Uptick in University Enforcement of Intellectual Property an Indication of Stricter Enforcement Policy or a Passing Trend?

by Miles & Stockbridge P.C.

Universities have traditionally been reluctant to enforce their intellectual property (IP) against third parties. There are many reasons for this position, including adverse publicity associated with such suits, the time required to pursue such actions, and the risk associated with these suits. The failure by universities to enforce their IP rights against third party infringers has had a negative effect on diminishing the potential value of university originated IP.

However, the wind may be shifting on this issue. A recent example is the University of Minnesota’s (UM) suit against Gilead Sciences (Gilead) [1] alleging that Gilead’s sofosbuvir-based medications for the treatment of hepatitis C infringe US Patent Number 8,815,830. In particular, UM claims that Gilead’s Sovialdi®, Harvoni® and Epclusa® drugs may be covered under the claims of the ‘830 patent.

UM is asking the court to enter a judgment that Gilead has directly and indirectly infringed the ‘830 patent, to award it damages to compensate for the alleged infringement, to find that Gilead has willfully committed acts of patent infringement and therefore award the school treble damages, and to determine that this is an exceptional case warranting the award of reasonable legal fees, costs and expenses to the school.  

Gilead alleges that "University of Minnesota did not invent sofosbuvir, nor did they contribute to its development. We believe their patent to be invalid and not infringed by the sale of Gilead’s medicines for chronic hepatitis C.” [2]

Sales of the three challenged drugs had combined sales of $19.1 billion last year and were the subject of a high profile trial [3] in which Gilead was ordered to pay Merck & Co. $200 million for patent infringement. The damage award was based on a 4% royalty rate. Following the award, Merck forfeited its right to enforce this judgment due to “a pervasive pattern of misconduct by Merck and its agents.” [4] Thus, there is a sordid past involved with these hepatitis C treatments.

The UM suit is one in a recent trend of universities demanding compensation for their inventions. Carnegie Mellon University received a $1.54 billion patent infringement judgment against Marvell Technology Group in 2015. [5] This judgment was later reduced by $278 million through removal of the punitive damages and finally settled for $750 million in 2016. In 2015, Apple was ordered to pay the Wisconsin Alumni Research Foundation (WARF), an affiliate of the University of Wisconsin-Madison, more than $234 million. [6] Similarly, Boston University was awarded approximately$13 million for patent infringement by a number of companies. [7]

Clearly, the trend has been in favor for enforcement of university-created intellectual property.  It looks like this trend will continue so long as cases with merit are brought forward.

[1] Regents of the Univ. of Minnesota v. Gilead Sciences Inc., No. 0:16-cv-02915, 2016 WL 4556978 (D. Minn., Aug. 29, 2016).
[2] Knaub, Kelly, U. of Minn. Says Gilead’s $20B Hep C Drugs Flout Patent, LAW360, Aug. 31, 2016.
[3] Gilead Sciences Inc. v. Merck & Co. Inc. et al., No. 3:13-cv-04057, 2013 WL 8206208 (N.D. Cal., Nov. 22, 2013).
[4] Gilead Sciences Inc. v. Merck & Co. Inc. et al., 2016 WL 146574 (N.D. Cal., Jan. 13, 2016).
[5] Carnegie Mellon Univ.v. Marvell Technology Grp. Ltd. et al., 805 F.3d 1382 (W.D. Pa., 2015).
[6] Wisconsin Alumni Research Foundation v. Apple, Inc., 135 F.Supp.3d 865 (W.D. Wis. 2015).
[7] Trustees of Boston Univ. v. Epistar Corp. et al., 310 F.R.D. 203 (D. Mass. 2015); ,Trustees of Boston Univ. v. Everlight Electronics Co. Ltd. et al., 105 F.Supp.3d 116  (D. Mass. 2015); and Trustees of Boston University v. Everlight Electronics Co. Ltd. et al., 2016 WL 3976603 (D. Mass. July 22, 2016).

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Accessing this blog and reading its content does not create an attorney-client relationship with the author or with Miles & Stockbridge. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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