University of Wisconsin sues Intel for Core 2 Duo patent infringement: http://www.engadget.com/2008/02/07/intel-sued-for-core-2-duo...
Northeastern University sues Google over Database Architecture: http://www.techcrunch.com/2007/11/10/google-being-sued-over-...
This goes to show that universities aren't always benevolent when it comes to IP. Even if the software is rewritten, there's no guarantee that university lawyers won't accuse you of infringement down the line.
Isn't licensing specifically designed to address this issue of IP? What would be a reason not to license the software from the university?