Bd. of Trs. of the Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc.

• Decision Date: 06 June 2011
• Docket Number: No. 09–1159.,09–1159.
• Citation: 131 S.Ct. 2188,563 U.S. 776,180 L.Ed.2d 1
• Parties: BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, Petitioner, v. ROCHE MOLECULAR SYSTEMS, INC., et al.
• Court: U.S. Supreme Court

563 U.S. 776

131 S.Ct. 2188

180 L.Ed.2d 1

BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, Petitioner,

v.ROCHE MOLECULAR SYSTEMS, INC., et al.

No. 09–1159.

Supreme Court of the United States

Argued Feb. 28, 2011.

Decided June 6, 2011.

Donald B. Ayer, Washington, DC, for Petitioner.

Malcolm L. Stewart, for United States as amicus curiae, by special leave of the Court, supporting the Petitioner.

Mark C. Fleming, Boston, MA, for Respondents.

Ricardo Rodriguez, Stephen C. Neal, Lori R.E. Ploeger, Michelle S. Rhyu, Benjamin G. Damstedt, Cooley LLP, Palo Alto, CA, Debra L. Zumwalt, Patrick H. Dunkley, Stanford, CA, Donald B. Ayer, Lawrence D. Rosenberg, Christian G. Vergonis, Jennifer L. Swize, Mark R. Lentz, Edward M. Wenger, Jones Day, Washington, DC, Pamela S. Karlan, Stanford, CA, for Petitioner.

Mark C. Fleming, Wilmer Cutler Pickering, Hale and Dorr LLP, Boston, MA, Paul R.Q. Wolfson, Gregory H. Lantier, Eric F. Citron, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, Adam P. Romero, Wilmer Cutler Pickering Hale and Dorr LLP, New York, NY, Adrian M. Pruetz, Pruetz Law Group LLP, El Segundo, CA, Brian C. Cannon, Quinn Emanuel Urquhart & Sullivan, LLP, Redwood Shores, CA, for Respondents.

Chief Justice ROBERTS delivered the opinion of the Court.

Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor. 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 and automatically vests title to federally funded inventions in federal contractors. We hold that it does not.

I

A

In 1985, a small California research company called Cetus began to develop methods for quantifying blood-borne levels of human immunodeficiency

virus (HIV), the virus that causes AIDS. A Nobel Prize winning technique developed at Cetus—polymerase chain reaction, or PCR—was an integral part of these efforts. PCR allows billions of copies of DNA sequences to be made from a small initial blood sample.

In 1988, Cetus began to collaborate with scientists at Stanford University's Department of Infectious Diseases to test the efficacy of new AIDS drugs. Dr. Mark Holodniy joined Stanford as a research fellow in the department around that time. When he did so, he signed a Copyright and Patent Agreement (CPA) stating that he "agree[d] to assign" to Stanford his "right, title and interest in" inventions resulting from his employment at the University. App. to Pet. for Cert. 118a–119a.

At Stanford Holodniy undertook to develop an improved method for quantifying HIV levels in patient blood samples, using PCR. Because Holodniy was largely unfamiliar with PCR, his supervisor arranged for him to conduct research at Cetus. As a condition of gaining access to Cetus, Holodniy signed a Visitor's Confidentiality Agreement (VCA). That agreement stated that Holodniy "will assign and do[es] hereby assign" to Cetus his "right, title and interest in each of the ideas, inventions and improvements" made "as a consequence of [his] access" to Cetus. Id., at 122a–124a.

For the next nine months, Holodniy conducted research at Cetus. Working with Cetus employees, Holodniy devised a PCR-based procedure for calculating the amount of HIV in a patient's blood. That technique allowed doctors to determine whether a patient was benefiting from HIV therapy

.

Holodniy then returned to Stanford where he and other University employees tested the HIV measurement technique. Over the next few years, Stanford obtained written assignments of rights from the Stanford employees involved in refinement of the technique, including Holodniy, and filed several patent applications related to the procedure. Stanford secured three patents to the HIV measurement process.

In 1991, Roche Molecular Systems, a company that specializes in diagnostic blood screening, acquired Cetus's PCR-related assets, including all rights Cetus had obtained through agreements like the VCA signed by Holodniy. After conducting clinical trials on the HIV quantification method developed at Cetus, Roche commercialized the procedure.

Today, Roche's HIV test "kits are used in hospitals and AIDS clinics worldwide." Brief for Respondents 10–11.

B

In 1980, Congress passed the Bayh–Dole Act to "promote the utilization of inventions arising from federally supported research," "promote collaboration between commercial concerns and nonprofit organizations," and "ensure that the Government obtains sufficient rights in federally supported inventions." 35 U.S.C. § 200. To achieve these aims, the Act allocates rights in federally funded "subject invention[s]" between the Federal Government and federal contractors ("any person, small business firm, or nonprofit organization that is a party to a funding agreement"). §§ 201(e), (c), 202(a). The Act defines "subject invention" as "any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement." § 201(e).

The Bayh–Dole Act provides that contractors may "elect to retain title to any subject invention." § 202(a). To be able to retain title, a contractor must fulfill a number of obligations imposed by the statute. The contractor must "disclose each subject invention to the [relevant] Federal agency within a reasonable time"; it must "make a written election within two years after disclosure" stating that the contractor opts to retain title to the invention; and the contractor must "file a patent application prior to any statutory bar date." §§ 202(c)(1)-(3). The "Federal Government may receive title" to a subject invention if a contractor fails to comply with any of these obligations. Ibid .

The Government has several rights in federally funded subject inventions under the Bayh–Dole Act. The agency that granted the federal funds receives from the contractor "a nonexclusive, nontransferrable, irrevocable, paid-up license to practice ... [the] subject invention." § 202(c)(4). The agency also possesses "[m]arch-in rights," which permit the agency to grant a license to a responsible third party under certain circumstances, such as when the contractor fails to take "effective steps to achieve practical application" of the invention. § 203. The Act further provides that when the contractor does not elect to retain title to a subject invention, the Government "may consider and after consultation with the contractor grant requests for retention of rights by the inventor." § 202(d).

Some of Stanford's research related to the HIV measurement technique was funded by the National Institutes of Health (NIH), thereby subjecting the invention to the Bayh–Dole Act. Accordingly, Stanford disclosed the invention, conferred on the Government a nonexclusive, nontransferable, paid-up license to use the patented procedure, and formally notified NIH that it elected to retain title to the invention.

C

In 2005, the Board of Trustees of Stanford University filed suit against Roche Molecular Systems, Inc., Roche Diagnostics Corporation, and Roche Diagnostics Operations, Inc. (collectively Roche), contending that Roche's HIV test kits infringed Stanford's patents. As relevant here, Roche responded by asserting that it was a co-owner of the HIV quantification procedure, based on Holodniy's assignment of his rights in the Visitor's Confidentiality Agreement. As a result, Roche argued, Stanford lacked standing to sue it for patent infringement. 487 F.Supp.2d 1099, 1111, 1115 (N.D.Cal.2007). Stanford claimed that Holodniy had no rights to assign because the University's HIV research was federally funded, giving the school superior rights in the invention under the Bayh–Dole Act. Ibid .¹

The District Court held that the "VCA effectively assigned any rights that Holodniy had in the patented invention to Cetus," and thus to Roche. Id., at 1117. But because of the operation of the Bayh–Dole Act, "Holodniy had no interest to assign." Id., at 1117, 1119. The court concluded that the Bayh–Dole Act "provides that the individual inventor may obtain title" to a federally funded invention "only after the government and the contracting party have declined to do so." Id., at 1118.

The Court of Appeals for the Federal Circuit disagreed. First, the court concluded that Holodniy's initial agreement with Stanford in the Copyright and Patent Agreement constituted a mere promise to assign rights in the future, unlike Holodniy's agreement with Cetus in the Visitor's Confidentiality Agreement, which itself assigned Holodniy's rights in the invention to Cetus. See 583 F.3d 832, 841–842 (2009). Therefore, as a matter of contract law, Cetus obtained Holodniy's rights in the HIV quantification technique through the VCA.² Next, the court explained that the Bayh–Dole Act "does not automatically void ab initio the inventors' rights in government-funded inventions" and that the "statutory scheme did not automatically void the patent rights that Cetus received from Holodniy." Id., at 844–845. The court held that "Roche possesse[d] an ownership interest in the patents-in-suit" that was not extinguished by the Bayh–Dole Act, "depriv[ing] Stanford of standing." Id., at 836–837. The Court of Appeals then remanded the case with instructions to dismiss Stanford's infringement claim. Id., at 849.

We granted certiorari. 562 U.S. ––––, 131 S.Ct. 502, 178 L.Ed.2d 368 (2010).

II

A

Congress has the authority "[t]o promote the Progress of Science and useful Arts, by securing ... to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." U.S. Const. Art. I, § 8, cl. 8. The first Congress put that power to use by enacting the Patent Act of 1790. That Act provided "[t]hat upon the petition of any person or persons ... setting forth, that he, she, or they, hath or have invented or discovered" an invention, a patent could be granted to "such petitioner or petitioners" or "their heirs, administrators or assigns." Act of Apr. 10, 1790, § 1, 1...