negotiate ownership of IP that is not of particular interest to your former employer.
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  • IP Links of Interest
  • US Patent office - Searchable database of all US Patents and, now, published patent applications.
    The Patent Cafe - an on-line source of interesting insights into current IP issues.
    EKMS Inc. - a company with whom we've worked that provides a range of IP management services including portfolio analysis, deal-making, and process improvement.

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  • On-Line Patent Glossary
  • The following link should take you to the web based version of Directions, where you will find the on-line Patent Glossary.

    Industry's Best Glossary
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    email us :: visit our site

    phone: 617-243-0007

  • You CAN take it with you - continued
    • Dr. John Madey was a tenured research professor at Stanford University where he had an innovative laser research program. Duke recruited Madey, and in 1988 he left Stanford for a position in Duke's physics department. In 1989 Madey moved his free electron laser ("FEL") research lab from Stanford to Duke. The FEL lab contained substantial equipment, requiring Duke to build an addition to its physics building to house the lab. In addition, during his time at Stanford, Madey had obtained sole ownership of two patents used in some of the equipment in the FEL lab.

      After a decade, Duke removed Madey as director of the lab and Madey then departed from Duke. Duke, however, continued to operate some of the equipment in the lab. Madey then sued Duke for infringement of his two patents.

      Duke successfully defended itself in district court. Their defense was based on two little know exceptions to patent infringement liability. First, if a patented invention "is used or manufactured by or for the United States" then the infringer is off the hook, with the liability, if any, passing on the the Government. The second exception put forth by Duke is a common law "exception" to patent infringement liability when the invention is used, in the district court's words, "solely for research, academic or experimental purposes".

      What Duke claimed was that the research it was performing with the FEL was paid for by Government grants, so they were infringing "at the direction" of the Government and should thereby be shielded from liability. Further, Duke argued, as a University they were pursuing lofty academic and intellectual goals, activities that have been exempted from infringement liability by past court decisions.

      While the district court ruled in Duke's favor, the Appeals Court reversed, finding for Madey. First of all, while Duke's research might be funded by Government grants, nowhere in their contracts did the Government consent to or direct Duke to infringe Madey's patent. Secondly, the district court had improperly shifted the burden to Madey to prove that Duke's usage was beyond the allowable research, academic, or experimental exemption - instead, it should have been Duke's burden to prove that they were within the allowable use regime.

      When the Court did look at Duke's use, they reiterated that an inventor's patent rights were strong. The research, academic, or experimental exemption is quite narrow, they said, and the infringing use cannot have even the smallest iota of commercial activity ("in any way commercial in nature") nor can it be a use that is "in keeping with" the infringer's legitimate business. That is, the infringing use is only allowed for ivory tower activities. ["For example, major research universities, such as Duke, often sanction and fund research projects with arguably no commercial application whatsoever. However, these projects unmistakably further the institution's legitimate business objectives, including educating and enlightening students and faculty participating in these projects. These projects also serve, for example, to increase the status of the institution and lure lucrative research grants, students and faculty."]

      Thus, to qualify for the very narrow and strictly limited experimental use defense an activity must be "solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry." "Moreover, the profit or non-profit status of the user is not determinative."

      The moral to this story is that a move from academia, where ideas are supposed to be free, to industry, where patents can give you a sustainable competitive advantage, should be anticipated in every academic's employment contract to avoid the costs of post-transition legal battles.

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      Nothing in the preceding article should be construed as legal advice. TechRoadmap Inc. serves as an interface between companies and their legal counsel.


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