Roche Molecular Systems shares ownership with Stanford University in three U.S. patents for a PCR-based test kit to detect and quantify levels of HIV in the blood, the U.S. Supreme Court decided Monday in a patent case closely watched by biotech and pharma companies as well as universities.
The court’s 7–2 decision upheld an appellate court ruling that Stanford cannot claim sole ownership of the patents because the inventor, who was based at the university but worked for a company later acquired by Roche, transferred his rights to the patented innovations.
“Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor. The question here is whether the University and Small Business Patent Procedures Act of 1980—commonly referred to as the Bayh-Dole Act—displaces that norm and automatically vests title to federally funded inventions in federal contractors. We hold that it does not,” Chief Justice John G. Roberts wrote for the court’s majority.
The PCR method was developed by Cetus, but the kit was developed by Mark Holodniy, M.D., a Stanford researcher, while working as a visitor at Cetus with university-secured NIH funding. Upon returning to Stanford, Dr. Holodniy and two researchers carried out federally funded clinical trials of the PCR kit, which resulted in the granting of the patents to the university.
While Stanford held the patents, Roche commercialized the kit application without coming to terms with the university. The firm has sold the PCR-based HIV kits since 1996.
Stanford demanded Roche enter into a licensing agreement and pay royalties, but the pharma giant refused. Stanford sued Roche in 2005, estimating it was owed $250 million in royalties. Roche contended it need not pay royalties to Stanford or Dr. Holodniy because he signed away his inventor rights to Cetus.
Stanford maintained that it owned the patents because Bayh-Dole awards patent ownership first to universities and other entities receiving federal funding, then to the federal government, and finally to inventors.
Commenting on the ruling in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems Inc. et. al., general counsel for Stanford Debra Zumwalt said, "We are disappointed with the ruling by the Supreme Court in this case but will move forward to protect the interests of all parties in inventions created with federal funding, including the interests of the federal government and companies that license technology from Stanford."
Siding with Stanford, Justices Stephen G. Breyer and Ruth Bader Ginsburg countered: “The facts that Stanford’s contract came first and that Stanford subsequently obtained a post-invention assignment as well should have meant that Stanford, not Cetus, would receive the rights its contract conveyed.”