Apple’s newest courtroom foe is a taxpayer-funded public university

“As a veteran of the global smart phone wars, Apple is used to courtroom battles with fierce competitors such as Samsung and Nokia,” Andrew Chung reports for Reuters. “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,” Chung reports. “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,” Chung reports. “‘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?'”

Read more in the full article here.

MacDailyNews Take: Properly-issued patents – which not all patents are, not by a long shot – should be protected regardless of owner. If it is found that Apple really infringed, they should compensate the patent holder. Now, should taxpayer-funded inventions be free for all to use? Even for companies based in other countries? Of course, not. Taxpayers should not be funding the R&D of companies based in foreign countries. Therefore, patents should also protect the research of public universities.

SEE ALSO:
Apple faces $400 million in damages in university patent case, sources say – October 14, 2015

38 Comments

  1. A rare case where I agree with MDN’s take. Hell no, justice first. The audacity of the question alone is offensive. Public funds have been spent on the research, this is true. This does not automatically give a free license to businesses.

    With all this talk about “special interests”, what about “corporate welfare”? You don’t like that public funds got used for research? Though I disagree with that position, royalties still need to be paid. Pay them to the public then. This does not mean they’re free, or that the public owes you a living.

    1. PS- What about governmental SBIR (Small Business Innovation Grants)? That’s public money given to small businesses to do research and development. Should patents arising from such work be open to other businesses too?

      1. When these companies get a grant there should be a clause that states when they become profitable the grant +a %age has to be paid back to fund the next generation of grants. I also be leave if you get funded by the government to pursue amateur sport if you then turn pro you are required to give a % of your pro income to pay for the next generation of amateur athletic grants, and wile were at it when artists are funded with grants and then they make millions for their art give some back.

  2. On MDN’s take, agreed. But then, when it becomes time to fund that institution for the next year, give them $400m less from the taxpayers purse. That way the real owner of the patent (which should be the taxpayer) benefits.

    1. Though I agree with you, on the surface, the public funds education a) for the betterment of the individual and thus society as a whole; and b) To provide a workforce to meet the supply/demand needs of that society.

    2. It’s not all that simple. Universities have line budget items, so you can’t just chop off $400 million in funding and expect it to balance out. WARF is not UW-Madison. It is a separate not for profit corpiration . WARF funds research out of it’s income. I’m not even sure that WARF gets any taxpayer money. Does someone know whether or not they do.

      1. How do the rights to the patents accrue to WARF? Do they pay money to the University research department? Who gave the University the right to sell assets gained from public funds to a private entity? Did the University charge an appropriate amount? Obviously the assets had great value. Is this just a scam to extract value created with taxpayer money that goes to a WARF Board of Directors and some highly paid executive staff?

        I recall what Dr Jonas Salk said when asked why he did not patent the polio vaccine. To paraphrase: “Getting to work on this important benefit for mankind was payment enough.”

        OTOH, without the ability to redirect and privatize the benefits derived from public funding, the University might just focus entirely on the football program. They do seem to have a very business-like approach to their place in the universe.

        1. I can see where patents filed by organizations receiving grant/public monies are allowed to license to For-Profit organizations/businesses but if used in a product that is not for sale (e.g. research/educational purposes) no licensing is required until that product is sold for profit.

    3. I disagree completely.

      This completely destroys the incentives for innovation. If you take away the financial rewards, you remove the incentive to invent.

      The university does not keep all the money in any case. Depending on how the funding for the research was actually structured, the licensing income gets split between the university (with a split between the inventors department or research unit and the university general fund), the inventors, and other sources of funding (grant sponsors, etc.).

    4. So, punish them for their success in research and science. which is what universities/college are actually for.

      How about decreasing funding to universities/colleges based on how successful their sports teams are, instead?

      1. How about having the benefits accrued with taxpayer money accrue to the common?

        Most (many?) (some?) University sports programs are self-supporting. That’s how they afford multi-million dollar coaching staffs. Other than the indentured servitude of the student athletes, of course. So, other than the moral hazard of the modern day slavery, the Universities don’t owe the public for the sports teams. Unless you go back to the land-grant university schema. Oh, wait, maybe they do have a debt to society.

          1. Then where does the money for the coaching staff and the rest of the cost of the program come from? Capitalism says the cost of the program should drop to the point where the income from the program exactly supports the program. Given the free athlete labor, those budgets have to go for something. Taxpayer subsidies or subsidies embedded in other student fees would just be socialism and redistribution of wealth.

    1. The patent system is broken and overwhelmed. Presuming innocent intentions (not a given), it’s easily possible to miss it, or to make the mistake and consider the patent invalid.

      Patents are valid until they expire, or are invalidated.

      1. Or, say, Apple just happened to hire an engineer who went to school at Wisconsin that was exposed to some of the information protected by the patent and the engineer just happened to apply his university education to his job at Apple.

        Maybe Wisconsin needs to have its engineering grads sign an NDA that promises to never use their education for the benefit of an employer. That should help out.

        1. Patents are by their very nature a disclosure, and a “deed” to IP.

          The deal between inventors and the government (the grantor of the patent) is that the government grants monopoly over an invention, for a specific period of time (20 years), in exchange for this disclosure.

          The engineer from the school would not be bound by an NDA, since the patent itself constitutes disclosure.

          There is no way, under your scenario, that helps Apple. It only strengthens the position that they willfully infringed.

          1. I wasn’t thinking in terms of the engineering student being specifically educated in the details of the patent or even necessarily directly knowing about the patent. Just being aware of the underlying ideas behind the patent, perhaps through lectures by one of the developers of the patent.

            I agree that if the student was told of Patent… and how it should be applied other rules would apply. At a minimum the student should have been presented a footnote in the lecture “actual use of this information requires the payment of a royalty”.

      2. Applecynic: I agree the patent jungle is so dense it’s possible to miss a patent or presume it invalid. But once a claim is made, let alone when it progresses to litigation, someone at Apple had to have taken a real hard look at the merits and decided to roll the dice. Many of Apple’s patent suits (where Apple was the defendant) invovled RAND patents where the holder was trying to rip off Apple by charging a massive surcharge just because it was Apple. This one doesn’t seem to be like that.

  3. As my first impression, patents won by publicly-funded schools belong to the public, not the school. This means that all in that nation have free access to that IP. Other nations do not have that right. But, with the passage of the Trans Pacific Partnership where a corporation can sue a nation for lost wages such as an inability to take advantage of another nation’s patent, this may not stand.

    The way to prevent free access is to privatize and corporatize schools as is happening now, but I strongly disagree with privatization and corporatization.

  4. The argument that A public university should not charge patent licenses is about as ignorant as saying their varsity sports events should not charge admission to events or licensing fees for logos.

    In the specific instance of Wisconsin, the money might help offset the budget cuts imposed by Governor Scott Walker (Koch Party- Wisconsin) so he can fund more tax cuts for the wealthy.

  5. NEW YORK, Oct 16 (Reuters) – The University of Wisconsin-Madison’s patent licensing body will not be able to extract triple damages from Apple as a jury weighs how much the iPhone maker must pay for using its microchip technology without permission, a U.S. judge ruled on Thursday.

    On Tuesday, a federal jury in Madison, Wisconsin said Apple Inc infringed a Wisconsin Alumni Research Foundation (WARF) patent which helps improve the performance of computer processors. The foundation is claiming approximately $400 million in damages.

    With a verdict on damages that could come as early as today, U.S. District Judge William Conley said in his ruling that WARF could not prove that Apple infringed its patent willfully. It is a welcome development for Apple, which no longer risks having the damage award increased by up to three times, which is allowed in federal law for recklessly infringing a patent.

    Apple raised a reasonable defense in the case, Conley said, and WARF “has failed to show by clear and convincing evidence that Apple acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.”

    1. So if Apple designs their next chip (A10?) still with the tech in dispute that will constitute ‘willful’ infringement? Assuming Apple works like Intel and designs chips years in advance and patent infringements are claimed for released products, it is possible any future A-series chips by Apple currently in development have to be delayed to find a work-around. Keep in mind that it is possible patents terms can be extended, otherwise how would Apple be able to license Liquid Metal in perpetuity?

  6. If the university is receiving federal funding, then the patent belongs to the entire nation. Any U.S.-based business should be allowed to use it.
    Now, if the state of WI is the only public entity that’s funding the university, then, by all means, the patent rights should remain with the the citizens of that state.
    What I find odd is the nature of this patent. DId the university do research into new chip design? Or did they get some Intel and ARM chips and reverse engineer them?

  7. Properly-issued patents – which not all patents are, not by a long shot – should be protected regardless of owner.

    I would say that in this case, the owner is the taxpayer. As such, any patents issued to the university of Wisconsin should be considered the common property of the entire United States of America.

    -jcr

    1. As DavGreg put it so elegantly, that “logic” means taxpayers get should get to attend all university sports events for free. Right now they’re already getting a break because tickets are tax-exempt

  8. Is it just possible that WORF is acting as a patent troll here, in order to fund research or make money to infuse into an alumni fund as donations.

    I gotta believe that alumni contributions by graduates is going downward as long-term student loan debt increases each year.

    Alumni Foundations gots to be gettin creative on how they raise funds.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.