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STANFORD V. ROCHE
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Factual background
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In 1985, Cetus, then a small California research
company, began to develop methods for quantifying
levels of HIV in human blood samples utilizing
polymerase chain reaction (PCR).
In 1988, Cetus began to collaborate with scientists at
Stanford’s Department of Infectious Diseases to test the
efficacy of new AIDS drugs.
Dr. Mark Holodniy joined Stanford as a research fellow
in the department around that time. At that time, he
signed a Copyright and Patent Agreement (CPA) stating
that he “agree[d] to assign” to Stanford his “right, title
and interest in” inventions resulting from his
employment at the University. Slip op. at 1-2.
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Factual Background
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At Stanford, Dr. Holodniy undertook to develop an
improved method for quantifying HIV levels in patient
blood samples using PCR.
Because Dr. Holodniy was largely unfamiliar with PCR,
his supervisor arranged for him to conduct research at
Cetus. As a condition of gaining access to Cetus, Dr.
Holodniy signed a Visitor’s Confidentiality Agreement
(VCA).
That agreement stated that Dr. Holodniy “will assign and
do[es] hereby assign” to Cetus his “right, title and interest
in each of the ideas, inventions and improvements” made
“as a consequence of [his] access” to Cetus. Id. at 2.
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Dr. Holodniy’s Assignments
 Stanford CPA (June 1988)
 “I agree to assign or confirm in writing to Stanford … that
right, title, and interest in and to … such inventions as required
by Contracts or Grants,” defined to include “agreements …
with third parties including the United States Federal
Government”
 Under Arachnid (CAFC), this language creates a future
interest, not a present assignment
 Cetus VCA (Feb. 1989)
 “I will assign and hereby do assign to CETUS my right, title,
and interest” in inventions conceived “as a consequence of my
access to CETUS’ facilities or information”
 Under FilmTec (CAFC), this creates a present assignment
 Stanford Assignment (1995)
 Present assignment recorded in PTO
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Factual background
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For the next nine months, Dr. Holodniy conducted
research at Cetus on a part-time basis.
Dr. Holodniy and others devised a PCR-based
procedure for calculating the amount of HIV in a
patient’s blood.
Over the next few years, Stanford obtained written
assignments of rights from the Stanford
employees involved in devising the procedure,
including Dr. Holodniy, and filed several patent
applications related to the procedure.
Beginning in 1999, Stanford secured the three
patents-in-suit covering the HIV measurement
process. Id.
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Factual background
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In 1991, Roche Molecular Systems, a company that
specializes in diagnostic blood screening, acquired
Cetus’s PCR-related assets, including all rights
Cetus had obtained through agreements like the
VCA signed by Dr. Holodniy.
After conducting clinical trials on the HIV
quantification method, Roche commercialized the
procedure in 1995. Id. at 2-3.
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Procedural background
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In 2005, Stanford filed suit against Roche, alleging that certain
Roche HIV test kits infringed three U.S. patents relating to
quantifying HIV in human blood samples and correlating the
measurements to the effectiveness of antiretroviral drugs. Board of
Trustees of the Leland Stanford Junior Univ. v. Roche Molecular
Systems, Inc., 583 F.3d 832, 836 (Fed. Cir. 2009).
Among other defenses, Roche challenged the validity of the patents
and asserted that it was a co-owner based on the assignment from
Dr. Holodniy.
On one summary judgment motion, the district court rejected
Roche’s co-ownership defense, finding that the Bayh-Dole Act
voided the assignment from Dr. Holodniy to Cetus. On a later
summary judgment motion, the district court determined that all
three patents were invalid as obvious. Id. at 838-39.
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Procedural background
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On appeal, the Federal Circuit reversed the district
court’s ruling on Roche’s co-ownership defense.
Id. at 836-37 and 848.
The court found that Roche was a co-owner
based on the assignment from Dr. Holodniy and
therefore remanded the case with instructions to
dismiss it because Stanford lacked standing. Id.
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Statutory background (per Stanford)
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Prior to the passage of the Bayh-Dole Act in 1980,
there were two systems that governed who acquired
title to Government-funded inventions.
The first system involved “vesting” statutes and
regulations that vested title in the Government and
“divested” inventors of all of their interests.
The second system involved the use of Institutional
Patent Agreements (“IPA”s), some of which provided
licenses to the Government and ownership interests
to inventors, while others provided title to the
Government.
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Statutory background (per Stanford)
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The Bayh-Dole Act was designed to create a
uniform system of addressing ownership interests in
an “invention of the contractor” under a federallyfunded contract.
Section 202(c) of the Act provides a number of
actions that a federal contractor must take if it wants
to acquire title to a subject invention.
Section 202(a) of the Act states that a contractor
“may elect to retain title to any subject invention,”
provided that it has complied with the requirements
of Section 202(c).
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Statutory Language
 “Each nonprofit organization or small business
firm may … elect to retain title to any subject
invention….” § 202(a).
 “The term ‘subject invention’ means any invention
of the contractor conceived or first actually
reduced to practice in the performance of work
under a funding agreement….” § 201(e).
 QUESTION: Does this language, in conjunction
with the requirements of §202(c), automatically
vest perfect title to federally-funded inventions in
the federal contractor?
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Petition for Certiorari
 Question Presented:
 “Whether a federal contractor university’s statutory
right under the Bayh-Dole Act, 35 USC 200-212, in
inventions arising from federally-funded research
can be terminated unilaterally by an individual
inventor through a separate agreement purporting
to assign the inventor’s rights to a third party.”
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Supreme Court’s decision
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The U.S. Supreme Court decided that the
Bayh-Dole Act did not automatically vest title to
inventions in federal contractors; rather, the
Court found title to the invention at issue vested
initially in the inventor in accordance with the
general rule in the U.S. Slip op. at 7 and 11.
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Supreme Court’s decision
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The University and Small Business Patent Procedures
Act of 1980, 35 U.S.C. § 200 et seq., commonly known
as the Bayh-Dole Act (the “Act”), allocates rights in a
federally-funded “subject invention” between the federal
government and the recipient of the research funding.
“Subject invention” is defined by the Act as “any
invention of the contractor conceived or actually first
reduced to practice in the performance of work under a
funding agreement.” 35 U.S.C. § 201(e).
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Supreme Court’s decision
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The Court noted “the general rule that rights in an
invention belong to the inventor,” citing cases dating
from 1851 to 1933. Slip op. at 7.
While an inventor can of course assign his or her rights
in an invention to a third party, “unless there is an
agreement to the contrary, an employer does not have
rights in an invention.” Id.
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Supreme Court’s decision
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The Court discussed a few federal statutes in which
Congress “divested inventors of their rights in inventions by
providing unambiguously that inventions created pursuant to
specified federal contracts become the property of the United
States.” Id. at 8 (citing statues related to the Atomic Energy
Commission and NASA).
The Court then contrasted such statutes with the Act, stating:
 Such language is notably absent from 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.
Id.
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Supreme Court’s decision
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Noting that the Act provides that contractors may “elect to
retain title to any subject invention,” 35 U.S.C. § 202(a), the
Court next addressed Stanford’s argument that the phrase
“invention of the contractor” in the definition of “subject
invention” included any inventions of a contractor’s
employees. Id. at 9.
The Court disagreed, stating that Stanford’s argument
“assumes that Congress subtly set aside two centuries of
patent law in a statutory definition,” and that it rendered the
phrase “of the contractor” superfluous in the definition of
“subject invention.” Id.
The Court applied the general rule against treating any
statutory terms as surplusage. Id.
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Supreme Court’s decision
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The Court stated that the Act’s “provision stating the
contractors may ‘elect to retain title’ confirms that the
Act does not vest title.” Id. at 11 (Court’s emphasis).
Relying on dictionaries, the Court asserted that “[y]ou
cannot retain something unless you already have it,”
and concluded that the Act does not give title to
contractors, but rather allows them to retain whatever
they may have otherwise acquired. Id.
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Supreme Court’s decision
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Turning to § 202(d) of the Act, which allows
inventors to retain rights to their invention in some
circumstances, the Court stated that section
“assumes that the inventor had rights in the subject
invention at some point,” id. at 12, and is thus
inconsistent with the view that the Act automatically
vests rights in the contractor.
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Supreme Court’s decision
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The Court observed that the Act does not include
provisions for the protection of the rights of inventors in
their inventions or of third parties and stated that the
absence of such procedures “makes perfect sense if the
Act applies only when a federal contractor has already
acquired title to an inventor’s interest.” Id. at 13.
Finally, the Court noted that its construction of the Act is
consistent with the practice of parties subject to its terms.
In particular, NIH guidance documents advise that
inventors initially own an invention and recommend that
contractors obtain assignments from inventors. Id. at 14.
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Justice Breyer’s dissent
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Justice Breyer wrote a dissenting opinion questioning the
propriety of the Federal Circuit’s ruling that the “hereby does
assign” language in Cetus’s agreement was an effective
assignment but the “agrees to assign” language in Stanford’s
contract was not.
The Federal Circuit’s ruling was based on FilmTec Corp. v.
Allied-Signal, Inc., 939 F.2d 1568 (Fed. Cir. 1991), which,
according to Justice Breyer, “provided no explanation for
what seems a significant change in the law.” Slip op. at 7-8
(Breyer, J., dissenting).
According to Justice Breyer, where the invention had not yet
been conceived, the language of both agreements should
have only been effective to confer equitable rights. Id.
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Justice Sotomayor’s concurrence
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Justice Sotomayor wrote a brief concurrence
agreeing with Justice Breyer’s concerns but finding
that affirmance was the correct disposition because
Stanford had not challenged the FilmTec rule below.
Both Justices Breyer and Sotomayor noted that they
believed this issue was open to review in a future
case.
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