The Importance of an Accurate Assessment of Patent Valuation and Potential Market

A recent article in the Saint Louis Post Dispatch by Christopher Yasiejeko describes a patent-related dispute between two academic institutions.  Two major research universities, University of Wisconsin (through its technology licensing arm, Wisconsin Alumni Research Foundation (WARF)) and University of Washington, Saint Louis (WUSTL) are engaged in litigation concerning royalty payments over a jointly invented patented invention that was licensed to Abbott Laboratories.  The inventors included a researcher from Wisconsin and one from WUSTL. 

One of the issues with university developed technology is who will cover the patent prosecution costs.  Here, WARF apparently agreed to cover the costs for a higher royalty rate.  The dispute concerns apparent representations made by WARF concerning the value of the patent—allegedly representations were made that the value was not very high by WARF.  WUSTL appears to assert that WARF made representations to others that the patent was actually quite valuable and eventually important to the pharmaceutical, Zemplar, which according to the article “generated $409 million in sales in 2011.”  This appears to be a case where fraud in the inducement in entering the contract is relevant.  However, it seems strange that WUSTL was unable to arrive at their own valuation or understand the potential market for the invention—perhaps they did not have the resources at the time invested in technology transfer.  WARF was likely well financed at that time and certainly experienced.

[Hat Tip to Technology Transfer Central]

The Scotsman reports that the future funding of stem cell companies is Scotland is dependent on a ruling next month by the European Patent Office's Enlarged Board of Appeals about whether stem cells are patentable or not.

The decision is on a patent application filed by the Wisconsin Alumni Research Foundation (WARF) - which holds the rights to a number of stem cell lines. Initially rejected by the Patent Office, WARF filed an appeal which was passed by the Appeal Board to the Enlarged Board of Appeal for a ruling (see decision here).

Personally I always find it interesting the various excuses made for not funding projects. Whilst the availability of patent protection is clearly one factor, the ruling will only effect the availability in Europe and the conditions that might be placed on the granting of patents in the stem cell field. Patent protection will still be available in other countries, such as the United States. I venture to doubt whether the effect on Scottish research will dependent on this ruling or not. It would be more serious if other countries came to a similar conclusion which would effectively allow a free-for-all in the stem cell field - and that outcome is unlikely to be either beneficial to the financing of research or on ethical grounds.