[Laser] Mark III free-electron laser stolen

Mon Oct 11 12:56:00 EDT 2004

Should K2KGH get his big LASER back?

-Ed

October 11, 2004

PAGE ONE

THE WALL STREET JOURNAL

Cutting Edge
A Laser Case Sears
Universities' Right
To Ignore Patents

Court Narrows an Exemption
In Suit Over Device at Duke
And a Spurned Physicist

 From Ham Radio to Star Wars
By BERNARD WYSOCKI JR.
Staff Reporter of THE WALL STREET JOURNAL
October 11, 2004; Page A1

DURHAM, N.C. -- Shielded behind thick concrete walls on the campus of Duke
University is a 60-foot-long laser that was once the centerpiece of
Reagan-era plans for a "Star Wars" missile defense. These days, the Mark III
free-electron laser is used by medical researchers for more benign purposes:
vaporizing tiny bits of brain tissue or zapping fruit flies in hopes of
someday healing wounds in humans.

Its biggest impact, though, may come as a result of a lawsuit over the laser
that has jeopardized a central practice in university research: using
patents without paying.

The battle pits the university against John M.J. Madey, a 61-year-old former
Duke physics professor and the inventor of the device. In the late 1990s,
Duke demoted Dr. Madey and removed him as director of the free-electron
laser lab. Dr. Madey quit Duke, decamped to the University of Hawaii, and
sued the university in federal court in Greensboro, N.C., alleging breach of
contract, fraud and other civil claims.

Duke denied the charges, and this might have been just another academic spat
except that Dr. Madey held the patent rights on two critical elements of the
laser he left behind. So, in his suit, he also alleged patent infringement.

Duke figured it had a solid defense. It was following a time-honored
"experimental use" exception whereby academics, in the name of research,
could infringe on patents so long as they didn't sell the results in
commercial markets.

But Dr. Madey didn't say Duke was selling anything in the normal sense.
Instead, he contended Duke used the laser to further its business interests
as a research university. "The Duke free-electron laboratory is a
significant enterprise," he argued, that brings in millions of dollars worth
of government grants every year. He said the lab was part of Duke's larger
purpose of competing with other institutions for faculty, students,
recognition, scientific distinction and grant money. "This is Duke's
business," his suit said, and therefore Duke had to honor his patents.

Although a lower court backed Duke, a three-judge panel of a federal appeals
court reversed the ruling and sided with Dr. Madey. Last year, the Supreme
Court declined to review the appellate court's ruling. Part of the case has
been sent back to the lower court, where Duke is claiming a patent exemption
for another reason: because it uses the laser to carry out federal
contracts. On that issue and others, the lower court has told the sides to
get ready for a trial.

Whether Duke ultimately prevails or not, Madey v. Duke is raising a central
question: At a time when universities increasingly act like corporations,
should they also be subject to the intellectual-property laws that bind
businesses and consumers?

These days, big research universities use their formidable powers for far
more than teaching and scholarly inquiry. They invest in top scientists,
create big labs, team up with companies and spawn commercial spinoffs. They
and their scientists lure grants from foundations and federal agencies. The
National Institutes of Health alone funded $20 billion of research at U.S.
campuses last year.

And big universities generate patents themselves. In 2002, they collected
nearly $1.3 billion in royalties, according to the Association of University
Technology Managers.

Duke and others are fighting hard for exemption from outsiders'
intellectual-property claims, at a time when many universities are also
aggressively seeking and defending their own patents. In one prominent case,
the University of Rochester sued drug maker G.D. Searle & Co., now owned by
Pfizer Inc., arguing that the university's patents for blocking certain
enzymes covered big-selling drugs including Celebrex. (Rochester's patents
were declared invalid earlier this year by a U.S. appeals court.)

Duke's fight against Dr. Madey isn't universally applauded within the
academic world. Although more than 20 universities backed Duke by filing a
friend-of-the-court brief with the Supreme Court, some universities with
active patent programs declined to join. Among them was the University of
Wisconsin, whose efforts to promote inventions and patents go back eight
decades. The Wisconsin Alumni Research Foundation manages 800 issued patents
and 600 pending ones. It holds stakes in 30 university spinoff companies.

"We believe it's a mistake to say [to industry] you need to pay us for
intellectual property but we aren't going to pay you, because we're a
university," says Carl Gulbrandsen, managing director of the Wisconsin
foundation.

The appellate-court ruling in the Duke case is already reverberating, as
universities fear that patent holders will come out of the woodwork,
demanding royalties and impeding research. Johns Hopkins says it has
received at least eight letters since the verdict, from streaming-media
outfits to biotech firms, claiming it infringes on patents.

The University of Iowa, as a test, tried to track the possible patent
infringement of one lab that has just a handful of scientists, who study
rare ocular disease. Iowa had to contact 71 different people. It spent
$24,000 just to do background checks and send letters to patent owners, none
of whom asked for money.

Patented Methods

An especially thorny problem lies with biotechnology. The methods for
conducting this research -- using DNA cell lines, reagents and such -- are
often patented. Biotech executives say it's about time universities that
have business interests start honoring patents. "Academia has been given
notice: They don't have a free ride," says Tim Reckart, general counsel of
Research Corp. Technologies, a company in Tucson, Ariz., that invests in
biomedical start-ups.

The case for an experimental-use or "research" exemption to patent laws
dates back to an 1813 dispute over a card-making machine. In the case of
Whittemore v. Cutter, Justice Joseph Story of the Supreme Court said it
wasn't the intent of patent laws to punish someone who infringed "merely for
philosophical experiments," or to verify how a machine worked.

But in recent years, courts have greatly shrunk the range of activities
exempt from the patent laws. Besides the Madey case, a 2003 appellate-court
ruling narrowed the exemption relating to applications before the Food and
Drug Administration. It said Germany's Merck KGaA and the Scripps Research
Institute in La Jolla, Calif., infringed on a small biotech firm's patent by
going beyond testing and using the patent to discover new drugs. Merck KGaA,
which isn't connected to Merck & Co. of the U.S., has filed an appeal to the
Supreme Court.

At Duke, medical-school dean R. Sanders Williams -- who holds four patents
from his discovery of genes, proteins and pathways controlling cardiac
development -- says he could wipe out some pockets of research if he got
tough in enforcing his own patents. "There's a nobility of science and a
magic of academia," Dr. Williams says, that could be imperiled by putting
all university activity "in the same cold glare as the corporate world."

Dr. Madey got into science early. Growing up in New Jersey, he was a
ham-radio enthusiast. His father arranged to have built a pair of 110-foot
towers in the backyard so the youth and his brother, Jules, could patch
communications between the U.S. and Antarctica.

John Madey enrolled at California Institute of Technology at age 16. There,
and later at Stanford University, he spent years working on his
free-electron laser. Unlike many other lasers, his could be "tuned" to
various frequencies, and could direct a very powerful beam of light to a
precise target.

The Defense Department once had plans to develop high-powered versions of it
to zap incoming missiles. After the Cold War, federal sponsors redirected
much of Dr. Madey's work to medical uses. Dr. Madey retained two patents on
the Mark III laser, including one on a microwave electron gun used in its
operation.

In 1988 he moved to Duke, where he became director of the free-electron
laboratory and a tenured professor. The U.S. government paid to ship the
laser to Durham, where Duke constructed facilities to house the
laser-research program. Dr. Madey won about $40 million in government
research money from various U.S. defense agencies, including the Office of
Naval Research.

Then troubles arose. In his suit, Dr. Madey asserted that his Duke superiors
wanted to divert research into areas outside the government grants. Duke
officials said that Dr. Madey's superiors repeatedly warned him about
mismanagement of the lab. Finally, Duke said in court documents, his
"managerial incompetence forced Duke to take remedial measures." Dr. Madey
says there was nothing wrong with his management.

The university removed Dr. Madey as principal investigator on a large Navy
grant, according to its court filings. It let him retain top status on other
grants and remain tenured.

Dr. Madey was infuriated at the demotion. In an interview, he says younger
scientists at the lab were shocked. "There's a chilling effect on these
youngsters to see a researcher's work taken out of the researcher's hands,"
he says.

He sued Duke, asking for unspecified damages for using the laser patents
without his permission. He also resigned from Duke and took a tenured
physics position at the University of Hawaii.

In the 65,000-square-foot laser lab at Duke, scientists now carry out a
variety of experiments. One major grant to Duke from the Pentagon totals
$2.8 million a year, with which scientists from Duke and elsewhere conduct
experiments in materials science and nuclear physics. Most are done on a
laser that shoots electrons along an oval track. Another laser, the one
built by Dr. Madey, is used mainly for medical experiments, funded by the
National Institutes of Health. Dr. Madey contends that both of the lasers
use his patented equipment.

When it ruled on his case, the appeals court, sitting in Washington, D.C.,
said the experimental-use exemption from honoring patents applied only to a
narrow set of activities, such as research to satisfy "idle curiosity" or
"philosophical inquiry." Duke didn't qualify, the court said, because its
use of the laser fell within normal "business" activities of the university,
such as fulfilling government grants.

Parallel Effort

Dr. Madey has launched a parallel legal effort to get the Mark III
free-electron laser shipped to Hawaii. The big machine is something of a
technological golden goose, because whoever has it can use it to bid for and
carry out federal grants and contracts. Dr. Madey wants it in Hawaii to
fulfill an Army contract to develop prototypes of a device to detect
clandestine nuclear tests. He says he is midway through the five-year, $49.9
million contract but can't complete it without the laser.

But even the laser's ownership is a matter of dispute. Duke says it owns it.
Dr. Madey says that the primary owner is the U.S. Department of Energy,
because it financed key phases of construction, and he has some ownership
interest himself because he donated some funds used to build it. The fight
has become so bitter that Duke lawyers won't allow Dr. Madey anywhere near
the device he built, or let him enter the building the university built
specifically for him in 1988.

Early last year, the Energy Department, which agrees it is the laser's
primary owner, asked Duke for permission to inspect the lab and conduct an
"inventory." Duke lawyers shot down the request and warned that neither Dr.
Madey nor anyone who might be an expert witness in his case against Duke
could visit. When a Madey associate at Hawaii, an Energy Department official
and two technicians showed up anyway, they had to satisfy their curiosity by
looking at the outside of the lab.

The Energy Department then tried to turn up the heat. Later in 2003, one of
its attorneys wrote to Duke that the laser and its add-ons belonged to the
U.S. government and stated that "whether the system has been reconfigured,
cannibalized for parts, or sits unused and gathering dust, the DOE needs to
transfer it to the University of Hawaii under a grant supporting important
domestic security related research." A Duke lawyer wrote back that the laser
belonged to Duke.

"You never have these problems in the English department," says Randall
Roden, Dr. Madey's lawyer, "because there's no money involved."

Write to Bernard Wysocki Jr. at bernie.wysocki at wsj.com1

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