Litigation

Oral Arguments Held In Dispute Over Patent Ownership

WASHINGTON, D.C. - (Mealey's) The scope of statutory rights bestowed upon federal contractor universities and their researchers was debated Feb. 28 at the U.S. Supreme Court in a dispute over patented HIV detection methods (Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, et al., No. 09-1159, U.S. Sup.). 

Donald B. Ayer of Jones Day in Washington, arguing on behalf of petitioner Leland Stanford Junior University (Stanford), told the high court that the Bayh-Dole Act "specifically defines the rights of inventors" as being "in the third position, behind the contractor . . . and behind the government."  Ayer further posited that inventors "may only receive rights . . . when the contractor has declined to take title or defaulted in some respect, and the government has likewise declined to take title." 

Stanford holds three patents relating to an HIV testing method, with each patent naming Stanford researcher Mark Holodniy as inventor.  When Holodniy joined Stanford, he signed a "copyright and patent agreement" obligating him to assign 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.

Respondent Roche Molecular Systems Inc. purchased certain Cetus assets - including its agreements with Stanford and its researchers - and began manufacturing HIV detection kits. Stanford 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.  In 2005, Stanford sued Roche in the U.S. District Court for the Northern District of California, alleging infringement.  Roche counterclaimed, asserting that it had an ownership interest in the patents because of Holodniy's assignment in the visitor confidentiality agreement.

The District Court found that Roche's ownership claims were barred by the Bayh-Dole Act.  The Federal Circuit U.S. Court of Appeals reversed in part, finding that the "statutory scheme did not automatically void the patent rights that Cetus received from Holodniy" and, therefore, that Roche had co-ownership of the patents by virtue of the visitor's confidentiality agreement signed by Holodniy.  Because standing principles preclude a patent suit by one co-owner without all other co-owners' agreement and participation, the Federal Circuit concluded that Stanford did not have standing, reversing the District Court's ownership decision. 

The Supreme Court granted Stanford's petition for certiorari in November, after inviting the views of the U.S. solicitor general. 

Attorney Mark C. Fleming of Wilmer Cutler Pickering Hale & Dorr in Boston, arguing on behalf of Roche, urged the high court to give Bayh-Dole its "straightforward meaning."  While the statute's "laudable" objective of "taking government inventions off the shelves and putting them into the market" has been successful, Fleming said it should not replace the high court's "longstanding" rule that title to an invention rests with its inventor. 

Deputy Solicitor General Malcolm Stewart, arguing on behalf of the government, warned that repercussions to the Federal Circuit's ruling - if upheld - would be wide-ranging, however. 

"We're worried not just about what can be done to universities, but what universities could do to us," Stewart said. 

[Editor's Note:  Full coverage will be in the March 7 issue of Mealey's Litigation Report: Intellectual Property.  In the meantime, the transcript is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #16-110307-014T.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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