Patents and Threats to Educational Institutions Joshua D. Sarnoff Washington College of Law American University Washington, DC, USA Educause Policy 2007 May 16, 2007

University patent licensing costs and benefits; three patents Costs of litigation and evaluation Benefits of technology licensing Three well-known “education” patents and costs of licensing Loss of experimental use exception Changes to obviousness requirement Conclusion

AIPLA 2005 Economic Survey – Costs of litigation and evaluation $350,000 (average discovery <$1M risk) $650,000 (total <$1M risk) $10,000 (validity or non-infringement per patent) $15,000 (combined per patent)

AUTM 2005 Survey of University Licensing Benefits

Blackboard – On-line education system 1. A course-based system for providing to an educational community of users access to a plurality of online courses, comprising: a) a plurality of user computers, with each user computer being associated with a user of the system and with each user being capable of having predefined characteristics indicative of multiple predetermined roles in the system, each role providing a level of access to a plurality of data files associated with a particular course and a level of control over the data files associated with the course with the multiple predetermined user roles comprising at least two user's predetermined roles selected from the group consisting of a student role in one or more course associated with a student user, an instructor role in one or more courses associated with an instructor user and an administrator role associated with an administrator user, and b) a server computer in communication with each of the user computers over a network, the server computer comprising: means for storing a plurality of data files associated with a course, means for assigning a level of access to and control of each data file based on a user of the system's predetermined role in a course; means for determining whether access to a data file associated with the course is authorized; means for allowing access to and control of the data file associated with the course if authorization is granted based on the access level of the user of the system.

Test.Com/Test Central – on-line student testing 12. A method of posting a test on-line for potential test-takers, said method comprising the steps of: providing a host system and a plurality of remote terminals operatively coupled to the Internet: placing a test in a restricted directory for potential test-takers: requiring a test-taker to input a password to have access to the restricted directory: wherein the restricted directory includes academic practice tests and wherein a school enrolls students at a set cost per school year.

Acacia – Streaming Audio/Video 1. A transmission system for providing information to be transmitted to remote locations, the transmission system comprising: library means for storing items containing information; identification encoding means for retrieving the information in the items from the library means and for assigning a unique identification code to the retrieved information; conversion means, coupled to the identification encoding means, for placing the retrieved information into a predetermined format as formatted data; ordering means, coupled to the conversion means, for placing the formatted data into a sequence of addressable data blocks; compression means, coupled to the ordering means, for compressing the formatted and sequenced data blocks; compressed data storing means, coupled to the data compression means, for storing as files the compressed, sequenced data blocks received from the data compression means with the unique identification code assigned by the identification encoding means; and transmitter means, coupled to the compressed data storing means, for sending at least a portion of one of the files to one of the remote locations.

Experimental Use – Duke Univ. v. Madey, 307 F.3d 1351 (2002) No exception for commercial (non- profit) activity, including activities that “further the institution’s legitimate business objectives, including educating and enlightening students and faculty participating in these projects.” Walsh et al study and Science article – widespread infringement

KSR v. Teleflex (April 30, 2007) and New Obviousness Standard Federal Circuit’s narrow “teaching- suggestion-motivation” test Expanded TSM test and combinations performing predictable functions Significant implications for software and business method patents

Conclusion – What’s Next? Pay $1,000 - ??? per year to license each patent? (Estimated 2001 legal fees of $50,000 per license) Make $0-$500M per year in total licensing revenue? How often will you be in what camp?