Patents are the most common form of IP protection used by universities. While expensive to obtain, they offer potentially broad protection and are well understood by licensees. They are particularly well suited to protecting the scientific inventions of universities and are readily enforceable.
However, there are several other IP protection mechanisms which may be useful in specific circumstances that TTPs need to be familiar with.
Here’s a short presentation on the different forms of IP protection.
2.3.1 Patents
Patents are the most common form of IP protection used by universities. Because of their breadth and strength, they are relatively easy to license because industry understands them.
However, patents are very expensive. All universities face challenges in managing their patent portfolio, including: the budget for filing and prosecuting the patents and obtaining the appropriate geographic scope of patents; anticipating whether the patent office will grant the claims needed; and determining whether potential licensing partners will be interested.
Thus, a robust invention evaluation system is crucial.
The following article shows how the very best academic licensing offices only license 25% of their inventions disclosures, showing why TTPs must be prepared to cut patents that lack potential: Les Nouvelles XLVIII No. 1, 44-51, March 2013.pdf
Here’s a presentation about patents.
2.3.2 Trade Secrets
Trade secrets are items of business information that are protected by keeping them secret. Both technical information and business information can constitute trade secrets. One of the most famous trade secrets is the formula for Coca-Cola®, which the company has protected as a trade secret since its invention by pharmacist Dr. John Pemberton in May 1886, 137 years ago and counting. That’s one of the big advantages of trade secrets – they go on as long as the information remains secret.
Another famous trade secret case is the mouthwash Listerine®, invented by a chemist in St. Louis, Dr. Joseph Lawrence, in 1879. He sold the trade secret formula to a pharmacist, Jordan Lambert, who founded the Lambert Pharmacal Company, and agreed to pay Lawrence $6 per gross (144 bottles) of Listerine sold. The trade secret formula slowly became known, and Lambert’s company stopped the payments, at the time around $1.5 mm per year, on the grounds that the formula was no longer secret. In the ensuing lawsuit, the judge ruled that the agreement simply said that Lambert would pay royalties as long as it sold Listerine®, not for as long as the formula was a secret. Johnson & Johnson, which now owns the Listerine® brand, still pays royalties to Lawrence’s descendants and their successors.
Licensing trade secrets is very difficult. Once the inventor discloses the trade secret to a potential licensee, the secret is known and loses value—even with a confidentiality agreement.
Each country’s trade secret laws are different, but when the World Trade Organization was created in 1995, the Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPs Agreement”) established certain minimum standards that member countries had to provide for trade secrets.
Trade secrets are of limited importance in universities because, in general, we are open places, where people come and go freely and talk with each other. All the research we do is intended for publication, and is generally kept as a secret until it is published. The most important trade secrets universities generally have are unique biological materials, further discussed below under Tangible Property. Another trade secret protection for universities is with software, where source code can be kept as a trade secret and only compiled code distributed.
Here’s a presentation about trade secrets.
2.3.3 Know-how
Know-how is practical knowledge on how to accomplish something that someone develops while working with something. Some know-how may be so important that a conscious decision is reached to protect it as a trade secret.
In the academic community, attitudes to know-how differ. Some major academic institutions assert that their professors own the know-how surrounding their inventions and do not include know-how in their license agreements. If a licensee wants the know-how, they should sign the professor to a consulting agreement.
Frequently however, licensees want the assurance that they have the right to use anything they learn from the professor and want it included in the license agreement. This gives the university the opportunity to seek royalties for use of the know-how if no patent issues, and to continue to receive royalties after patent expiration to reflect the on-going value of the know-how. Such licenses to know-how must be non-exclusive, because the professor transfers the know-how whenever they give a talk or publish a paper.
Note that in the United States it is a de facto antitrust violation to demand the same royalty rates for use of know-how after a patent has expired as for use of the patents during their lifetime. There MUST be a step down in royalty rates, and a 50% step down is frequently encountered; however, a 25% step down meets the criterion and is starting to be seen.
Once the patents have expired, the university cannot sue for patent infringement, so the license agreement must include a provision that the licensee cannot terminate the license agreement if licensed products are being sold.
License agreements that do not include a license to know-how will normally explicitly state that when the patents have expired and royalties are no longer due, the license shall have a permanent, fully paid-up license.
2.3.4 Trademarks
Trademarks protect words, phrases, designs, shapes, sounds, and even smells and colors used to identify a company’s goods and services and to distinguish them from the goods and services of others. They protect the investment a company makes over many years in creating a popular brand.
As discussed earlier, famous trade secrets, such as the formulas of Coca-Cola® and Listerine®, are brought to market under a strong brand name protected by a trademark.
Universities have generally spent many years developing a reputation as a trusted source of unbiased knowledge and advice. They don’t want the university’s name used by licensees to sell products developed from the university’s inventions. License agreements therefore generally include explicit provisions about what the licensee can say about their and their products’ connection to the university.
One famous example of a university trademark license is that of Gatorade®. The sports drink was invented at the University of Florida (UF) by a urologist, Professor Robert Cade, in the 1950’s. He filed patents on the product, which the National Institutes of Health (NIH) later forced him to abandon (a long, long story!), and maintained the formula as a trade secret. However, the formula was incredibly simple—glucose, salt and a sweetener—and would not have withstood a serious attempt to reverse engineer it for long. Cade created the trademark Gatorade®—the University of Florida sports teams are called the Gators, short for alligators—and licensed that and the trade secret formula to the Stokely-Van Camp Company. Sixty years later, Stokely-Van Camp’s successor, Pepsi Cola, is still paying the University of Florida and Cade’s successors massive royalties. There were several lawsuits between Cade and UF, ending in a settlement in which Cade got 80% of the income and UF got 20%. In total, Gatorade’s royalty payments are over $1 billion, making it one of the top five most valuable university inventions of all time.
While trademark protection may sound very attractive, there is a major issue—quality control provisions. They are foundational in any trademark license agreement and protect the trademark owner’s reputation by specifying certain minimum quality standards that must be met by the licensee, standards that consumers rely on in making their purchasing decisions. If a licensor does not exercise sufficient control over the quality of the goods and/or services offered by the licensee, the trademark may, in some countries like the United States, be deemed abandoned. Most universities are not set up to monitor and enforce quality control provisions.
Here’s a presentation about trademarks and service marks.
2.3.5 Copyrights
Copyrights are a very important form of IP protection. Together with patents, copyrights are one of the two types of IP that are explicitly provided for in the U.S. Constitution:
“Congress shall have the Power… to promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Authors’ writings are protected by copyrights, while inventors’ discoveries are protected by patents.
While originally conceived as protecting artistic expression, copyrights also have come to protect software. Software was not even patentable until 1981—Microsoft was six years old by the time it could get patents on its software.
Universities may also use copyrights for websites, survey instruments, user manuals, etc. —things created in written form. Universities have copyrighted, licensed and made money on scientific photographs that have aesthetic value. A university’s name and logo have value and can be licensed to apparel companies to create tee-shirts, sweatshirts, jackets, caps, etc. Some universities dedicate the revenues from such activities to student activities, since the primary purchasers of such apparel tend to be students and their families.
A key advantage of copyrights is that they are cheap to obtain. Copyright exists on something when it is “fixed in tangible form”—written down or saved in digital form etc. Registering a copyright is cheap.
Another advantage of copyrights is their duration. They remain valid for decades versus the 20 years from initial application for patents. People joke about the “Mickey Mouse Rule” — that whenever the copyrights on Mickey Mouse are getting close to expiring, Congress passes a new Copyright Act to extend them!
The downside is the relatively narrow scope of protection compared with patents. Copyrights only protect the specific creation, whereas patents can have a much broader scope than a specific product implementing the invention.
Here’s a presentation about copyrights.
2.3.6 Plant Breeder’s Rights
There are multiple ways to protect innovations in plants. Some novel plants can be protected by patents; in the United States, there is even a special type of patent called a plant patent, which is only available for asexually propagated plants (i.e., plants that breed true to their parent, as opposed to hybrid plants, which do not breed true and hence seeds of which need to be purchased new each year). However, there are also a special set of IP rights called Plant Variety Protection Certificates (PVPC). While the specific details of PVPC’s vary from country to country, certain basic requirements were established in 1961 with the adoption of the Union Internationale pour la Protection des Obtentions Végétales or PVOP treaty. PVPC’s confer patent-like rights on innovations that probably wouldn’t rise to the level of patentability.
These rights can incredibly valuable. The University of Stellenbosch in South Africa created the Pinotage grape, a cross of the flavorsome Pinot Noir with the robust Hermitage. Pinotage has become one of South Africa’s signature wines, comparable to Argentina’s Malbec. Fifteen million vines have been sold by commercial wineries. Unfortunately, Stellenbosch forgot to get a PVPC for the Pinotage variety and made no money from its innovation. (It’s a complex story, spanning many years and a change in personnel).
In addition to these plant-specific IP protections, trademarks and trade secrets also have their place in protecting plant innovations.
Here’s a presentation on protecting plant innovations.
In addition, protection of plant innovation as bioproperty, i.e., as tangible property, is very important and can be used in conjunction with these intangible forms of IP protection. Bioproperty is discussed in the next section.
2.3.7 Bioproperty
In the innovation ecosystem, bioproperty is innovation that exists and can be protected in tangible—i.e., physical—form. This can be very helpful if other forms of IP protection are not available. It is a form of tangible property – in contrast to other forms of IP which are intangible.
Having the innovation in a physical form is most useful if it is living and can be replicated from the sample in hand, and applies to things like:
- Plants (which have their own special forms of IP, discussed in the section above)
- Germplasm
- Animals
- Agricultural animals
- Disease model
- Microorganisms
- Hybridomas
- Beneficial strains for health, agriculture, etc.
Tangible property protection is via trade secrets. The innovation must be carefully conserved and only given out under Confidential Disclosure Agreements (CDAs) or Material Transfer Agreements (MTAs). Ideally, the innovation has a unique “secret” identifier—say a genetic marker—so that if theft is suspected, it can be verified. Having a backup foundational source of the innovation, carefully stored in a very secure location, is crucial.
One form of tangible property protection is via hybrid seeds. If the innovation is in one of the parental lines, the innovator can force customers to come back and buy new seed each year by only selling hybrids which do not breed true.
Here’s a presentation on protecting and commercializing innovation as bioproperty.
2.3.8 Orchestrating the Suite of Property Rights
As explored in this section, using a combination of IP types can help in many circumstances. Doing so provides the TTO / licensor and the licensee many more strategic IP options, and can extend the revenue generating lifetime of an innovation beyond the 20 years from initial patent application of a patented innovation. We’ve seen examples of innovations which are still under proprietary protection 60-120 years from their invention —Listerine® and Gatorade®, respectively. And many of these non-patent forms of IP protection are much cheaper to obtain than patents.
Trade secret / trademark combinations are very popular ways of exploiting innovations in healthcare and wellness that we’ve seen in emerging countries where confidence in, and the financial ability to enforce, patents might be low.
In agriculture, a combination of one or more forms of specialized IP protection with protection as biological materials—bioproperty—can be very advantageous and sometimes the only feasible route to capturing some commercialization value by the TTO.