Tech & Sourcing @ Morgan Lewis


The US Department of Justice (DOJ) announced on January 13 that it had completed its review of a proposed joint patent licensing pool known as the University Technology Licensing Program (UTLP) of 15 participating universities. The DOJ concluded that the UTLP was unlikely to harm competition and would benefit licensees and the public to the extent that the UTLP would make it easier to commercialize inventions that may be currently unlicensed or underutilized.

Under the UTLP, complementary patents will be organized into curated portfolios relating to (i) Autonomous Vehicles, (ii) Internet of Things (IoT), and (iii) Big Data and sublicensing will be managed by a five-member board selected by member universities. The DOJ acknowledged that the UTLP may be expanded to other technical areas but the review was limited to those three areas.

Unique Structure of UTLP

Member universities must license those patents they choose to contribute to the UTLP on an exclusive basis, which is intended to avoid the risk of a member free-riding on the UTLP infrastructure but then licensing technology outside of the UTLP.

Unlike Standard Essential Patents (SEP) pools that have so far been favorably reviewed by the DOJ, the UTLP is not formed around an industry standard and includes complementary non-SEP patents that may be neither essential nor without competitive substitutes. The UTLP adopts a “menu” approach that enables sublicensees (“implementers”) to choose freely among a combination of individual patents, groups of patents, or the entire portfolio, rather than just a pool-wide license that SEP pools offer. The DOJ found that this capability permits flexibility and can be procompetitive.

The DOJ noted that the UTLP’s LLC Agreement expressly excludes substitute patents, defined as a patent providing a different technical way of accomplishing the same task as another patent contributed to the UTLP by any member. If substitute patents are inadvertently included in the UTLP’s portfolios, or a patent is later deemed to be substitutable (which must be agreed by an independent expert), the implementer might be able to license both patents through the UTLP but only pay for one or negotiate a separate, nonexclusive license with the relevant member university that contributed that patent.

Should Technology Implementers Take Note?

The DOJ highlights the following effects of the UTLP, which may be of interest to implementers:

  • A customized package of patents can be licensed based upon the value they may have to an implementer
  • The UTLP represented to the DOJ that it will pass on to implementers, in the form of a royalty discount for portfolio options, a portion of the costs savings associated with the UTLP’s centralized licensing administration
  • The UTLP has the authority to enforce a contributed patent, protecting the rights of implementers as sublicensees, although member universities will make individual determinations about initiating litigation

Should UK Universities Take Note?

UK universities arguably occupy a less developed market for commercializing intellectual property than US universities. UK government-commissioned research found a growing market for universities as drivers of commercial innovation, but also inhibitors to commercialization. These included variable skills and experience of university staff, complex negotiation processes, perceived conflicts between university public interest purposes and licensee profit-driven motives, and the small number of commercialization-active universities. The DOJ’s findings of the UTLP’s centralized administrative benefits, streamlined negotiation through use of standards, and the UTLP’s public interest benefits may be of interest to UK policymakers, although the small number of research-focused UK universities that lead this market may find less need for such a collective approach.

There would also be antitrust concerns to a patent pool of the UTLP model that would need to be overcome. The DOJ showed flexibility in considering how these concerns may be mitigated through licensing and governance safeguards and public interest considerations. It is not clear if UK public authorities or courts would take the same approach.

The UTLP approach is also unique to specific technical areas. As the DOJ noted, in life sciences a single patent may be highly valuable for many uses and industry partners for universities more common. However, in physical sciences a useful application may require numerous patents and a single university may not possess a sufficiently comprehensive set of patents for a successful application or other technology transfer, and so lending itself to the UTLP approach.

The success of the UTLP in the United States as a potential driver of innovation is one to watch and will be of global interest.