U.S. Supreme Court Issues Important Ruling In Stanford, Roche Patent Ownership Dispute

June 7th, 2011 by spyros lazaris

In a major technology transfer ruling, the United States Supreme Court has held that a 1980 law does not automatically vest title to federally-funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions, and means that inventors may still have ownership rights to patents covering inventions resulting from federally-funded research. The decision in Stanford v. Roche also touched on issues involving competing contractual assignment clauses for inventive rights and on tensions between university and private industry over who owns patents where both were involved in creating the underlying invention.

Stanford initially sued for infringing on patents for measuring HIV virus concentration in blood using a polymerase chain reaction technique, known as PCR.  The patented method was developed by a university researcher who entered into an employment agreement with Stanford promising to assign rights to any inventions. The Stanford researcher also worked at Cetus Corp., a small biotech company whose technology was later acquired by Roche, to learn more about PCR. He signed a further agreement assigning his right, title and interest in any inventions made as a consequence of access to Cetus. The researcher developed the particular method while at Cetus, and conducted further testing upon returning to Stanford. The university then filed for and obtained patents covering the measurement procedure.

The Supreme Court’s analysis of the case centered around The University and Small Business Patent Procedures Act of 1980, otherwise known as the Bayh-Dole Act, a law enacted to clarify ownership rights to inventions stemming from research where federal funding was obtained.  At the appellate level, the Federal Circuit agreed with Roche and found that rights had indeed been assigned to Cetus, and thus to Roche. It also found that federal law under the Bayh-Dole Act did not automatically void an inventor’s rights in federally funded inventions.

The Court began its analysis by noting that as a general rule, under US patent law, a patent may be issued only to an applying inventor.  The Court further noted that principles of contract law provide that an inventor’s interest “assignable in law by an instrument in writing,” thereby extending patent ownership rights to an inventor’s assignee. In resolving the issue over whether the Bayh-Dole Act changes these longstanding principles US patent law, the Court stated that nowhere in the Act is title expressly vested in contractors or anyone else, and nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions. Instead, the Act provides that contractors may “elect to retain title to any subject invention,” noting that the agency that granted the federal funds receives from the contractor “a nonexclusive, nontransferrable, irrevocable, paid-up license to practice . . . [the] subject invention.”

Therefore, nothing in the 1980 law changes longstanding patent law principles regarding the importance of inventorship. The Court’s treatment of the issue is particularly interesting given the looming possibility of patent reform in the United States. Current versions of the America Invents Act of 2011 in the U.S. Senate (S. 23) and in the House of Representatives (H.R. 1249) would both significantly change U.S. patent law to a first-to-file patent ownership system. The Stanford v. Roche decision may therefore indicate a potential constitutional issue with any movement away from the first-to-invent system in the United States. 

Despite the attention given to the Bayh-Dole Act and the potential ramification for patent reform, the question of who owned the patents in question ultimately turned on the competing contractual clauses involved in the case.  The Court’s deference to the contractual provisions shows that the parties’ contractual intentions ultimately control in determining who wins ownership of the patents, and suggests an even further polarization of the issue of university vs. researcher ownership of intellectual property assets even further. In this case, the Court awarded ownership to Roche – but suggests that a mere change in Stanford’s agreement may have won the case, since it contained only a “promise” to assign. Because the Cetus agreement included more specific assignment language, rights under the Cetus agreement vested earlier than Stanford’s even though it occurred later in time.



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