Most universities are nonprofit institutions and like to think that makes them fundamentally different from profit-making ventures. They are and they aren't. Their goal is not maximizing a bottom line but rather serving the public interest with education and research. But financially, they need to at least break even, which generally requires that they maximize their multiple sources of income. So they are businesses, and when viewed financially, they often are hard to distinguish from profit-making enterprises. This perspective was, I be-lieve, at the heart of the recent judgment in the case of Madey v. Duke University. In that October 2002 decision, a federal appeals court reversed a lower court and held that a university is not generally entitled to an exemption from obtaining licenses to patents that affect its research endeavors. The appeals court found that all of the research activities of a university serve to further its "legitimate business objectives" and therefore are no different than the activities of a for-profit company. The appellate decision explicitly stated that the lower court had "attached too great a weight to the nonprofit, educational status of Duke University." It said, "The correct focus should not be on the nonprofit status of Duke but on the legitimate business Duke is involved in." Just recently, the U.S. Supreme Court refused to hear the case, so the judgment will presumably stand, although the lower court still has to interpret it.
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