U.S. Supreme Court Holds That Bayh-Dole Act Does Not Automatically Vest Title In Patents To Government Contractors From Inventors Working For The Contractors

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On Monday, June 6, 2011, the United States Supreme Court issued its decision in Board of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Systems, Inc. (Stanford v. Roche). In a majority decision1 authored by Chief Justice John Roberts, the Supreme Court upheld the Federal Circuit’s decision that the Bayh-Dole Act does not automatically vest title to federally funded inventions in federal contractors, such as universities conducting NIH-funded research. Although this decision prevents the Bayh-Dole Act from acting as a safety net for universities without appropriate employment agreements, careful attention to the language of invention assignment contracts will serve to preserve rights to university inventions. As a consequence, the decision will not normally impact the ability of universities to translate the results of research to a commercial setting.

Bayh-Dole Act Overview

Passed in 1980, the Bayh-Dole Act2 seeks to “ensure that the Government obtains sufficient rights in federally supported inventions.” To achieve this, the act provides that rights to federally funded “subject invention[s]” are allocated between the federal government and federal contractors (defined as “any person, small business firm, or nonprofit organization that is a party to a funding agreement”3). Under the act, a “subject invention” is “any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement.”4 Contractors can “elect to retain title to any subject invention,” but to do so they must fulfill several statutory obligations. In many cases, the contractor is a university that performs grant-funded research. In the case under discussion, the Bayh-Dole Act was important because a lower court had held that Stanford’s employment agreement had not transferred title in a patent to the university.

Background

The technology involved in the patents at issue is a polymerase chain reaction (PCR) test for human immunodeficiency virus (HIV). In the late 1980s, Cetus and Stanford began to collaborate to test new drug efficacy. A research scientist at Stanford (Mark Holodniy) joined Stanford’s Department of Infectious Diseases. Upon joining the department, Holodniy signed a contract with Stanford stating that he would “agree to assign” his “right, title and interest in” inventions resulting from his employment. Holodniy, who was unfamiliar with PCR at that time, went to Cetus to learn PCR techniques and research PCR quantification of patient HIV levels from blood samples. Cetus, a pioneer in thedevelopment of PCR, employed scientists who won the Nobel Prize for their discovery and was a cutting-edge expert in the field at the time. As a condition of utilizing Cetus’ expertise, Holodniy signed a confidentiality agreement that stated that he “will and do[es] hereby assign” his “right, title and interest in each of the ideas, inventions and improvements” made “as a consequence of access” to Cetus.

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Published In: General Business Updates, Intellectual Property Updates, Labor & Employment 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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