Penn State Office of Technology Management Will Auction Intellectual Property Licenses

Pennsylvania State University announced that it will host what it believes to be the country’s first online auction of intellectual property licenses by a university. So far, only engineering patents will be available for auction. Future auctions will be held for biotechnology patents, chemistry patents, material patents, information technology (IT) patents, and molecular biology patents. Bidding opens on the general engineering patents on March 31st and continues until April 11th. Licenses are valued between $5,000 and $50,000. Bidding is done by creating an account on http://patents.psu.edu. An account can also be created to receive notifications when new patents become available.

The licenses offered are exclusive, meaning that the licensee and Penn State will agree on an exclusive field of use and territory where the licensee is the sole owner of the patent rights. The agreement also includes a provision requiring the winning bidder to pay all the patent maintenance fees. However, unlike most university research licenses, Penn State does not require the payment of any ongoing royalties. In addition, Penn State retains the right to pursue third-party infringers allowing the licensee to participate in enforcement only if Penn State’s enforcement efforts are not successful after six months. The licensing agreement also contains a “marketing efforts” provision that requires the licensee to use reasonable efforts to diligently bring one of the licensed products into the commercial market. Finally, the agreement allows the licensee to sub-license the technology if the sub-licensee agrees to the same terms and pays a fee.

The goal of the auction is to get the intellectual property “off of the shelf and in the hands of companies that can use the technology, at very favorable terms and price points. The buyers get the rights to use the IP, and the University gets a financial return. It’s a win-win situation,” said Penn State Associate Vice President for Research and Technology Transfer Ron Huss. Associate Vice President Huss cites a variety of reasons why the technology has not yet been picked up by a commercial entity. Interim Vice President for Research Neil Sharkey stated that the idea for the auction did not come from a desire to get the most money possible out of the sale of the licenses, but to create knowledge of technologies that have potential for real-world impact. However, if people are not aware of the technology that has been developed, it has no value.

Previous patent auctions by companies have had limited success over the past years, noting specifically auctions by Kodak and NASA in 2012. It will be interesting to see if Penn State is successful in its auction and if so, if consumers eventually see these technologies used in the marketplace. If successful, this might be a process that university technology transfer offices in New York State should consider. In addition to bringing licensing fees that the university would not have had, the auction also draws attention to the university’s research efforts and capabilities.