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Supreme Court to Weigh in on Ownership of Federally Funded Inventions

The Supreme Court, in taking the Board of Trustees of Leland Stanford University v. Roche Molecular Systems, Inc., case, will weigh in on the question of who owns federally funded inventions.

Roche, sued for patent infringement by Stanford University, argued that they could not be sued because they had an ownership interest in the patents in question. They asserted that their ownership interest in the patents stemmed from an assignment from Dr. Mark Holodniy to Cetus (Roche’s predecessor in interest). 

Holodniy, a Stanford researcher, originally signed an agreement promising to assign his inventions to Stanford.  He subsequently participated in a collaborative project between Stanford and Cetus.  As part of the agreement, Holodniy had access to Cetus’ facilities. Holodniy assigned to Cetus his interest in any inventions arising as a consequence of his work at Cetus. The patents in question, related to an assay that used a polymerase chain reaction to measure ribonucleic acid (RNA) from HIV in blood plasma of infected humans taking certain drugs, are based on Dr. Holodniy’s research at Cetus.

During trial, and on appeal to the Court of Appeals for the Federal Circuit, Roche agued that Holodniy’s actual assignment to Cetus trumped Holodniy's earlier promise to assign inventions to Stanford.  Stanford, in turn, argued that Holodniy’s promise to assign to Stanford was effective, leaving Roche with no ownership interest in the patents.  Stanford further argued that it retained ownership, by way of the Bayh-Dole Act, because it received federal funding for at least part of the HIV research leading to the patents in-suit. 

Impact of the Bayh-Dole Act
Pursuant to the Bayh-Dole Act, in certain circumstances, the Government can take title to “subject inventions” which received Government funding; alternatively, if certain conditions are satisfied, the university or inventor(s) can retain ownership.  In order to retain ownership, however, the university must comply with certain requirements of the Act.  For example, the university must grant the Government a fully paid-up, nonexclusive license.

Holdings of the Trial and Appellate Courts
The trial court held that Holdniy’s promise to assign to Stanford was enforceable, that the Bayh-Dole Act rendered the assignment to Cetus null, and that Roche had no ownership interest in the patents.  The Court of Appeals disagreed, however, and ruled that title to the inventions did not immediately vest with Stanford and, instead, Cetus has an ownership interest.  Moreover, the Court of Appeals ruled that nothing in the Bayh-Dole Act automatically voids Holodniy’s assignment to Cetus.  The court therefore concluded that Roche’s ownership interest was still valid. 

Subsequently, Stanford filed a petition asking the Supreme Court to hear the case.  The Supreme Court granted review and is scheduled to hear oral arguments early in 2011.

Take Away Lesson re Assignment Agreements
The case highlights the importance of having well crafted agreements at the beginning of a project.  The question of ownership could have been avoided if Stanford’s standard assignment agreement included an actual assignment as opposed to a promise to assign.  The case also suggests that joint collaboration agreements should take into consideration the provisions of the Bayh-Dole Act.

If you would like us to review your employment agreements and assignments to make certain that they provide you with actual title to intellectual property, please do not hesitate to contact us. 

This article was prepared by Mike McKeen.  Mike is an associate at Vidas, Arrett & Steinkraus.  To learn more about Mike's practice, click here.

This article should not be considered legal advice. Receipt of this New Release does not establish an Attorney-Client Relationship. We do, however, invite you to contact us if you would like us to represent you.


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