University Software Ownership and Litigation: A First Examination

Software patents and university-owned patents represent two of the most controversial intellectual property developments of the last twenty-five years. Despite this reality, and concerns that universities act as "patent trolls" when they assert software patents in litigation against successful commercializers, no scholar has systematically examined the ownership and litigation of university software patents. In this Article, we present the first such examination. Our empirical research reveals that software patents represent a significant and growing proportion of university patent holdings. Additionally, the most important determinant of the number of software patents a university owns is not its research and development ("R&D") expenditures (whether computer science-related or otherwise) but, rather, its tendency to seek patents in other areas. In other words, universities appear to take a "one size fits all" approach to patenting their inventions. This one size fits all approach is problematic given the empirical evidence that software is likely to follow a different commercialization path than other types of invention. Thus, it is perhaps not surprising that we see a number of lawsuits in which university software patents have been used not for purposes of fostering commercialization, but instead, to extract rents in apparent holdup litigation. The Article concludes by examining whether this trend is likely to continue in the future, particularly given a 2006 Supreme Court decision that appears to diminish the holdup threat by recognizing the possibility of liability rules in patent suits, as well as recent case law that may call into question certain types of software patents.