The Vacuum-Assisted Closure (VAC) wound treatment device was developed by professors at Wake Forest Baptist Medical Center and is used worldwide. Two related patents were licensed to KCI (Kinetic Concepts Inc.) and the university earned nearly $300M in royalties over a four year period. That appears to be coming to a screeching halt.
Smith & Nephew started selling a similar wound dressing in 2009 and KCI and Wake Forest sued to protect their IP. The celebration of their victory was short-lived, as in October of 2010 a U.S. District judge found that the patents ”would have been obvious to a person of ordinary skill,” thus invalidating them.
KCI decided not to appeal, and also decided that since the patents are invalid, they should no longer be required to pay Wake Forest royalties. Thus Wake Forest is facing a type of “patent cliff,” one they had little time to prepare for. IPBlog has reported on how others have managed massive revenue shortfalls (see 1, 2 and 3). Wake Forest Medical School has created an Innovation and Entrepreneurship Initiative to proactively seek out commercially viable ideas for the institution’s many researchers to improve their pipeline. Matt Evans in The Business Journal reports Wake Forest’s invention disclosures in 2010 were up 80% over 2005, and licensing activity has doubled in the same time period.