Government’s Right to Inventions Isn’t Implied

(CN) - Government contractors cannot use a federal law to claim title for publicly funded inventions against the centuries-old practice of awarding such rights to the product's inventor, the Supreme Court ruled Monday.

Stanford University had sued Roche Molecular Systems and its subsidiaries in 2005, claiming that the diagnostic blood-screening company had infringed on its patent for an HIV-measurement technique.

The researcher who devised the technique had singed copyright and patent agreements with both Stanford and a company whose assets eventually Roche acquired, so Roche said it could not be sued as a co-owner of the technology.

Stanford argued that the scientist never had the authority to divest ownership of his research since his work with Stanford was federally funded, a fact it claimed gave the school superior ownership rights under the Business Patent Procedures Act of 1980, also known as the Bayh-Dole Act, which Congress passed in 1980 to "promote the utilization of inventions arising from federally supported research," "promote collaboration between commercial concerns and nonprofit organizations," and "ensure that the Government obtains sufficient rights in federally supported inventions."

Though the District Court agreed with Stanford that an inventor assumes rights to federally funded technology if the government has declined to exercise its rights to title, the Federal Circuit concluded otherwise, remanding the case with instructions to dismiss.

A majority of Supreme Court justices affirmed that holding Monday.

"Although much in intellectual property law has changed in the 220 years since the first Patent Act, the basic idea that inventors have the right to patent their inventions has not," Chief Justice John Roberts wrote for the seven-judge majority.

An employer cannot claim rights to an invention without a specific agreement to that effect, according to the ruling. Though Congress enacted laws that explicitly granted ownership to the United States for atomic energy, nuclear material and NASA inventions, it made no such provisions in the Bayh-Dole Act.

"Nowhere in the Act is title expressly vested in contractors or anyone else; nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions," Roberts wrote.

"Instead, the Act provides that contractors may 'elect to retain title to any subject invention,'" according to the ruling.

This is different from "vesting" title, the majority found. "You cannot retain something unless you already have it," Roberts wrote.

"The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have," according to the 15-page lead opinion. "Such a provision makes sense in a statute specifying the respective rights and responsibilities of federal contractors and the Government."

Though universities typically have the employees assign invention rights, "it does so without violence to the basic principle of patent law that inventors own their inventions," Roberts wrote.

Justice Stephen Breyer authored a dissenting opinion, joined by Justice Ruth Bader Ginsburg, saying that this case is novel since it involves "inventions that the employee fails to assign properly." The dissenting justices said they would vacate and remand the Federal Circuit's decision because the case "turns on matters that have not been fully briefed (and are not resolved by the opinion of the Court)." (Parentheses in original.)

"Given this basic statutory objective, I cannot so easily accept the majority's conclusion - that the individual inventor can lawfully assign an invention (produced by public funds) to a third party, thereby taking that invention out from under the Bayh-Dole Act's restrictions, conditions, and allocation rules," " according to the 11-page opinion. "That conclusion, in my view, is inconsistent with the Act's basic purposes. It may significantly undercut the Act's ability to achieve its objectives. It allows individual inventors, for whose invention the public has paid, to avoid the Act's corresponding restrictions and conditions. And it makes the commercialization and marketing of such an invention more difficult: A potential purchaser of rights from the contractor, say a university, will not know if the university itself possesses the patent right in question or whether, as here, the individual, inadvertently or deliberately, has previously assigned the title to a third party."

In a one-page concurring opinion, Justice Sonia Sotomayor noted that she joined fully with the majority despite sharing the concerns of the dissent "[b]ecause Stanford failed to challenge the decision below on these grounds."

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