A $255 Million Patent - Stanford University's Cohen Boyer Patent

Stanford University made $255 million from the licensing of three fundamental Gene Splicing patents by Stanley Cohen and Herbert Boyer. The main patent is US Patent 4,237,224 "Process for producing biologically functional molecular chimeras", which together with a patent for proteins produced using recombinant prokaryote DNA and a patent for proteins from recombinant eukaryote DNA defined the Recombinant DNA technique of modern molecular biology. This technology gave birth to the biotechnology industry which began in 1976 when Genentech was founded. By the year 2000 over 2,000 biotechnology companies had been launched.

The Cohen-Boyer inventions were fundamental and revolutionary but it was the licensing strategy of Stanford University that extracted significant value from this technology while facilitating the explosive birth of the biotech industry. Stanford wrote non-exclusive licenses with a small upfront licensing fee and small percentage running royalties on any products that were developed using the gene-splicing technology. Since the licensee only had to pay if and when it got a product in the market it was relatively easy to get companies to sign up.

The importance of the Cohen-Boyer patent can be seen in this IPVision Patent Landscape Map™ which shows the 260+ patents that cite it as prior art. These are the patents that "fan" out to the right of the Cohen-Boyer patent.