A Primer on University Endowments and IP

Guest article: 10 facts:


http://www.onlineuniversities.com/blog/2012/05/10-surprising-facts-about-university-endowments/

U.S. university endowments:

http://en.wikipedia.org/wiki/List_of_colleges_and_universities_in_the_United_States_by_endowment

So Sue Me

Jim Castagnera

Institutions and individuals duel over intellectual property in an environment reminiscent of Jack London's Klondike.

If your campus is one of the so-called R-1 universities—the 63 members of the prestigious Association of American Universities and/or the additional 25 so classified by the Carnegie Foundation—not much in this article will be news. Your institutions have had big league grant management, technology transfer, and legal departments since Einstein was a pup.

However, just about every other four-year institution has galloped into the intellectual-property gold rush since 2000. The upshot is a shoot-em-up IP environment reminiscent of Jack London's Klondike.

Consider for example the case of New England College (NEC) v. Drew University [2009 Westlaw 3525596]. In the excerpted words of federal district court (NH) judge Joseph La Plante, "This case involves a dispute between two colleges over poetry in motion. The plaintiff, NEC has sued Drew and Ms. Anne Marie Macari, alleging that while Macari was serving as interim director of NEC's graduate poetry program, she secretly conspired with Drew to develop a similar program and to solicit NEC faculty and students to affiliate with Drew. NEC has brought claims of breach of fiduciary duty, breach of contract, and intentional interference with various contractual and other relationships."

So sue me… over a cure for cancer, or patent rights to safe nuclear fusion… but over a poetry program?

What makes "poetry in motion" so special that the small liberal arts college in Henniker, NH drags a New Jersey school into a federal forum?

Here's another interesting wrinkle. According to the Associated Press, "In both programs, students complete most of their work at home and travel to campus only briefly to work with prominent poets."

Background and pre-trial activity
In March 2007 Macari was named graduate poetry interim director at NEC, where she was already a faculty member. NEC billed its offering as the only all-poetry program of its kind in the U.S., and believed that its program's attractiveness to students had dollar value.

According to testimony, about a month later, without informing NEC, Macari, met in New Jersey with Drew's president and others to discuss the possibility of developing a similar poetry program down there. Macari reportedly told the Drew folks she could bring a good faculty with her, including some of the poets affiliated with NEC's program.

Macari, who herself resided in New Jersey, returned to New Hampshire to direct NEC's summer poetry residency. While in New Hampshire, she spoke with various NEC faculty members about affiliating with Drew, and some of them expressed interest. Not surprisingly, she told no one else at NEC about her plans.

According to the published court opinion, more meetings between the professor and Drew personnel followed, revolving around such details as the list of NEC faculty prepared to jump ship; facilitation of student transfers from NEC to Drew in the wake of the faculty exodus; budgetary issues; and ultimate program approval by Drew's Academic Affairs Committee. A vote occurred in December 2007, after which Drew's chief liaison with Macari, Professor Peggy Samuels, wrote to her, "I'm glad we managed to get to this [p]oint before the Jan[uary] Res[idency] so that you can spread the word there a bit."

The word "there" in the Samuels message took on importance, when Drew later denied attempts to steal students. Although Drew's president apparently assured his NEC counterpart that no poaching would occur, "Samuels acknowledged at her deposition that "there" meant NEC, and that she was asking Macari to spread the word about Drew's new program," concluded Judge LaPlante. Other evidence indicated Macari contacted NEC students and some, along with faculty, relocated to Drew.

NEC's claims against Drew include breach of fiduciary duty, breach of contract, and intentional interference with various contractual and other relationships. As this article goes to press the court's only decisions concern Drew's twice-denied motion to move the litigation from the Granite to the Garden State. Meanwhile, Drew's website continues to advertise …
The Drew University Master of Fine Arts in Poetry Program is a two-year, low-residency program for poets and poet translators. … The program offers some of America's most talented poets as faculty mentors who work one-on-one with our students.

The program is divided into short, intense residencies and mentorship semesters. During residencies, students and faculty come together on Drew's beautiful campus in Madison, New Jersey. Residencies consist of ten days of public readings, lectures, workshops, as well as close work and planning between students and mentors for the mentorship semester.

Alphabet soup wars
Does fighting over a poetry program seem a bit farfetched in an IP arena traditionally dominated by NIH, NSF, energy and defense grants? How about a battle over the letters "S" and "C"? To those uninitiated in legal property issues, nothing might seem to be more squarely in the public domain than the English alphabet. True enough. But extract two of the 26 letters, and sew them on a sweatshirt, and the grounds for a lawsuit may be laid.

In this case, the University of South Carolina filed an application to trademark a new logo for its baseball apparel:

The University of Southern California opposed South Carolina's registration application, arguing that the proposed emblem was confusingly similar to its own registered trademark: The U.S. Trademark Trials and Appeals Board concurred, refusing to register the South Carolina logo. The Gamecocks appealed, retorting that "SC" is uniquely identified with the Palmetto State. Au contraire, replied the U.S. Court of Appeals for the Federal Circuit in January. While we "agree that 'SC' may refer to the State of South Carolina… the evidence offered by Southern California demonstrates 'SC' refers to many entities aside from the State. Indeed, South Carolina, in the context of another issue, submitted evidence showing that at least sixteen other universities and colleges represent themselves as 'SC.'"

The SC bottom line? "Because the Board did not commit reversible error, we affirm its decision to refuse registration of South Carolina's mark and its grant of summary judgment against South Carolina on its cancellation counterclaim."

Conclusions?
Hamlet, in one of his more decisivemoods, proposed to go to war "even for an eggshell . . . when honor's at stake." Apparently today's campuses will launch litigation assaults, even over a poetry program or a teaspoon of alphabet soup, when dollars are at stake.

Other current cases confirming this conclusion include:

• O'Bannon v. National Collegiate Athletic Association: On February 12th, the federal court for Northern California refused to dismiss a class action suit brought by former college athletes, who contend that the NCAA's licensing of their images to third parties, while refusing to let the former players do the same, violates U.S. antitrust statutes.
• Authors' Guild v. Google, Inc. and the Webcasters Settlement Act of 2009: Last year's settlement, seeking to resolve authors' and publishers' claims aimed at Google's posting of their texts on the web, and the federal statute signed into law last June to resolve proliferating webcasting disputes, are among the most significant efforts to reconcile traditional IP rights with the inexorable reach of the internet.

What about patents?
Note that none of the foregoing cases involve patents. They underline the reality that intellectual property takes many forms, and all are potentially valuable. Trademarks, copyrights, trade secrets, and an employee's fiduciary duty of loyalty all figure into the IP mix. Lest you conclude that patents have taken a backseat to a recent plethora of IP items, witness the ongoing war between Hewlett-Packard and Cornell University.

Their dispute involves allegations that "HP's PA-8000 family of microprocessors, and servers and workstations incorporating those processors, infringed a patent" owned by Cornell University. A trial jury recently awarded Cornell $184 million in damages. The federal judge cranked that staggering verdict back to $53 million. Nevertheless, HP appealed. Whatever the eventual outcome, patent litigation is alive and well in the realm of higher education IP.

In the words of Kelly Tillery, an IP attorney with Philadelphia's Pepper Hamilton law firm, "We are now in a perfect storm of IP litigation for three reasons: First, IP as a revenue-producing asset is more important today than it has ever been, and for many, it is more important than any real or personal property.

"Second, the severe economic downturn drives IP owners to squeeze all possible remuneration from their assets, including via litigation. It also drives some to cut corners and take risks by using, without authorization, the IP of others to trim expenses or gain revenue.

"And, third, litigation, even to defend the most innocent of accused infringers, is so expensive, that cases settle with payments that often are justified only by the potential litigation costs, and not because of real damages."

In other words, implies Mr. Tillery, look for more, not less intellectual-property litigation in the second decade of our litigious 21st century.

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Jim is a university attorney and the author of Al Qaeda Goes to College [Praeger].
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