Supreme Court Round-up – Part 3 of 3: Only if There Is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche
- Patent title vests in the inventor
- Title may pass to the employer but only if there is an assignment
- Only then if the employer is a federal contractor does Bayh-Dole apply
Stanford v. Roche
In Stanford v. Roche, Cetus developed methods for quantifying blood-borne levels of human immunodeficiency virus (HIV), the virus that causes AIDS. Cetus began to collaborate with Stanford. Dr. Holodniy joined Stanford and signed an agreement with Stanford to assign his “right, title, and interest in” inventions resulting from his employment at Stanford. In collaborating with Cetus, to gain access to Cetus, Dr. Holodniy signed an agreement stating that he “will assign and do(es) hereby assign” to Cetus his “right, title, and interest in . . . the ideas, inventions, and improvements” made “as a consequence of [his] access” to Cetus. Together with Cetus, Dr. Holodniy devised a PCR-based procedure for measuring the amount of HIV in a patient’s blood which the successor company to Cetus through acquisition, Roche, commercialized. Stanford filed for patents on the inventions and sued Roche. Roche countered that its agreement with Dr. Holodniy gave it co-ownership of the patents, and thus Stanford had no standing to sue. Stanford responded that Dr. Holodniy had no rights to assign because the University had superior rights under the Bayh-Dole Act.
The District Court held that the Bayh-Dole Act trumped the employer agreements. The Federal Circuit disagreed, concluding that the Bayh-Dole Act did not divest an inventor of his rights in federally funded inventions. Because as between Stanford and Cetus, Stanford only had an agreement to assign whereas Cetus had an actual assignment, the Federal Circuit held that Dr. Holodniy assigned his rights to Cetus and thus to Roche.
The only question before the Court in Stanford was whether the Bayh-Dole Act displaces the norm and automatically vests title to federally funded inventions in federal contractors. The Supreme Court held that it did not.
The Court began its analysis with the fundamental tenet that under US patent law, the rights in an invention belong to the inventor. The Court explained that while an invention may be assigned, employment alone does not give rise to assignment. Since the first Patent Act, the basic idea that inventors have the right to patent their invention has not changed. Mere employment is insufficient to vest title to an employee’s invention in the employer. An employee agreement is required. Slip Op. 10.
The Bayh-Dole Act applied here because the invention flowed from federally funded research. However, the Court held that the Bayh-Dole Act does not reorder this priority of inventors by moving the inventor from the front of the line to the back by vesting title to federally funded inventions in the inventor’s employer – the federal contractor. Slip op. 8. There is no unambiguous language in the Bayh-Dole Act of the kind that Congress uses to divest inventors of their rights in inventions by specifying that inventions created pursuant to federal contracts becomes the property of the contractors or United States or anyone else . Slip Op. 8. Indeed, the Act reinforces that title vests in the inventor by providing that contractors may “elect to retain title”. Slip Op. 11. In other words, they may keep title to whatever they may already have. Slip Op. 11. Here, Stanford never had the patent that it could “elect to retain” because Stanford never got an assignment of the invention from Dr. Holodniy.
In short, only when an invention belongs to the contractor does the Act come into play. Slip Op. 12 As the Court explained, “[t]he Act clarifies the order of priority of rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor. Nothing more.” (emphasis added) Slip op. 12
It is for this reason, the Court maintained, that universities typically enter into agreements with their employees requiring the assignment to the university of rights in inventions. With an effective assignment, those inventions – if federally funded – become “subject inventions” under the Act, and the statute works the way Stanford says it should. Slip op. 15. It does so without violence to the basic principle of patent law that inventors own their inventions. Slip Op. 15.
Here, Stanford did not have such an assignment in place and so the Bayh-Dole Act does not apply.
The Juhasz Law Firm can help you to better understand the effect of Stanford on your patents. For more information regarding Stanford and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.
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For an analysis on Prometheus v. Mayo go to Supreme Court Round-up – Part 1 of 3: Certiorari Granted in Prometheus.
For an analysis on Global-Tech Appliance v. SEB go to Supreme Court Round-up – Part 2 of 3: “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech.