UC Regents file lawsuit claiming patent infringement

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The UC Board of Regents and a University of California patent licensee have filed a lawsuit against Facebook, Disney and Wal-Mart claiming patent infringement.

The lawsuit, filed Sept. 12,  accuses the corporations of infringement involving four separate software patents licensed to Eolas Technologies Inc. — a company that works to monetize the university’s patents.

“Frankly, it is not that big of a deal,” said UC spokesperson Dianne Klein. “It is not unusual for us to be tied up in such litigation. The only reason you are hearing about this particular case is because of the size of the companies involved.”

Wal-Mart spokesperson Randy Hargrove said the company takes the allegations seriously and is currently investigating them.

“Wal-Mart respects the intellectual property rights of others,” Hargrove said.

Facebook and Disney did not immediately respond to comment.

According to the 2011 UC Technology Transfer Annual Report, licensees like Eolas usually bear the cost of seeking and maintaining patent protection.

Statistics released in the 2011 UC Technology Transfer Annual Report could point to a push by the university to raise money by commercializing patents. Between 2010 and 2011, the number of U.S. first filings from the UC system increased by 9 percent, and the number of secondary filings increased by 8.1 percent. The number of foreign patents increased by 10.3 percent in the same time period.

Total revenue for the University of California from licensing for fiscal year 2011 was $202.2 million, a 61.4 percent increase from fiscal year 2010. That increase, however, is complicated by $87.5 million in prepayment in 2011 of royalties for an immune activator for treating cancer, a UC Berkeley invention.

Litigation settlements for patent infringement are not included in these numbers and can be lucrative on their own. The university reportedly received $30.4 million from an Eolas settlement with Microsoft Corp. in 2007.

The Electronic Frontier Foundation — a nonprofit organization of lawyers and analysts who fight for consumer rights in the digital world — has argued that the way some patent policing is done can hinder small-business innovation.

“When someone invents a novel invention, the government grants him a 20-year monopoly to exploit that invention,” writes EFF staff attorney Julie Samuels in an article entitled “Why the System Doesn’t Play Well with Software: If Eolas Went the Other Way.” “At the end of those 20 years, the inventor dedicates that invention to society, allowing others to practice it and build upon it.”

According to Samuels, the problem with this is that the protection is too broad and stops smaller companies with limited legal funding from innovating.

Contact D.J. Sellarole at [email protected]