Supreme Court Agrees to Decide Whether Universities’ Ownership Rights in Federally Funded Inventions Can Be Terminated Unilaterally By Individual Inventors

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The Supreme Court today agreed to decide a question of patent law with profound effects on the national economy – the disposition of patent rights under the Bayh-Dole Act in inventions arising from federally funded research at universities. According to some estimates, from 1996 to 2007, university patent licensing contributed an estimated $187 billion to U.S. gross domestic product. By granting the petition for certiorari in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., the Supreme Court agreed to decide whether a university’s right under the Bayh-Dole Act to own patents in inventions arising from federally funded research can be terminated unilaterally by an individual faculty inventor’s assignment of his rights to a third party. Ropes & Gray filed an amicus brief in support of Stanford’s petition on behalf of 50 leading research universities and university associations.

In 1980, Congress passed the Bayh-Dole Act to spur commercial development of inventions resulting from federally funded research. Prior to the Bayh-Dole Act’s enactment, the government generally retained ownership of these inventions but rarely developed them for commercial use. Recognizing that universities, other non-profits, and small businesses would be more efficient in delivering these inventions to the marketplace, Congress provided in the Bayh-Dole Act that these entities would generally retain ownership of the inventions they created with federal funds (subject to certain government rights designed to protect the public interest), enabling the non-profit or small business contractor to license the inventions to private industry for commercial development.

The proper interpretation of the Bayh-Dole Act is the central question at issue in Stanford v. Roche. In 2005, Stanford University sued Roche Molecular Systems for allegedly infringing Stanford’s patents relating to methods for evaluating the efficacy of anti-HIV therapies, which Stanford had developed using federal funds. Roche claimed that Stanford could not sue to enforce the patents because one of Stanford’s faculty inventors had signed, while using a Roche lab, a visitor confidentiality agreement that purported to grant ownership rights in any invention that might result from work at the lab, supposedly leaving Stanford without full title to the patents. Stanford responded that it fully owned the patents under the terms of the Bayh-Dole Act, since Stanford researchers conceived the invention in the course of research using federal funds, and the Act grants universities and other non-profits the right to assume ownership in federally funded research, subject to certain restrictions and obligations designed to protect the government’s interest. The district court agreed.

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