The Bayh-Dole Act (1980) was intended to give government contractors incentive to commercialize government-funded inventions by permitting the contractor to retain title, so long as the contractor paid for the patents and the government got a paid-up license (with march-in rights if the contractor ceased commercialization). An issue in Stanford v. Roche was whether the contractor still had to obtain patent rights from the inventor or whether Bayh-Dole gave patent rights directly to the contractor.
“In the article “Assignment of Inventions and the Bayh-Dole Statute,” we reported that the U.S. Court of Appeals for the Federal Circuit (CAFC) held that an inventor’s prior assignment of an invention acted to deprive a government contractor of title to an invention where the inventor had merely “agreed to assign” to the government contractor, but, before fulfilling that agreement, actually assigned to another.
In a seven to two decision, the U.S. Supreme Court upheld the principle that original rights to an invention belong to the inventor and the Bayh-Dole Act did not change that.
As outlined in the case, Holodniy, one of four inventors, was working with both Stanford University and Cetus (later purchased by Roche). Holodniy was a Stanford University employee whose employment agreement required him to assign inventions to Stanford (at some future date). When Holodniy began to work with, but not for, Cetus, he actually assigned his patent rights to Cetus (now Roche) about six years before he belatedly, but ineffectually, attempted to assign the same rights to Stanford.
The result was that Stanford University, pursuant to Bayh-Dole, owned the rights from only three of the inventors. Because of Holodniy’s prior assignment, Roche owned Holodniy’s patent rights. Hence, the patent had split ownership between Stanford and Roche. Black-letter law says both had to be joined in any suit to enforce the patents in order for either to have standing. Roche, not interested in suing itself, deprived Stanford of standing. That was the bottom-line holding of the Federal Circuit Court.
The U.S. Supreme Court rejected Stanford’s argument that mere employment is sufficient to vest title to an employee’s invention in the employer.
Chief Justice Roberts, writing for the majority wrote: “The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors unilaterally to take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.”
The basic purpose of Bayh-Dole is being fulfilled because the invention is still being commercialized. The government is still immune from suit because Stanford cannot join Roche in a suit against the government, which has a royalty-free license from Stanford; Stanford and Roche can still join to sue any other infringers. The purpose of Bayh-Dole was not defeated, as Stanford argued and as seminar promoters suggest.