The University of California, Santa Barbara (UCSB) is pressing lawsuits that could have major ramifications – by not only winning the institution a share of a billion-dollar industry but also lighting a path towards similar payouts across higher education.
The lawsuits concern a popular type of LED light bulb with an old-fashioned-incandescent appearance, with the classic glowing wires made from high-efficiency LEDs using a technique developed at UCSB.
Even more innovative, though, may be the university’s decision to sue over the matter.
Outside medicine, where life-saving drugs can be easily tied to a single invention, universities have often had trouble justifying the major legal costs needed to prove complicated links between commercial products and academic research labs.
UCSB is tackling that obstacle by aligning with a new wave of investment firms that finance big-money lawsuits in exchange for a share of the winnings − firms that are beginning to see university research as their next big marketplace.
“This is very much an emerging landscape,” said Sherylle Englander, head of technology transfer at UCSB.
It is also one with potential for huge value, said Seth Levy, an attorney with Nixon Peabody, who is running the legal side of UCSB’s efforts to force makers of filament LED lighting technology to share the profits.
LEDs, or light-emitting diodes, are compounds invented in the early 1900s that glow when electricity is passed through them. A team at UCSB that included Shuji Nakamura, a Nobel Prize-winning professor of materials, devised the means of fashioning LEDs into the thin string shape that emits light in all directions.
The LED filaments, popular with consumers for their aesthetics and light-distribution qualities, sell in the US in the range of $1 billion (£800 million) a year, Mr Levy said.
While estimates are difficult, Mr Levy said he believes there could be another 60 to 100 instances of products with similar sales values that are using innovations derived from US university labs without paying rights fees.
US universities have long known about such cases but have been reluctant to gamble scarce institutional resources to pursue violators, Mr Levy said. Many companies have recognised that reality and regularly sell derived products without paying royalties, even when asked, he said.
That may change, Mr Levy said, for the first time in his 20 years of working with academic institutions, due to the emergence of venture capital firms willing to finance the lawsuits.
Currently, UCSB has reached royalty agreements on the filament LED bulb technology with at least a dozen vendors, including the major US retail chain Bed Bath & Beyond. But it is pursuing cases against big companies such as Amazon, Walmart, Target, General Electric, Home Depot and Ikea.
The university has not said what share of the profits it has been seeking or receiving so far. But Ms Englander said that even with the outside financing of legal costs, the decision to sue was not an easy one.
She said UCSB was helped by the fact that the commercial litigation finance company in its case, Longford Capital Management, appears rare within its industry for its willingness to accept the unique challenges of working with a university.
Those difficulties include the need to proceed slowly through stages of consultation with faculty and other concerned shareholders, she said. A typical private company, by comparison, may want funding and legal partners that get quickly to the bottom line and worry less about the details of getting there, she said.
Mr Levy agreed, having seen faculty concerned not just with financial settlements in infringement cases but with issues that include ensuring the public benefit of an invention, as well as protecting relationships with companies that can finance future research and hire students.
Longford Capital, in a written response to questions, said it had been in discussions with more than 100 leading research universities and already is partnering with “a number of” them beyond UCSB.
Universities do understand that companies using their inventions are operating in a complex environment, Ms Englander said.
“But I think it’s good for universities to stand up and ask that their rights are respected,” she added, “so that in the future, maybe it’s a little more of a habit to respect university rights.”
