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TTOs standing ground on infringement, more willing to sue


By Jesse Schwartz
Published: February 22nd, 2017

Universities are increasingly finding the courage and the resources to stand up and fight when their patents are infringed, with the University of Minnesota’s lawsuit against Gilead Sciences just the latest in a series of challenges to powerful companies. The stakes are high enough for UM to risk defeat, and that calculation is likely to be the determining factor when other schools decide whether to pursue litigation.

UM is suing Gilead for patent infringement, alleging that the company’s highly successful sofosbuvir-based medications violate the school’s patent based on a discovery by researcher Carston Wagner. The lawsuit names specific drugs using the patent — Sovaldi, Harvoni and Epclusa — that have come to be essential in the treatment of hepatitis C. Sofosbuvir was approved for medical use in the United States in 2013. A 12-week course of treatment costs about $84,000 in the U.S.

By the time UM filed suit in August 2016, Gilead had earned more than $8 billion on the drugs in just the first six months of that year. UM claims the drug was a direct product of Wagner’s research, while Gilead says it doesn’t owe UM anything because the patent is invalid and the pharmaceutical company has the sole right to commercialize sofosbuvir.

“The University of Minnesota did not invent sofosbuvir, nor did they contribute to its development,” the company declared in a statement after the lawsuit was filed. “We believe their patent to be invalid and not infringed by the sale of Gilead’s medicines for chronic hepatitis C.”

UM disagreed strongly enough to pursue litigation, and the amount of money involved was most likely a driving factor in the decision. “Gilead has reaped tens of billions of dollars in sales of those drugs, without the University’s authorization and without compensating the University,” the lawsuit states. “The University invests heavily in the important and groundbreaking work of its professors, and it takes seriously its role in defending their and the University’s intellectual property rights.”

The university’s lawsuit seeks “all damages adequate to compensate it for Gilead’s infringement, in no event less than a reasonable royalty.” The hep C drugs have been a major driver and a huge blockbuster for Gilead, with reported sales between 2014 and 2017 of near $50 billion. Using a royalty rate of 5%, a victory in court could mean a payday for UM of $2.5 billion.

UM declined to comment on the case except to send a statement reiterating its confidence in the university’s position. “The University is seeking to protect the investment it has made in valuable research and development, and the resulting patent rights it has been awarded by the United States Patent Office,” the statement says. “The University believes that Gilead has infringed on those rights without going through the proper procedures to license our patent. We feel that we must defend these intellectual property rights.”

Litigation like the UM lawsuit indicates that universities are warming up to the idea that fighting for their patent rights is worth the effort and expense, says Joshua H. Haffner, JD, an attorney with Haffner Law in Los Angeles. The UM case continues a trend of schools stepping up and demanding payment for use of their patents, he notes. Carnegie Mellon University settled a patent infringement case with Marvell Technology Group for $750 million in 2016, and later that year a jury ordered Apple to pay the University of Wisconsin more than $234 million for using its microchip technology in iPhones and iPads without permission. In 2015, a jury awarded Boston University more than $13 million from three companies that infringed on its patent for blue light emitting diodes (LEDs).

“This trend is continuing because they’re making money off the cases,” Haffner says. “Patent infringement cases can be very profitable, and with every win by a university others are looking at that and saying maybe they could reap the same rewards. There are other principles at play, like protecting the inventors and the principle of ownership, but really if the invention is not making money those principles tend to fall by the wayside.”

A detailed article on the UM’s infringement action against Gilead, and the underlying trends in universities’ willingness to protect their patents in court, appears in the February issue of Technology Transfer Tactics. To subscribe and access the complete article, along with the publication’s 9+ year archive of success strategies, case studies, and best practices for TTOs, CLICK HERE.

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