Yale, professor agree to pay $1.5 million for failing to share patent royalties, feds say

Yale University and one of its professors have agreed to pay $1.5 million to the federal government for failing to share royalties with the U.S. Department of Veterans Affairs, officials say.

In a release, the U.S. Department of Justice said Yale University and Dr. John Krystal have agreed to pay $1,508,000 to resolve False Claims Act and common law allegations that they failed to disclose certain patents and failed to share patent royalties with the VA for inventions made by Krystal when he worked for both institutions. It said the settlement resolves alleged conduct between March 2006 and February 2023.

Principal Deputy Assistant Attorney General Brian Boynton, the head of the Justice Department’s Civil Division, said universities and their professors have to disclose and share royalties on inventions they discover while working for the government.

“The department will ensure that those who benefit from government funding and resources properly compensate the taxpayers,” he said.

Vanessa Avery, the U.S. attorney for the District of Connecticut, shared those sentiments.

“It is critical that inventions funded with taxpayer money be fully and timely disclosed to the government,” she said. “This settlement shows our commitment to ensuring that the government is fairly compensated for all taxpayer funded inventions.”

Christopher Algieri, the special agent in charge for the VA, said the agency’s Office of Inspector General is committed to ensuring the it is appropriately and fairly compensated for all intellectual property developed through projects it funds.

At the time of the inventions, the DOJ said, Krystal was employed part-time at Yale in various positions and with various research responsibilities, including as a professor of psychiatry, neuroscience and psychology, and as chair of the department of psychiatry in the Yale School of Medicine. It said he was also employed part time by the VA as a salaried clinical psychiatrist with research responsibilities at the VA Medical Center located in West Haven.

The DOJ said the VA and Yale are parties to an agreement under which they agreed to “promptly and in confidence” disclose to each other all joint inventions. It said that includes “any future invention or discovery, which is or may be patentable… in which at least one employee with compensation from the VA and at least one person who has an appointment with Yale is named as a co-inventor.”

In addition, the DOJ said, VA regulations require all VA employees to promptly disclose their inventions to the VA so the VA can make a determination as to whether it is entitled to ownership.

“Beginning in March 2006, Dr. Krystal and four co-inventors applied for several patents related to the use of intranasal ketamine for treatment of depression and suicidal ideation,” it said. “The patent applications allegedly acknowledged VA funding support. The U.S. Patent and Trademark Office issued three patents. Dr. Krystal assigned his interests in those three patents to Yale.”

In February 2015, the DOJ said, Yale and Krystal began receiving royalty payments arising from the

three ketamine patents. It said the federal government alleged they never shared these royalty payments, now totaling more than $3 million, with the VA, and did not disclose the patents to the VA until 2017.

In September 2017 and again in January and June 2019, the DOJ said, another school that had been assigned as agent for the ketamine patents, in coordination with Krystal and Yale, allegedly submitted documents to the U.S. Patent and Trademark Office removing the acknowledgement of VA support from the three ketamine patents.

“The United States alleged that after a VA employee reminded Dr. Krystal of VA employees’ obligations to disclose inventions to the VA, in December 2017, Dr. Krystal submitted the

required disclosure to the VA of the three ketamine patents,” it said. “The VA then issued a determination that it was entitled to an ownership interest in the patents.”

The DOJ said Krystal appealed that determination to the National Institute of Standards and Technology, and the VA prevailed.

The DOJ said the settlement resolve these allegations,

noting that as part of the agreement Krystal agreed to forego any entitlement to share in the settlement paid to VA, pursuant to rights that he would otherwise have as a VA employee inventor.

“Simultaneously with this settlement, Yale, Krystal and the VA also entered into a separate agreement, under which Yale and VA agreed to share future royalties associated with the ketamine patents and assign the patents to the VA,” it said.