Resources

Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

Apple’s newest courtroom foe is a patent-savvy university

NEW YORK (Reuters) – As a veteran of the global smart phone wars, Apple is used to courtroom battles with fierce competitors such as Samsung and Nokia.

This week, however, a federal jury returned a verdict against Apple in a lawsuit brought by a different kind of adversary: a public university.

The University of Wisconsin-Madison’s licensing arm, the Wisconsin Alumni Research Foundation, convinced a jury that Apple had infringed its patent for improving chip efficiency when the company incorporated the technology into some of its phones and tablets.

Research institutions and universities have not traditionally been major players in patent litigation, and even now schools still launch relatively few patent suits compared to private companies – about 40 to 50 cases per year, according to preliminary research by University of Alberta professor Tania Bubela.

But within that world, WARF has become an aggressive litigator. Since 2000, the foundation has filed 33 lawsuits against 31 different defendants, according to a Reuters analysis of federal court data maintained by RPX Corp, a patent risk management firm.

In the current case, WARF is claiming $400 million in damages from Apple. As the dispute over how much the iPhone maker owes is hashed out, critics are questioning whether schools receiving public money for research should be engaged in hostile patent litigation.

WARF, however, has argued that such lawsuits are key to monetizing inventions created at research universities, and that protecting patents encourages innovation. The Apple trial is now in the damages phase, and if WARF gets anywhere close to what it is asking, it would be one of the largest patent payouts ever to a university.

Attorney Michael Ng, who has represented Australia’s national science agency in U.S. courts, said that universities are feeling forced into litigation. “In recent years there has been a greater reluctance, for example in high-tech, to do voluntary licensing deals, and that sometimes leaves holders of intellectual property with no other recourse.”

In its current lawsuit, WARF hired one of the country’s top patent litigators, Morgan Chu, to go head-to-head with Apple attorney William Lee. And last month WARF sued Apple again over the same patent, this time targeting the company’s newest products, the iPhone 6S and 6S Plus, and iPad Pro. WARF also sued Intel Corp in 2008, but the case was settled the following year on the eve of trial.

WARF, housed on the university’s Madison campus, has been around for 90 years and helps patent and commercialize the university’s inventions. In 2014-15 alone, it provided more than $100 million in direct and in-kind support to the university, it said.

WARF declined to provide any of its staff to be interviewed for this article, citing the ongoing trial. Apple also declined to comment.

The patent at issue in the Apple suit was granted in 1998 and covered a “predictor circuit” to boost microchip performance developed by a computer science professor, Gurindar Sohi, and three of his students. Sohi declined to comment.

In the years leading up to the invention, Sohi’s research was funded in part by the National Science Foundation and the Office of Naval Research, which provided about $200,000 annually, according to court documents. In 1995, he and another professor also received a $2.3 million grant over three years from the NSF and the Advanced Research Projects Agency.

All three of those agencies are credited in the patent itself, which notes: “The United States has certain rights in this invention.”

Some legal experts have criticized lawsuits over patents developed with public funding. “Government funding is being used to go after some of our most innovative companies,” said Robin Feldman, a professor at the University of California Hastings College of Law. “Do we want taxpayer money to fund this behavior?”

Though universities are legally able to obtain patents, considered a private right, on research funded by public dollars, “This policy is being turned on its head,” she said.

But WARF has argued in the past, as it did to the Federal Trade Commission in 2009, that companies that infringe on university patents should have to pay monetary damages. Such penalties, the foundation says, encourage companies to license patents, providing revenues on which universities depend on to create startups and commercialize their inventions.

“In short, strong patents and a high cost for infringement stimulate innovation,” its managing director, Carl Gulbrandsen wrote in a letter to the FTC.

WARF brought in nearly $152 million in income from royalties and investments last year, according to its website.

Tagged with →