The U. S. Supreme Court has granted a certiorari petition filed by Stanford University in a case involving the issue of whether, under the Bayh-Dole Act, individual inventors or contractors retain intellectual property rights to inventions arising out of federal grants to universities and non-profits. Stanford University v. Roche Molecular Systems, Inc., Case No. 09-1159 (Supr. Ct., Nov. 1, 2010).

The Bayh-Dole Act includes provisions permitting institutions such as universities, nonprofits and small business contractors to retain the rights to inventions conceived or reduced to practice through federally funded research. The question presented to the Supreme Court is whether the law allows inventors employed by these institutions to unilaterally assign intellectual property rights to a third party.

In September 2009, the Federal Circuit found that Stanford lacked standing to sue Roche for patent infringement because it had never acquired a sufficient interest in three patents that cover HIV test kits using PCR to measure the amount of circulatory HIV infection from one of its researchers, Mark Holodniy, M.D. (See IP Update, Vol. 12, No. 10.) It seems that Holodniy conducted HIV-related research at Cetus Corp. Cetus was later taken over by Roche. Prior to undertaking the research that led to the patents in suit, Holodniy signed an agreement with Stanford, stating that he “agreed to assign” title in any invention to Stanford. Holodniy also signed a confidentiality agreement that gave Cetus rights to inventions arising from his use of the company’s facilities, stating that he “will assign and does here assign” rights in any inventions to Cetus. The Federal Circuit concluded that the Stanford agreement was simply a “promise” to assign, while the Cetus Agreement was an “immediate transfer of an expectant interest.”

Stanford claimed the Federal Circuit’s ruling would allow companies to obtain an interest in inventions by use of side agreements with inventors; agreements that “unilaterally terminate” the university’s exclusive rights.

In response to Stanford’s petition, Roche contended that Stanford’s right to the patents-in-suit were not terminated, but were only shared with Roche. Further, the company argued, “the Bayh-Dole Act nowhere alters an inventor’s basic freedom to assign his own rights in an invention to a third party.”

The solicitor general filed a brief in support of Stanford’s position, as did other research universities, including MIT. The solicitor general argued that individual inventors can only secure rights to federally funded inventions if a contractor elects not to retain title and the federal government affirmatively assigns the rights. In its reply, Roche argued that the Bayh-Dole Act did not alter an inventor’s right to assign his or her invention and that the present case was so fact specific that it would be inappropriate for high court review.