On Monday, November 1st, the Supreme Court granted certiorari in Stanford v. Roche, 583 F.3d 832 (Fed. Cir. 2009), in which the Fed. Cir. decided that a professor could void his University-employer’s rights under the Bayh-Dole act to elect title to an invention he made with government grant support, by assigning his rights in the invention to a third-party, prior to the University’s electing title. The Solicitor General, at the Invitation of the Court, has filed an persuasive and informative amicus brief, which contains a very clear summary of the history and features of the Bayh-Dole Act, that should be perused by any patent attorney who has a substantial university-institutional practice. A copy of that amicus brief can be found at the end of this post.
Prior to enactment of the Act in 1980 – note that Chakrabarty was decided in 1980 and the Cohen-Boyer patent issued in 1980 – few university inventions made with Government grant support ever made it from “bench to bedside,” due to a patchwork of regulations on ownership and patent rights that differed from agency to agency. The Act founded the “industry” of modern university “tech transfer.” After passage of the Bayh-Dole Act, a university could elect to take title to an invention made with, say, NIH grant support, usually by filing a patent application on it, reporting it and making its election to the appropriate agency. The inventor(s) had no personal rights to inventions made with such grant support, but they were not left out in the cold. The Act required sharing of any royalties earned by licensing the patent with the inventor(s), and the university was required to use some of the funds to support research; often a portion of the royalties were returned to the inventor’s department. If a professor wished to patent, he/she was required to work with the university tech transfer office, who would in turn work with outside counsel to file patent applications and hopefully, license them to industry or to a v.c.-funded start –up. Over the last 30 years, this system has yielded hundreds of millions of dollars to universities and other non-profit organizations, and led to the commercialization of inventions as diverse as anti-HIV drugs (Ziagen), therapeutic enzymes (Myozyme), medical software, organic herbicides and a shrub willow bioenergy source. See http://www.betterworldproject.net/. A few universities even show up in annual lists of top patent-obtaining organizations.
Most university patent policies required assignment of patents filed on inventions made using university facilities or in the course of employment of the professor (or grad student, or post-doc) to the university, even prior to Bayh-Dole, but some did not. Companies like Research Corporation Technologies and University Patents dealt directly with professors in some cases, funding patent prosecution, licensing the technology and taking a share of the royalties. Occasionally, individual professors would go it on their own, and some were even successful, but they were rarities. After Bayh-Dole, if the university chooses not to elect title, e.g., not to patent or commercialize the invention, it is the Government, not the university, who is empowered to “waive title” to the inventor.
My mentor in the area of university tech transfer once told me, “Professors will sign anything,” and that maxim figures in Stanford v. Roche. The Stanford inventor visited Cetus in the course of working on a PCR-based method to monitor HIV infection/treatment. He signed a boilerplate visitor pass that purported to assign—at that time — any inventions he conceived during the visit or due to the visit to Cetus (later purchased by Roche). He later proved out his assay, and disclosed it to Stanford, who obtained a patent on it, which he assigned to Stanford. However, when Stanford sued Roche, Roche defended by arguing that it was a co-owner of the patent, and could not be sued for infringement. The district court found for Stanford, holding that Stanford’s and the government’s rights under Bayh-Dole effectively had extinguished the inventor’s “interest in the patents” so that he had nothing to convey to Cetus.
The Federal Circuit reversed, holding that the inventor had no rights remaining to assign to Stanford, since he had assigned them to Cetus/Roche before Stanford elected title. Thus, Stanford was not a co-owner of the patent and lacked standing to sue. The DOJ amicus brief urges the Supreme Court to consider that this holding “upends the Bayh-Dole Act’s hierarchy of rights…[and] made the government’s rights, like the [university’s] rights, depend on the action of an individual inventor.” The DOJ position stands on the clear language of the Act, that it “take[s] precedence over any other Act which would require a disposition of rights in subject inventions of small business firms or nonprofit organization contractors in a manner that is inconsistent with” the disposition of rights in the Act. 35 USC 210(a). The DOJ points out that this includes sections of 35 USC that involve the assignment of patent rights. Importantly, the brief argues:
“[T]he Act grants priority of title to the [university] by giving [it] the statutory right to ‘elect to retain title’ in the invention. 35 USC 202(a). Through this provision, the Act ‘establishes a presumption that ownership of all patent rights in government funded research will vest in [the university],’ House Report 5, unless the [university] declines to retain title or fails to assert its rights. Under the [Act], the [university’s] ability to assert its statutory prerogatives does not depend on an assignment of rights by the individual….Thus, the inventor occupies the lowest position in the Bayh-Dole Act’s hierarchy of rights in federally-funded inventions, subordinate both to the [university] and the federal government….The court of appeals decision turns the Bayh-Dole Act’s hierarchy on its head. In the court’s view, title to a federally funded invention belongs in the first instance not to the university but to the inventor.”
This brief leaves me with the impression that the Federal Circuit, buried in Hatch-Waxman appeals of late, has lost touch with the world of university tech transfer, a feeling reinforced by the odd holding in Madey v. Duke University, that conflated university and industry research. The DOJ brief argued that reversal of this decision was necessary to restore what certainty the Bayh-Dole Act had imparted to the already complex realm of university tech transfer.