Supreme Court Grants Certiorari in Case On Individual Patent Rights Under Bayh-Dole

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The U.S. Supreme Court agreed Nov. 1 to hear a case testing whether, under the limitations of the Bayh-Dole Act, inventors may assign their individual rights in patents partially funded by the federal government (Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems Inc., U.S., No. 09-1159, cert. granted 11/1/10).

The Solicitor General responded Sept. 28 to the high court's request for the government's views and supported the grant, so the decision to take the case was not unexpected. The government, siding with the view of petitioner Stanford University that it held title to its researcher's invention, asked the court to correct the U.S. Court of Appeals for the Federal Circuit's “serious misunderstanding of the Bayh-Dole Act's framework for determining ownership of federally funded inventions.”

Court Declines to Resolve Ownership on Mandamus.

The patents at issue (5,968,730; 6,503,705; and 7,129,041), all titled “Polymerase Chain Reaction Assays for Monitoring Antiviral Therapy and Making Therapeutic Decisions in the Treatment of Acquired Immunodeficiency Syndrome,” involve correlating measurements of HIV nucleic acids obtained through a PCR assay to determine whether a therapy is effective.

The inventors include a Stanford researcher, Mark Holodniy, who was part of a collaboration on related technology between the university and Cetus, a company where PCR techniques matured in the early 1980s. While Holodniy's agreement with Stanford included language that he would “agree to assign” patent rights to the university, his consulting agreement with Cetus recited that, “I will assign and do hereby assign” intellectual property rights.

Roche acquired Cetus's assets in 1991. The first patent application on the technology was filed by Stanford in 1992. The parties negotiated possible licensing terms, but when those negotiations failed, Stanford filed a lawsuit alleging that Roche's HIV detection kits infringed the patents.

Judge Marilyn Hall Patel of the U.S. District Court for the Northern District of California first granted Stanford's motion for summary judgment, ruling that Roche was barred from asserting that it was the owner of the disputed patents, that it had a license, and that Stanford lacked standing without Holodniy's assignment.

The Federal Circuit in 2008 denied Roche's petition for a writ of mandamus. In re Roche Molecular Systems Inc., 516 F.3d 1003, 85 USPQ2d 1843 (Fed. Cir. 2/1/08) (75 PTCJ 358, 2/8/08). But in dissent, Judge Pauline Newman said, “It is as inappropriate as it is unnecessary to require trial to proceed on the issues of infringement, without resolving the threshold questions of ownership of the inventions.”

The case did not go to trial, though, as Patel granted Roche's motion for summary judgment of invalidity, finding that an article in the prior art provided sufficient information such that it would be obvious to try the particular marker used in the claimed assay, and that no prior art references taught away from use of that marker. Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems Inc., 563 F. Supp. 2d 1016 (N.D. Cal. 2008) (76 PTCJ 222, 6/13/08).

Stanford appealed the invalidity ruling. Roche appealed the court's judgments as to the parties' respective ownership rights in the patents.

Federal Circuit Denies Standing.

The Federal Circuit only addressed the standing issue this time around, and held that Stanford University had no standing to sue to bring a patent infringement lawsuit because Holodniy had assigned his rights prior to conception of the invention. 583 F.3d 832, 92 USPQ2d 1442 (Fed. Cir. 2009) (78 PTCJ 694, 10/9/09).

The court said, “the contract language 'agree to assign' reflects a mere promise to assign rights in the future, not an immediate transfer of expectant interests,” citing IpVenture Inc. v. Prostar Computer Inc., 503 F.3d 1324, 1327, 84 USPQ2d 1853 (Fed. Cir. 2007).

In contrast, the “do hereby assign” language in the Cetus agreement meant that “Cetus's equitable title converted to legal title no later than the parent application's filing date,” the court said. When Holodniy finally, in 1995, executed an assignment of his rights in the 1992 application to Stanford, he no longer had such rights to assign, according to the court.

The court further rejected Stanford's argument that the Bayh-Dole Act negated Holodniy's assignment to Cetus since the invention proceeded from NIH-funded research, giving the government discretionary rights and Stanford the right to take complete title to the inventions as a “right of second refusal” under 35 U.S.C. §§200-212.

“Bayh-Dole does not automatically void ab initio the inventors' rights in government-funded inventions,” the appellate court panel said, citing Central Admixture Pharmacy Services Inc. v. Advanced Cardiac Solutions P.C., 482 F.3d 1347, 1352-53, 82 USPQ2d 1293 (Fed. Cir. 2007) (73 PTCJ 703, 4/13/07), nor did that statute void Holodniy's rights, assigned to Cetus, in the instant case.

In a footnote, however, the court also made a point that it was not expressing an opinion “as to whether Holodniy's execution of the [agreement with Cetus] violated any provisions of the Bayh-Dole Act, or whether the Act provides the Government or Stanford some other legal recourse to recover Holodniy's rights.”

Stanford requested a rehearing en banc, No. 2008-1509 (Fed. Cir. Oct. 30, 2009) (79 PTCJ 188, 12/18/09), which the appellate court denied.

Petition Supported by University Research Groups.

Stanford filed a petition for writ of certiorari March 22, arguing that an individual inventor may not assign rights otherwise allocated to a university receiving federal funds and subject to the Bayh-Dole University and Small Business Patent Procedures Act of 1980, 35 U.S.C. §§200-212. (80 PTCJ 104, 5/21/10).

The petition, filed by Ricardo Rodriguez of Cooley Godward Kronish, Palo Alto, Calif., presented the question as follows: “Whether a federal contractor university's statutory right under the Bayh-Dole Act, 35 U.S.C. §§200-212, in inventions arising from federally funded research can be terminated unilaterally by an individual inventor through a separate agreement purporting to assign the inventor's rights to a third party.”

Three briefs by friends of the court were filed in April in support of the petition:

• A brief by the Wisconsin Alumni Research Foundation was filed by Michelle M. Umberger of Perkins Coie, Madison, Wisc. WARF was involved in a similar case in the Seventh Circuit. Wisconsin Alumni Research Foundation v. Xenon Pharmaceutical Inc, 591 F.3d 876, 93 USPQ2d 1361 (7th Cir. 2010) (79 PTCJ 271, 1/15/10).

• Douglas Hallward-Driemeier of Ropes & Gray, Washington, D.C., filed on behalf of the Association of American Universities, three other university associations, and 42 universities.

• The Massachusetts Institute of Technology filed a brief as well, submitted by Kelly M. Klaus of Munger, Tolles & Olson, Los Angeles.

Roche responded May 26, and then Stanford replied June 5.

Solicitor General Supports Grant.

The Supreme Court discussed the briefing in conference June 24, but rather than decide on the issue, the justices requested the views of the United States.

The high court redefined the question to the solicitor general slightly: “Whether an inventor who is employed by a contractor that elects to retain rights in an invention may defeat the contractor's right to retain title under the Bayh-Dole Act by contractually assigning his putative rights in the invention to a third party.”

The United States responded Sept. 28, in a brief filed by Neal Kumar Katyal, acting solicitor general. The brief traces the circumstances around and intent of Congress in the passage of the Bayh-Dole Act.

Based on that discussion, the government concluded that the Federal Circuit erred in its decision. “An individual inventor can obtain title in a federally funded invention only if the contractor declines to take title (or fails to assert its statutory rights as required by the Act) and the government affirmatively authorizes the retention of title by the inventor,” according to the brief.

In the instant case, Katyal said, “Holodniy had no patent rights to assign to Cetus because title to the inventions initially vested in Stanford and Stanford exercised its Bayh-Dole Act rights.”

By Tony Dutra

Federal Circuit decision at

SG's brief at