Supreme Court Rules Against University In Patent Case

Supreme Court Rules Against University In Patent Case

WASHINGTON, D.C. - (Mealey's) In a dispute over patented HIV-detection kits, a divided U.S. Supreme Court on June 6 affirmed a Federal Circuit U.S. Court of Appeals ruling that the Bayh-Dole Act does not automatically vest title to federally funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions (Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems Inc., No. 09-1159, U.S. Sup.).

Chief Justice John G. Roberts, writing for the majority, cited United States v. Dubilier Condenser Corp. (289 U. S. 178, 188 [1933]) for the proposition that "unless there is an agreement to the contrary, an employer does not have rights in an invention 'which is the original conception of the employee alone.'"  Although in certain situations Congress has divested inventors of their rights "unambiguously" pursuant to specified federal contracts, "such language is notably absent from the Bayh-Dole Act," according to the majority. 

"Nowhere in the Act is title expressly vested in contractors or anyone else; nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions.  Instead, the Act provides that contractors may 'elect to retain title to any subject invention,'" Chief Justice Roberts wrote, citing the statute. 

The Federal Circuit sided with respondent Roche Molecular Systems Inc. in its dispute with petitioner Leland Stanford Junior University, which owns three federal patents for an HIV-testing method naming Stanford researcher Mark Holodniy as inventor.  According to both parties, Holodniy signed a "copyright and patent agreement" upon accepting a position with Stanford that required him to assign his inventions to the university.  In addition, pursuant to a collaboration between Stanford and Cetus Corp., Holodniy signed a "visitor's confidentiality agreement" with Cetus in which he also assigned rights to any inventions devised as a "consequence" of his work.   

Roche purchased certain Cetus assets - including its agreements with Stanford and its researchers - and began manufacturing HIV detection kits.  Stanford then filed the patent application to which all three patents claim priority and later entered into an agreement with the National Institutes of Health (NIH) that gave the government certain rights to the invention, pursuant to the Bayh-Dole Act, based on the NIH's funding for the research.  The parties entered into litigation in 2005, with Stanford levying patent infringement claims and Roche filing counterclaims on ownership and standing grounds.   

The Federal Circuit found that Roche was a co-owner of the patents pursuant to Holodniy's visitor's confidentiality agreement and that, as such, Stanford lacks standing to maintain its infringement action.  Specifically, the Federal Circuit concluded that the Bayh-Dole Act's statutory scheme does not "automatically void the patent rights" that Cetus received from Holodniy. 

Affirming, the majority noted that Section 202(a) of the statute - which states that contractors may "elect to retain title" - confirms that the Act "does not vest title."  Stanford reaches the opposite conclusion "only because it reads 'retain' to mean 'acquire' and 'receive,'" according to the majority. 

"That is certainly not the common meaning of 'retain,' which is 'to hold or continue to hold in possession or use.'  You cannot retain something unless you already have it," the majority held.   

Chief Justice Roberts was joined by Justices Anthony M. Kennedy, Antonin Scalia, Clarence Thomas, Samuel Alito Jr., Sonia Sotomayor and Elena Kagan.  Justice Sotomayor issued a concurring opinion, while Justice Stephen G. Breyer issued a dissent that was joined by Justice Ruth Bader Ginsburg.  

[Editor's Note:  Full coverage will be in the June 20 issue of Mealey's Litigation Report: Intellectual Property.  In the meantime, the decision is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #16-110620-002Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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