He Who Pays the Piper Calls the Tune. Or Does He? The Supreme Court to Decide Who Owns Patent Rights to Inventions Produced in Federally Funded Projects?


The following alert was written by our friends at Kilpatrick Stockton, Charles W. Calkins and Wendy A. Choi.

The Supreme Court granted certiorari on November 1, 2010, in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. (09-1159), involving the ownership of inventions made with federal funding under the 1980 Bayh-Dole Act. The issue is whether a federal contractor university’s statutory right under the Bayh-Dole Act in inventions arising from federally funded research can be terminated (or superceded)unilaterally by an individual inventor through a separate agreement purporting to assign the inventor’s rights in a future invention to a third party.

The three patents in this case involve methods for using PCR techniques to measure HIV concentration in blood plasma to determine the effectiveness of AIDS treatment. Stanford scientists invented the methods while subject to a contractual duty to assign any inventions to Stanford. After agreeing to assign rights, but prior to making the invention, one of the inventors, Dr. Mark Holodniy, who was working on a collaboration between the university and Cetus, assigned his rights in his future inventions to Cetus, whose PCR business was later acquired by Roche. Dr. Holodniy promised to assignrights to Stanford but had actually assigned his rights to Cetus. Stanford filed for a patent and then demanded a royalty from Roche for the sale of its HIV test. The Federal Circuit has held that Roche could not be liable for infringement because it held ownership rights based on Dr. Holodniy’s purported assignment, which was contrary to his promise to Stanford.

Stanford has argued that its receipt of federal funding for the research results in ownership in the resulting inventions. The U.S. Department of Justice (DOJ) supported the petition, arguing that the Bayh-Dole Act establishes a “framework for determining ownership interests in federally funded inventions.” The DOJ contends that the Bayh-Dole Act supercedes the normal statutory rule that patent rights vest with the inventor. Instead, by virtue of receiving federal funding, the university or federal contractor receives title to the invention as a matter of law and only it may elect not to retain title. If Bayh-Dole mandates that result, Stanford retains full title because it received federal funding for the research and elected to pursue patent protection. The Federal Circuit had rejected these positions – holding instead that the Bayh-Dole Act was not designed to automatically void contractual transfers made by an inventor simply because the research was federally funded.

In addition to the DOJ brief, additional amicus briefs were filed by a number of universities and university-related organizations that all supported the petition, including MIT, WARF and the Association of American Universities. The universities contend the Federal Circuit decision has broad implications, casting doubt on many patents stemming from hundreds of billions of dollars of taxpayer-supported research.

We will continue to monitor this important case, which will clarify the workings of the Bayh-Dole Act, before the Supreme Court and will provide updates on the oral arguments and decision, which are expected in the first half of 2011.

Click here for the full publication from Kilpatrick Stockton.

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