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US Supreme Court to Hear Case on Universities' IP Rights on Federally Funded Research

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – The US Supreme Court on Monday agreed to review a case over who owns the rights to discoveries paid for with government funding.

The case involves Stanford University, which sued Roche in 2005 alleging it infringed on three patents covering PCR technologies. The technologies were developed by Mark Holodniy and others and are directed at measuring HIV viral loads.

Holodniy, who is now a professor of medicine at Stanford's School of Medicine, had signed an agreement with the university in 1988 obligating him to assign to the school any inventions he might develop. During that time Stanford collaborated with Cetus, a company developing PCR technology, and Holodniy eventually began working with Cetus, as well, and signed an agreement with the company assigning to it "my right, title, and interest in each of the ideas, inventions, and improvements," that he would devise from his work at the company.

That work led to the development of PCR-based test kits that incorporate the technology covered by the three disputed patents, US Patent Nos. 5,968,730; 6,503,705; and 7,129,041.

In late 1991 Cetus was acquired by Roche, and the following year, Stanford filed patent applications for the three patents. Because the technologies covered by the patents were developed with funding from the National Institutes of Health, Stanford claimed ownership of the patents under the 1980 Bayh-Dole Act.

Under that legislation, universities, small businesses, and non-profit organizations were granted rights over inventions that were supported by government funding.

In its suit against Roche, Stanford claimed that because the underlying technology of the three patents was funded by federal money, the Bayh-Dole Act prevented Holodniy from assigning rights to the technology to Cetus. Roche countered that Stanford, in fact, did not own the patents, and so didn't have standing to file suit against Roche. By purchasing Cetus' PCR business, which had acquired ownership of the technology from Holodniy, Roche now owned the rights to the technology, Roche said.

In October 2005, Stanford sued Roche in US District Court for the Northern District of California, which ruled in 2008 that the patents were invalid, but did not agree with Roche's claim of ownership.

Both firms appealed that decision and last year, the US Court of Appeals for the Federal Circuit sided with Roche and determined that Roche owned the rights to all three patents. In its decision, the court said that Holidniy only promised to assign rights to the technology to Stanford at an undetermined date, and so his agreement assigning rights to the technology to Cetus took precedent.

In appealing to the Supreme Court, Stanford argued that Bayh-Dole supercedes an individual's rights to grant ownership to an invention.

The Obama Administration agrees and is siding with the university. In a brief to the Supreme Court, it said that the appeals court "erred in holding that an individual inventor may contract around the Bayh-Dole Act's framework for allocating ownership of federally funded inventions."

The Bayh-Dole Act gives ownership over an invention to a contractor, in this case, the research institution, and an individual inventor may "obtain title in a federally funded invention" only if the contractor declines to claim ownership, which Stanford did not, the administration said in its amicus brief.

"Here, Holodniy had no patent rights to assign to Cetus because title to the inventions initially vested in Stanford and Stanford exercised its Bayh-Dole Act rights," the administration's lawyers said. "The court of appeals' decision — which holds that Holodniy's assignment to Cetus limited the patent rights that Stanford could assert under the Bayh-Dole Act — turns the Act's framework on its head."

They added that the case has broad implications for federally funded research and the government's role in supporting such research and making them available for the public good.

"The Bayh-Dole Act reflects Congress' considered judgment about the best way to ensure that federally funded inventions are made available to the public and to encourage further science and technology research and development in the United States," the administration said. "The funds at issue are substantial: the federal government spends billions of dollars per year on science and technology research at United States colleges and universities, small businesses, and nonprofit organizations.

"By upending the Bayh-Dole Act's hierarchy of rights, the court of appeals necessarily made the government's rights, like the contractor's rights, depend on the actions of an individual inventor," it said.