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The Supreme Court Sets Limitson the Bayh-Dole Act
Board of Trustees of the Leland Stanford Junior University v. Roche
Molecular Systems, Inc.
Kevin E. Noonan, Ph.D.
Outline of the Talk Introduction: the case
Agreements with Stanford and Cetus District court decision Federal Circuit panel decision
The Supreme Court Majority opinion Dissent (Justices Breyer and Ginsberg) Concurrence (Justice Sotomayor) Significance Unanswered questions
Outline of the Talk
Consequences and Recommendations For universities For researchers For licensees and potential licensees Policy concerns
Questions
Background Technology: PCR detection of HIV
infection Stanford holds patents assigned by inventors Roche sells diagnostic test relating to
invention
Ownership issue Inventor signed agreement with Stanford that
he “will assign” inventions to the university Some work performed at Cetus where inventor
signed agreement that he “hereby assigns” Roche asserted ownership interest in patent
infringement lawsuit by Stanford
Background
Proceedings below District court trial on the merits, denied
Roche’s ownership claim Federal Circuit vacated and remanded with
instructions to dismiss, finding significant difference in language between two agreements
Background
Proceedings below “Agreement to assign” is merely a promise to
assign in the future while “do hereby assign” is a present assignment of a future invention
Relied on FilmTec v. Allied Signal, held that inventor had already assigned his rights to Cetus/Roche and thus had nothing to assign to Stanford
Supreme Court
What was the question presented? Depends on who presented it
University: Whether a federal contractor university’s
statutory right under the Bayh-Dole Act… in inventions arising from federally funded research can be terminated unilaterally by an inventor through a separate agreement purporting to assign the inventor’s rights to a third party.
Supreme Court
What was the question presented? Depends on who presented it
Roche: Whether the Bayh-Dole Act’s provision
allowing a federal contractor to “elect to retain title” to an “invention of the contractor” allows the contractor retroactively to take intellectual property rights that have been validly assigned to a third party that neither accepted nor benefitted from federal funds.
Supreme Court Opinion
Majority opinion (written by Chief Justice Roberts) affirmed Federal Circuit opinion
But majority did not address Federal Circuit’s contract/assignment grounds
Majority decision based on primacy of inventor in owning the rights to her invention
Held that Bayh-Dole did not change that
Supreme Court
What did the Court think was the question? The question here is whether the
University and Small Business Patent Procedures Act of 1980—commonly referred to as the Bayh-Dole Act—displaces that norm [that rights in an invention belong to the inventor] and automatically vests title to federally funded inventions in federal contractors. We hold that it does not.
Greatly influenced by the Solicitor Generals’ views
Supreme Court opinion Primacy of inventor’s ownership of patent
rights: "[s]ince 1790, the patent law has operated on
the premise that rights in an invention belong to the inventor."
Provisions of Patent Act and precedent consistent with this primacy
Stanford (and U.S. amicus) contended the Bayh-Dole Act vested ownership in university
Supreme Court opinion The majority disagreed:
Nowhere in the Act is title expressly vested in contractors or anyone else; 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."
Majority notes that when Congress intends to make such a fundamental change, it does so expressly, citing other statutes
Supreme Court Opinion
Employment is not enough, by itself, to automatically vest title in the university
Citing express language of the statute regarding “retaining” rights:
"[t]he Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have."
Supreme Court opinion The Bayh-Dole Act is limited:
"order of priority rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor. Nothing more."
This interpretation is supported by the absence of provisions regarding third parties:
"that have neither sought nor received federal funds" where the absence of such remedies "would be deeply troubling . . . [i]n a world in which there are frequent collaboration between private entities, inventors and federal contractors."
Dissenting opinion
Justices Breyer and Ginsberg dissented on the FilmTec v. Allied Signal precedent
Believe the majority decision contrary to purpose of the Bayh-Dole Act
Permitting an inventor to independently license to a third party “tak[es] that invention out from under the Bayh-Dole Act's restrictions, conditions, and allocation rules."
Dissenting opinion As a consequence, public might have to “pay
twice” for federally funded research
Also believes the Federal Circuit’s contract interpretation “makes too much of too little” and produces a “technical trap for the unwary”
Also believes that Federal Circuit precedent is flawed on the underlying contract issues as they related to inventor assignments
But concede that the issue not properly briefed and thus not ripe for review
Concurring opinion
Justice Sotomayor concurred but agreed with dissent that this precedent flawed
Expresses hope that issue will properly come before the Court in another case
Consequences Perhaps minimal, provided universities
properly draft assignment provisions Increases burdens on technology transfer
offices to ensure compliance with Bayh-Dole requirements regarding assignments
Increases potential for inventors to limit effectiveness of Bayh-Dole Act through independent activities
May decrease likelihood of commercialization due uncertainty regarding scope of rights
Consequences
May correct “excesses” third parties allege have arisen under Bayh-Dole Tendency to assert Bayh-Dole “rights” to
anything done with any Federal grant monies (voiced by majority opinion)
Overreaching or attempt to comply? Decision reduces motivation (insofar as
compliance-driven For this reason, may increase likelihood of
university/industry collaborations
Consequences
Will not address other third party concerns (regarding ownership)
Also does not address the issue raised by the Federal Circuit regarding present assignment of future inventions
Universities could follow Justices Breyer and Ginsberg in crafting contract and assignment language, but not the law
Requires increased efforts by Technology Transfer Offices to “educate” (control?) faculty
Consequences
What should universities do? Educate/outreach to department heads and
PIs regarding Bayh-Dole requirements Make explicit invention disclosure and
reporting requirements Amend/change employment and appointment
agreements to make duties under Bayh-Dole explicit
Condition funding on compliance (NIH role)
Consequences
What does the opinion say about “first inventor to file”? Short answer: nothing A philosophical question Not always the actual first inventor under
current law Policy reasons 102(g): “who has not abandoned, suppressed of
concealed”
Dangerous to read the tea leaves
Thank you!
Kevin E. Noonan, Ph.D.
www.patentdocs.org
MBHB
300 South Wacker DriveChicago, Illinois 60606-6709312 913 0001 phone312 913 0002 faxwww.mbhb.com