Editors Note: Jose Cortina is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A.The Court of Appeals for the Federal Circuit in the recent case of Maday v. Duke University substantially eliminated the defense to patent infringement for conduct which has been characterized as an “experimental use” of a patent holder’s technology.

(Note:This decision was discussed in an earlier article available at www.localtechwire.com/article.cfm?u=9823 )

Until this decision, the academic community, in large part, conducted their research work under the belief that such an exception existed. As a result of the Federal Circuit’s decision, virtually no research conducted by university faculty or graduate students is shielded from infringement claims, which means that they and the universities may face lawsuits, injunctions and damage claims if and when patent owners identify those using their patented technology in the name of research.

Effects of the Decision

While the Federal Circuit’s decision should have a significant impact on how university employees conduct research, university researchers appear to be unconcerned about the decision, and in large part seem to be operating with “business as usual,” in some cases ignoring patents covering their research work with impunity.

This conduct and the court’s decision presents a new opportunity for patent owners to seek out new revenue sources through licensing activities, and failing that, through litigation seeking damages, and if the infringement is willful then also punitive damages. While damages in many cases may be small, the prospect of an injunction being granted on basic research which could ultimately lead to technology which is commercializable, and which could ultimately result in substantial license revenues to a university, should be sufficient to cause universities and academics to reconsider current practices.

Recognition of the Potential Problems

While many in the academic community have decided to continue with “business as usual,” others such as the National Academy of Science have recognized the problem and potential consequences. More specifically, in an executive summary handed out at the October, 2004 American Intellectual Property Law Association (AIPLA) meeting in Washington, D.C., the National Academy of Science (NAS) discussed a number of criteria for evaluating the U.S. Patent System and made several recommendations.

One criteria involves the premise that “[a]ccess to patented technologies is important in research and in the development of cumulative technologies, where one advance builds upon one or several previous advances.”

The NAS recognized the potential impact of the Maday decision, but acknowledged that the effect on the behavior of patent holders toward university research is not yet known. Notwithstanding, the NAS went on to suggest that the law should be changed to “[s]hield some research uses of patented inventions from liability for infringement.” Even without a substantial change in the law, the NAS suggests that certain types of government-funded research could be shielded by having the Office of Management and Budget (OMB) and the federal agencies providing funding extend the government’s power of “authorization and consent” to infringement to federally-funded research projects.

Creating a Research Exemption without Compensation is Unfair

The U.S. Constitution, on which the U.S. Patent Law depends, was drafted at the height of the industrial revolution and favors rewarding inventors. The Constitution provides in part that “Congress shall have the power … to promote the progress of science … by securing for limited times to … inventors the exclusive right to their … discoveries.”

It is on this basis that the current Patent Law exists. The NAS proposal and others like it do not envision compensating patent owners for infringing activities labeled as “experimental use.”

To create a research exemption without compensation for patent owners is fundamentally unfair and contrary to the spirit, if not the fundamental underpinnings, of the U.S. Constitution. Further, the unfairness of any proposal to create such an exemption without compensation becomes more evident in view of the fact that universities today, through their technology transfer offices, derive substantial licensing revenues from commercial developments that result from basic research.

To allow such profiting from commercial technology which was initially developed on the basis of someone else’s patented technology, and without appropriate compensation to the owner of the exclusive rights in that technology, is clearly not what the founding fathers intended, and some will certainly argue, unconstitutional.

A. José Cortina is a registered patent attorney with the law firm of Daniels, Daniels & Verdonik. He focuses his practice on the intellectual property needs of small to large technology companies, including providing patent, trademark, copyright, counseling, licensing, conflict resolution and transactional services. He is experienced in a broad range of technologies, including electronics, communications, computer hardware and software, biomedical, materials, and selected chemical and chemical engineering technologies.