On June 6, 2011, the Supreme Court decided Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, et al., No. 09-1159, holding that the Bayh-Dole Act, 35 U.S.C. § 200, et seq. does not automatically vest title to federally funded inventions in federal contractors.
In 1985, Cetus, a small California research company, began developing methods for quantifying blood-borne levels of the human immunodeficiency virus (HIV). A Nobel Prize-winning technique that Cetus developed, polymerase chain reaction (PCR), was integral to its efforts. In 1988, Cetus collaborated with scientists at Stanford University's Department of Infectious Diseases to test the efficacy of new AIDS drugs. Around this time, Dr. Mark Holodniy joined the department. Upon doing so, he signed an agreement stating that he "agree[d] to assign" to Stanford his "right, title, and interest in" inventions resulting from his employment at the University.
Because Holodniy's work required him to use PCR, Stanford arranged for him to conduct his research at Cetus. To gain access to Cetus, Holodniy signed a confidentiality agreement stating that he "will assign and do[es] hereby assign" to Cetus his "right, title, and interest in each of the ideas, inventions and improvements" made "as a consequence of [his] access" to Cetus.
For the next nine months, Holodniy conducted research at Cetus and devised a PCR-based procedure for calculating the amount of HIV in a patient's blood. He then returned to Stanford, where he and other Stanford employees tested the technique developed at Cetus. Over the next three years, Stanford obtained written assignments of rights from the Stanford employees involved in refining the technique, including Holodniy. Stanford eventually secured three patents for the HIV measurement process.
Congress enacted the Bayh-Dole Act to "promote the utilization of inventions arising from federally supported research," "promote collaboration between commercial concerns and nonprofit organizations," and "ensure that the Government obtains sufficient rights in federally supported inventions." To that end, it allocates rights in federally funded "subject inventions," defined as "any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement." A federally funded contractor, such as Stanford in this case, may "elect to retain title in any subject invention." Here, Stanford went through the necessary steps to do so.
In 1991, Roche Molecular Systems acquired Cetus's PCR-related assets, including all rights obtained through confidentiality agreements such as the one signed by Holodniy. Roche then commercialized the method developed at Cetus. The Board of Trustees of Stanford University then filed suit against Roche, claiming that it infringed upon Stanford's patents. Roche responded that it was a co-owner of the procedure, based on Holodniy's assignment of his rights to Cetus in the confidentiality agreement. Accordingly, Roche argued, Stanford lacked standing to sue for patent infringement. Stanford claimed that Holodniy had no rights to assign because its research was federally funded, effectively giving it superior rights to the invention under the Bayh-Dole Act.
The Court rejected Stanford's position, affirmed the Federal Circuit, and held that the act does not itself confer patent rights. Rather, it allows a federal contractor to retain rights it already possesses. The Court's decision relies on the general rule that mere employment is insufficient to vest title to an employee's invention in the employer. According to the Court, the Bayh-Dole Act does not alter this general rule.
The Court stated that the phrase "of the contractor," as used in the act, plainly denotes that the inventions must be those "owned by or belonging to the contractor," not simply "all inventions made by the contractor's employees." Similarly, the Court stated, the phrase "elect to retain title" confirms that the act does not itself vest title, but allows a federal contractor to retain what it already possesses. If Congress had intended to deprive inventors of the rights to their inventions, the Court reasoned, it would not have done so with such language. While other statutes expressly divest inventors of their rights in inventions created under federal contracts, such language is not present in the Bayh-Dole Act.
Chief Justice Roberts delivered the opinion of the Court, in which Justices Scalia, Kennedy, Thomas, Alito, Sotomayor, and Kagan joined. Justice Sotomayor filed a concurring opinion. Justice Breyer filed a dissenting opinion, in which Justice Ginsburg joined.