R. Andrew Schwentker · February 2008
76 GEO. WASH. L. REV. 426 (2008)
Over the past several decades, universities have increasingly engaged in significant scientific research and technological development and have become owners of a substantial number of patents. Between 1969 and 1991, universities owned only 1.55% of U.S. utility patents not owned by the federal government. By 2005, universities owned 4.18% of such patents. This is due, in large part, to the enactment in 1980 of the Bayh-Dole Act, which provides for the transfer to universities and businesses of patents based on government-funded research.
In 2002, the U.S. Court of Appeals for the Federal Circuit decided Madey v. Duke University, which greatly limited the scope of the experimental-use exception as it applies to scientific and engineering research at universities. The Federal Circuit explained that, regardless of whether a university engages in research for commercial gain, such research furthers the university’s “legitimate business objectives,” which include educating students and attracting faculty and research grants. The Federal Circuit therefore held that the experimental-use exception does not shield universities engaged in research from liability for patent infringement. Many legal commentators have weighed in on the subject of the experimental-use exception, both prior to and since the Madey decision. Some commentators argue that the limited experimental-use exception set forth by the Federal Circuit will stifle research at universities and nonprofit organizations, thereby limiting innovations that are vital to the nation’s economy and public health and welfare. Others take a contrary view and argue that a broad experimental-use exception is detrimental to the patent system and decreases incentives to innovate.
This Note argues that commentators such as Jordan Karp have correctly concluded that an overly broad experimental-use exception would be inappropriate, because permitting infringement by universities and other nonprofit organizations may have a detrimental effect on incentives for innovation. Infringing activity should not be automatically protected under the guise of academic research. This Note, therefore, advocates that patent owners be entitled to exercise their property right to exclude others from infringing their patents. It must be recognized, however, that universities and other nonprofit organizations perform an extremely important role, often with limited resources, in exploring the frontiers of science and technology. Expanding these organizations’ access to patents for research purposes can promote innovation. Therefore, this Note argues that Congress should enact tax legislation that will effectively expand the application of the experimental-use exception while preserving patent owners’ right to exclude infringers. This proposal falls between the two positions discussed above and presents a compromise between proponents of free access and proponents of the right to exclude.
Part I includes a discussion of scientific and technological research at universities and examines the development of the experimental-use exception to patent infringement liability. Part II examines recent discourse on the experimental-use exception, including proposals for statutory codification and expansion of the exception. Part III proposes tax regimes as an alternative to the experimental-use exception and discusses the advantages to such a solution.
