The Supreme Court Sets Limitson the Bayh-Dole Act

Board of Trustees of the Leland Stanford Junior University v. Roche

Molecular Systems, Inc.

Kevin E. Noonan, Ph.D.

Outline of the Talk Introduction: the case

Agreements with Stanford and Cetus District court decision Federal Circuit panel decision

The Supreme Court Majority opinion Dissent (Justices Breyer and Ginsberg) Concurrence (Justice Sotomayor) Significance Unanswered questions

Outline of the Talk

Consequences and Recommendations For universities For researchers For licensees and potential licensees Policy concerns

Questions

Background Technology: PCR detection of HIV

infection Stanford holds patents assigned by inventors Roche sells diagnostic test relating to

invention

Ownership issue Inventor signed agreement with Stanford that

he “will assign” inventions to the university Some work performed at Cetus where inventor

signed agreement that he “hereby assigns” Roche asserted ownership interest in patent

infringement lawsuit by Stanford

Background

Proceedings below District court trial on the merits, denied

Roche’s ownership claim Federal Circuit vacated and remanded with

instructions to dismiss, finding significant difference in language between two agreements

Background

Proceedings below “Agreement to assign” is merely a promise to

assign in the future while “do hereby assign” is a present assignment of a future invention

Relied on FilmTec v. Allied Signal, held that inventor had already assigned his rights to Cetus/Roche and thus had nothing to assign to Stanford

Supreme Court

What was the question presented? Depends on who presented it

University: Whether a federal contractor university’s

statutory right under the Bayh-Dole Act… in inventions arising from federally funded research can be terminated unilaterally by an inventor through a separate agreement purporting to assign the inventor’s rights to a third party.

Supreme Court

What was the question presented? Depends on who presented it

Roche: Whether the Bayh-Dole Act’s provision

allowing a federal contractor to “elect to retain title” to an “invention of the contractor” allows the contractor retroactively to take intellectual property rights that have been validly assigned to a third party that neither accepted nor benefitted from federal funds.

Supreme Court Opinion

Majority opinion (written by Chief Justice Roberts) affirmed Federal Circuit opinion

But majority did not address Federal Circuit’s contract/assignment grounds

Majority decision based on primacy of inventor in owning the rights to her invention

Held that Bayh-Dole did not change that

Supreme Court

What did the Court think was the question? The question here is whether the

University and Small Business Patent Procedures Act of 1980—commonly referred to as the Bayh-Dole Act—displaces that norm [that rights in an invention belong to the inventor] and automatically vests title to federally funded inventions in federal contractors. We hold that it does not.

Greatly influenced by the Solicitor Generals’ views

Supreme Court opinion Primacy of inventor’s ownership of patent

rights: "[s]ince 1790, the patent law has operated on

the premise that rights in an invention belong to the inventor." 

Provisions of Patent Act and precedent consistent with this primacy

Stanford (and U.S. amicus) contended the Bayh-Dole Act vested ownership in university

Supreme Court opinion The majority disagreed:

Nowhere in the Act is title expressly vested in contractors or anyone else; nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions.  Instead, the Act provides that contractors may "elect to retain title to any subject invention." 

Majority notes that when Congress intends to make such a fundamental change, it does so expressly, citing other statutes

Supreme Court Opinion

Employment is not enough, by itself, to automatically vest title in the university

Citing express language of the statute regarding “retaining” rights:

"[t]he Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have."

Supreme Court opinion The Bayh-Dole Act is limited:

"order of priority rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor.  Nothing more." 

This interpretation is supported by the absence of provisions regarding third parties:

"that have neither sought nor received federal funds" where the absence of such remedies "would be deeply troubling . . . [i]n a world in which there are frequent collaboration between private entities, inventors and federal contractors." 

Dissenting opinion

Justices Breyer and Ginsberg dissented on the FilmTec v. Allied Signal precedent

Believe the majority decision contrary to purpose of the Bayh-Dole Act

Permitting an inventor to independently license to a third party “tak[es] that invention out from under the Bayh-Dole Act's restrictions, conditions, and allocation rules." 

Dissenting opinion As a consequence, public might have to “pay

twice” for federally funded research

Also believes the Federal Circuit’s contract interpretation “makes too much of too little” and produces a “technical trap for the unwary”

Also believes that Federal Circuit precedent is flawed on the underlying contract issues as they related to inventor assignments

But concede that the issue not properly briefed and thus not ripe for review

Concurring opinion

Justice Sotomayor concurred but agreed with dissent that this precedent flawed

Expresses hope that issue will properly come before the Court in another case

Consequences Perhaps minimal, provided universities

properly draft assignment provisions Increases burdens on technology transfer

offices to ensure compliance with Bayh-Dole requirements regarding assignments

Increases potential for inventors to limit effectiveness of Bayh-Dole Act through independent activities

May decrease likelihood of commercialization due uncertainty regarding scope of rights

Consequences

May correct “excesses” third parties allege have arisen under Bayh-Dole Tendency to assert Bayh-Dole “rights” to

anything done with any Federal grant monies (voiced by majority opinion)

Overreaching or attempt to comply? Decision reduces motivation (insofar as

compliance-driven For this reason, may increase likelihood of

university/industry collaborations

Consequences

Will not address other third party concerns (regarding ownership)

Also does not address the issue raised by the Federal Circuit regarding present assignment of future inventions

Universities could follow Justices Breyer and Ginsberg in crafting contract and assignment language, but not the law

Requires increased efforts by Technology Transfer Offices to “educate” (control?) faculty

Consequences

What should universities do? Educate/outreach to department heads and

PIs regarding Bayh-Dole requirements Make explicit invention disclosure and

reporting requirements Amend/change employment and appointment

agreements to make duties under Bayh-Dole explicit

Condition funding on compliance (NIH role)

Consequences

What does the opinion say about “first inventor to file”? Short answer: nothing A philosophical question Not always the actual first inventor under

current law Policy reasons 102(g): “who has not abandoned, suppressed of

concealed”

Dangerous to read the tea leaves

Thank you!

Kevin E. Noonan, Ph.D.

noonan@mbhb.com

www.patentdocs.org

MBHB

300 South Wacker DriveChicago, Illinois 60606-6709312 913 0001 phone312 913 0002 faxwww.mbhb.com