Reducing Legal Risk to Bayh Dole Act Intellectual Property: Are Inventor Assignments to Third Parties Valid?

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On February 28, 2011 the U.S. Supreme Court will hear oral argument in a case that may significantly impact the intellectual property rights of small businesses and universities that work in close collaboration to develop new inventions. Under the Bayh Dole Act, 35 U.S.C. §§ 200-212, small businesses and nonprofit organizations may "elect to retain title" to subject inventions, which the statute defines as inventions "conceived or first actually reduced to practice" under a government-funded agreement. In Stanford v. Roche, the Supreme Court will decide whether the Bayh Dole Act eliminates or constrains the ability of an inventor to unilaterally assign a university or small business contractor's ownership rights to a third party. Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. et al., No. 09-1159 (certiorari granted Nov. 1, 2010).

The Stanford Case

Cetus Corporation (Cetus) developed a scientific technique called polymerase chain reaction (PCR) in the mid-1980's. In 1989, a Stanford researcher named Dr. Mark Holodniy worked as a visitor for a brief period at Cetus's facilities where he first conceived of a commercial application of PCR to detect and quantify levels of HIV in patients' blood. After returning to Stanford, Dr. Holodniy and other researchers conducted federally funded clinical trials of the PCR application, which eventually resulted in Stanford being granted three related patents.

Despite these patents being granted to Stanford, a Swiss Company that had acquired Cetus called Hoffman-Roche, Inc. (“Roche”) had commercialized the PCR application without entering into a license or paying royalties to the university. Since 1996, Roche sold kits for quantifying HIV levels in blood to hospitals and clinics worldwide. When Roche refused Stanford's demands that it enter into a license and pay royalties, Stanford sued Roche for patent infringement in 2005.

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Published In: Business Organization Updates, General Business Updates, Intellectual Property Updates, Nonprofits Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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