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Stanford University v. Roche Molecular Systems, Inc.’s Impact on Government Contracts

by Jesse Erlich

A decision by the Supreme Court of the United States on June 6, 2011 has a great impact on the interpretation of the Bayh Dole Act as well as assignment of contracts relating not just to the Bayh Dole Act but to assignments in general. The case, Board of Trustees of the Leland Stanford Junior University v. roche Molecular Systems, Inc., et al., is of particular interest because the assignment of inventions has an impact on contractor relations with the government. Without an assignment of rights by the inventor to the contractor or subcontractor, the contractor or subcontractor cannot grant to the government rights that the government may have in an invention funded by the government, more specifically the confirmatory license discussed in Protecting Your IP Under Government Contracts, Part 1.

This decision points out that the Bayh Dole Act does not automatically vest title to the contractor in federally funded inventions. Title or ownership belongs to the inventor unless the inventor assigns his or her title by contract to another individual or company. The Bayh Dole Act specifically recites that the contractor in federally funded inventions may elect to retain title to any subject invention; that is an invention that has either been conceived or actually reduced to practice under the federal contract.

Since the Bayh Dole Act does not vest title automatically within the contractor, and since title to an invention under the United States patent law initially belongs to the inventor who conceived the invention, it is essential that the contractor obtain title from the inventor via an employment agreement or other such contractual relationship. In this particular instance, Stanford University did not obtain such title from the inventor, and the inventor obligated himself to assign the invention to a company for which he had worked (Cetus, later purchased by Roche). It was Stanford’s contention that under the Bayh Dole Act title vested within the contractor directly, preempting the inventor’s right to title. The Supreme Court held that such was not the case, and since Stanford failed to obtain appropriate title from the inventor, the inventor’s rights preempted those of Stanford University.

Since the agreement between the inventor and Stanford University merely stated that the inventor “will assign rights to the invention to Stanford University” instead of stating that the inventor “will assign and do[es] hereby assign,” (as in the case of the language between the inventor and Cetus), the inventor’s original ownership of the invention takes precedent over any rights that Stanford may obtain by electing to take title under the Bayh Dole Act or with respect to the government contract.

It should be pointed out that in this particular case Stanford University did obtain title from two other inventors and therefore was capable of providing the government with a royalty-free license to practice the invention for governmental purposes as required by government contract law, specifically in this case the Bayh Dole Act. By Stanford University failing to obtain title from the third inventor, who instead passed on title to Cetus (and therefore Roche), the infringement action brought against Roche by Stanford University failed.

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