Supreme Court rules against University in Stanford v. Roche

July 14, 2011, 3:05 a.m.

The U.S. Supreme Court decisively ended a decade-long patent dispute over an HIV-screening method developed by School of Medicine professor Mark Holodniy with its June 6 ruling on Stanford v. Roche that awarded patent rights to the pharmaceutical firm.

In the court’s 7-2 decision, the majority opinion, written by Chief Justice John Roberts — dismissed Stanford’s claim to the test’s patent under the 1980 Bayh-Dole Act, which established protocol for assigning the patent rights of inventions made by institutions receiving federal funds. It cited Roche and Stanford as co-owners of the test, meaning no patent infringement occurred.

The U.S. Supreme Court ruled 7-2 against the University in Stanford v. Roche. (SERENITY NGUYEN/The Stanford Daily)

The dispute stems from two contracts Holodniy signed giving both Stanford and Cetus Corporation– a company later acquired by Roche — rights to his work: a 1998 copyright and patent agreement with Stanford and a Visitor Confidentiality Agreement with Cetus the following year.

The HIV test under dispute is used worldwide. Stanford sued Roche for its rights in 2005; the Supreme Court decision addresses an appeal filed, again by the University, in 2009.

Stanford released a statement soon after the decision stating that it “respectfully disagrees.” In the same statement, Stanford General Counsel Debra Zumwalt J.D ’79 said the University is “disappointed” by the decision and again cited the Bayh-Dole Act.

“I do not think the Supreme Court opinion adequately considered the history and language of the Bayh-Dole Act and the policy behind the Act,” she wrote in an email to The Daily. “Prior to the Bayh-Dole Act, when the federal government funded research at universities, the government kept the patents to the inventions created through that research. The government did not have a good track record in commercializing the inventions resulting from the federally funded research.”

Its co-sponsor, former U.S. Sen. Birch Bayh, filed an amicus brief on behalf of the University.

“[The Bayh-Dole Act] automatically vests ownership rights in the inventions arising from federally funded research in the universities, small businesses and nonprofit organizations responsible for their creation,” he wrote in the brief.

“Congress thought that universities could do a better job of licensing patents resulting from the research and seeing that these inventions were developed and put out in the marketplace so that people could benefit from them,” Zumwalt said. “The government kept certain rights, gave the rest of the patent rights to the university and required that universities share any royalties from successful patents with the faculty, employee and student inventors.

The American Association of Universities and U.S. Solicitor General Neal Katyal also filed briefs on Stanford’s behalf.

The Court also dismissed Holodniy’s personal claim to the test.

“[It] has long been the rule that inventors have title to their patents initially, even if they make those inventions while working for somebody else,” Roberts wrote in the majority opinion. “The United States as amicus curiae argues that this provision operates to displace the basic principle, codified in the Patent Act, that an inventor owns the rights to his invention.”

In order to protect the interests of its faculty and prevent future conflicts, Stanford is currently supervising a small but critical change to the language used in its agreements. Rather than having the employee say he or she “will assign” patent rights, the employee will instead sign, “I hereby agree.”

“This decision will also create problems for the government’s reserved rights,” Zumwalt said.

Ellora Israni contributed to this report.

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