A legal challenge to Princeton University’s tax-exempt nonprofit status has survived an attempt by the university to throw it out of court. A state appeals court on April 17 allowed the suit by four Princeton residents to proceed, and will likely go before a tax court next year.
The lawsuit was first filed in 2011 by attorney Bruce Afran, pictured, who has argued the university is a commercial enterprise because of its technology transfer program, which allows the university to license inventions made by its faculty members to private companies. For example, according to the lawsuit, the school received $524 million between 2005 and 2012 from drugmaker Eli Lily because a university faculty member invented compounds needed to make the drug Alimta.
The university does not pay property taxes but voluntarily pays the town of Princeton about $2.75 million a year. However, if the courts strike down its nonprofit status, it would have to pay about $50 million a year to the township. The New York-based firm of Simpson Thacher and Bartlett is defending the university.
