College Planning & Management

JAN 2013

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EMERGING TECHNOLOGY BY MICHAEL B. GOLDSTEIN and MAT THEW J. RIZZOLO MOOCs and Consequences MIGHT MASSIVE OPEN ONLINE COURSE MA NIA EXPOSE UNIVERSITIES TO PATENT INFRINGEMENT SUITS ? N o good deed goes unpunished. The recent success of massive open online courses (MOOCs) may contain the seeds of an unanticipated wave of patent litigation. This is a real and potentially costly threat that administrators should understand and take steps to guard against. Not much is new about MOOCs. Online courses have been available for more than 20 years, and have steadily improved in quality, ease of use, and interactivity. So why the concern now that MOOCs may invite patent infringement litigation? The answer lies in the numbers. Enrollment in online courses has historically been relatively modest. The MOOC phenomenon has resulted in the enrollment of hundreds of thousands of individuals. In patent litigation, these big numbers can mean big money. While the vast majority of patents are never litigated, a wave of patent litigation has often followed the introduction of successful products or industries. The educational services field has already seen one high-profi le patent skirmish — the multi-year dispute between Blackboard and Desire2Learn over Internet-based learning management systems. The emergence of MOOCs has the potential to trigger a patent war in which universities are likely to become both combatants and civilian casualties. Online courses require the use of interrelated technologies to develop and deliver content to participants — technologies that may implicate literally thousands of patents. The potential for astoundingly high participation in MOOCs is what drives the risk of lawsuits. Consider the hypothetical case where a patent covers the administration of a MOOC-related exam with real-time feedback. If a million people enroll in the MOOC, and only 10 percent stick it out to take at least one exam, then there are at least 100,000 potential acts of infringement — multiplied, of course, by however many tests are incorporated into the MOOC. MOOCs also make attractive targets for non-practicing entities (NPEs, sometimes referred to as "patent trolls") — companies that own patents but do not actually use them to produce anything. The magnitude of this problem is virtually impossible to assess: countless NPEs may hold patents relevant to Internet-based communications, data transmission, encryption/authentication, etc. The scent of big money often means a troll may emerge from under a nearby bridge. All is not lost: universities are far from powerless in the face of an infringement lawsuit. In fact, in addition to "traditional" patent defenses, an institution has several other defensive options. First, state universities are immune from liability for patent infringement under the 11th Amendment to the Constitution. This means that a patentee cannot sue Gigantic State University for infringing its patent; instead, it would have to sue a vendor or service provider. Private institutions, however, cannot rely on this defense, and it may similarly be unavailable to institutions, like many community colleges, which are public but not instrumentalities of the state. Second, the vendor of MOOC-related services used by the university may have licenses with the patentee, in which case the patent rights may be "exhausted" — when a seller of a product has a license with the patentee that covers a patented product, the purchaser or user of that product generally is not liable for infringement. Universities must determine what licenses MOOC vendors have, as well as to what extent the vendor must — and, importantly, can — indemnify the institution in the event of a lawsuit. Furthermore, the penalty for infringement may not be too severe, depending on the significance of the patent to the overall MOOC system. For example, a holder of a patent related to a specific encryption technology would likely not be awarded a royalty based on overall revenues or be able to obtain an injunction to shut down the course. Lastly, the best defense is often a good offense. There is longstanding concern over the use of patents to impede commerce and innovation, and bills pending before Congress could place additional limitations on infringement plaintiffs, such as instituting a "loser pays" fee-shifting structure. Legislative relief could be proposed perhaps as part of a reauthorization of the Higher Education Act. Increases in patent infringement claims have often followed successful products. MOOCs meet the criteria as targets for attack: technology-based, potentially high-value, and offered by entities possibly unlikely to vigorously defend themselves. Institutions playing in the MOOC pool may not be able to avoid all patent infringement issues, but developing strategies to deal with claims before they arise can minimize their impact. — Read a full version of this article on our online archives at www.peterli.com/cpm/archive.php?article_id=3961. CPM Michael B. Goldstein is co-chair of the Higher Education Practice at the Washington, DC, law firm of Dow Lohnes, PLLC. Matthew J. Rizzolo is an associate in the firm's litigation group, specializing in patent litigation. JANUARY 2013 / COLLEGE PLANNING & MANAGEMENT 63

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