Supreme Court hears Stanford v. Roche

Dispute surrounds assignment of intellectual property at universities

The Supreme Court heard arguments yesterday morning in Stanford v. Roche, and the justices did not indicate which way they were leaning in the university patent dispute. At issue is whether a Stanford researcher, Mark Holodniy, could sign away Stanford’s patent rights to an AIDS test to Cetus, a local biotech company. Holodniy first signed an agreement with Stanford that he “will assign” any future inventions to Stanford. But then he visited Cetus and agreed to “hereby assign” future inventions — inventions he had not yet created at the time of the agreement — to the biotech company. Which agreement wins is a question of more than just contract law.

Because the research was federally funded, the Bayh-Dole Act of 1980 governs the handling of its intellectual property. MIT and many other universities have sided with Stanford in the case. Cetus was later bought by Roche. Stanford is appealing the case to the Supreme Court, because Roche won the last round in the United States Court of Appeals for the Federal Circuit.

Stanford’s counsel, Donald B. Ayer, was initially questioned by Justices Antonin Scalia and Anthony Kennedy over how this dispute would have been resolved had there been no federal funding or no Bayh-Dole Act.

Justice Samuel A. Alito sharply defined the two weaknesses in Stanford’s argument: “First, that 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.”

“And the second,” Alito continued, “is that you are relying on a provision that says that the nonprofit organization may elect to ‘retain’ title, which means hold onto a title that the organization already has. There’s just no accepted definition of the word ‘retain’ that corresponds to the meaning that you want to assign to that word. ‘Retain’ does not mean ‘obtain.’”

Arguing for the Solicitor General of the United States, Deputy Solicitor General Malcolm L. Stewart received part of the Stanford’s half-hour argument time. Stewart was asked by Justices Elena Kagan and Sonia Sotomayor why the government didn’t simply require the institutions to get “I hereby assign” statements from their inventors. There was no good answer.

Indeed, some universities (such as MIT), have done just that. Last spring, as this case began making its way to the Supreme Court, MIT changed the language of its Inventions and Proprietary Information Agreement to “I hereby assign,” instead of “I agree to … assign.” MIT made the change so that if a similar dispute were to arise, it would not be in the legal position Stanford is in.

Curiously, Roche cited MIT as an example of the “hereby assign” language in argument today. Roche seemed not to be aware that MIT had changed its language in response to this case.

Roche’s case was argued by Mark C. Fleming. Justices asked Fleming what would prevent an inventor and a federal contractor from conspiring to keep the rights owned by the inventor, cutting the government out of the picture, if in fact the inventor really had the power to sign away those rights.

When Fleming replied that the government could require property assignments as a condition of funding, Chief Justice John Roberts observed that such an idea could return the world to the pre-1980 situation of many different government agencies having vastly different policies on intellectual property. It was because of the difficulty in navigating that regulatory landscape that Bayh-Dole was born: a way to encourage technology transfer to private industry without getting bogged down in the red tape.

The Court seems to suggest that universities should just change the language of their agreements, said Baldassare Vinti, a partner at Proskauer Rose LLP who specializes in patent law. Vinti said that including the “I hereby assign” language would provide better protection than the language that is now commonplace: “I agree to assign.”

Chief Justice Roberts and Justice Ruth Bader Ginsburg asked the most questions, nine each: six questions for Roche, and three split between the United States and Stanford. Next was Scalia, who questioned Roche three times and Stanford and the U.S. four times. Justices Sotomayor, Kagan, and Breyer did not question Stanford, but reserved their inquiries for Roche and the United States.