Please Excuse My Dear Aunt Patent

Stanford University v. Roche Molecular Systems, Inc.

Patent law's order of operations remains the same. In Stanford University v. Roche Molecular Systems, Inc., a 7-2 U.S. Supreme Court held that the Bayh-Dole Act does not change patent law's basic equation that inventors own their inventions until otherwise assigned. The Bayh-Dole Act protects government investments in federally sponsored research. Stanford had argued that Bayh-Dole also works to re-order patent ownership by automatically vesting title to any invention created during federally sponsored research away from the inventor and into the institution with the sponsorship. But the Court said that theorem just didn't add up-factoring in both patent law's 200 year history and common dictionary definitions of the words "of" and "retain." The result? Expressed mathematically: Stanford + Bayh-Dole-Based Patent Claims = 0.

The patents at issue in Roche allow accurate measurement of the amount of HIV virus in the blood of infected individuals. A Stanford professor invented the test after spending time doing research with an outside company later acquired by Roche. Before beginning the outside research, the professor signed an agreement promising to assign all his inventions to Stanford. After that, he also signed an agreement with the outside company. But, unlike Stanford's promise-to-assign agreement, the agreement with Roche's predecessor contained an actual assignment of inventions.

Stanford later sued Roche for patent infringement on claims that a Roche testing kit infringed its patents. Roche argued that its predecessor's assignment from the professor made it half owner of the Stanford patents, and that Stanford thus lacked standing to sue. Siding with Stanford, the district court held that, because Stanford's research had received federal funding, Stanford had superior rights to the invention under Bayh-Dole. 

The Federal Circuit disagreed. First, the court of appeals said that Roche's agreement gave it superior rights because it contained an actual assigment as opposed to the promise to assign contained in the Stanford agreement. The court also would not read Bayh-Dole as allowing the involvement of federal funding to inventors' right to their inventions. Roche appealed and the Supreme Court granted cert.

Affirming the court of appeals, the Supreme Court said that Bayh-Dole clarifies the order of priority of rights between the government and a sponsored institution in a federally funded invention that belongs to that institution-and nothing more. The Court rejected Stanford's construction of certain language within the Act to mean that an institution receiving federal funding automatically acquires the rights to an employee-inventor's invention because of that funding. The Court said that inventors' right to own their inventions have been and remain "one of the fundamental precepts of patent law." The Court found it unlikely that Congress would undertake to change those rights "through an ambiguous definition  . . . and an idiosyncratic use of the word ‘retain.'" 

The dissent took issue with court of appeals' interpretation of the two assignment contracts at the heart of the parties' dispute-an issue the Court's majority specifically did not address. Rather than reaching the merits, Justice Breyer, joined by Justice Ginsburg, would have had returned the matter to the district court for a determination of which assignment took priority under the equitable principles at the heart of patent rights assignments.

What's the sum total of Roche's impact? Had Stanford prevailed, the decision may have divested inventors of their patent rights if any part of their work took place at an institution receiving even minimal government funding, radically transforming accepted patent law practices. Instead, inventors will continue to own their own inventions unless they have assigned them to a sponsoring institution or university-and most universities now know the correct assignment language to use to protect their interest and government investments in federally sponsored research. As a result, the decision may have its greatest net effect on the pending Patent Reform's Act attempt to change patent law ownership to a new "first to file" standard. With Roche's confirmation that an inventor's ownership is one of patent law's most absolute values, it seems "first to file" may end up sharing the same fate as New Math.

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