Stanford-Roche Patent Fight Draws U.S. Supreme Court Review

The U.S. Supreme Court agreed to use a case involving Stanford University and Roche Holding AG to consider reinforcing the patent rights of research universities that rely on federal funds.

The justices today said they will hear Stanford’s bid to revive its lawsuit against a Roche unit over patents covering ways to test how well AIDS treatments are working.

The case will clarify the workings of a 1980 law that allocates patent rights among the government, investors and institutions that receive federal money. Universities contend that a federal appeals court decision favoring Roche casts doubt on patents stemming from hundreds of billions of dollars in research.

The lower court ruling “will cloud title to federally funded inventions and impose massive costs on research institutions,” Stanford argued in its appeal.

The U.S. Court of Appeals for the Federal Circuit in Washington said Roche couldn’t be sued because it was a co-owner of the disputed patents under an agreement between one of the inventors and Cetus Corp., a company that later sold its line of business to Roche. The scientist, Mark Holodniy, was a Stanford employee who performed some of his research at Cetus.

Obama Administration

The case may pit universities and the federal government against companies. The Obama administration, the Massachusetts Institute of Technology and the Association of American Universities are backing Stanford.

Roche, the world’s largest maker of cancer drugs, urged the Supreme Court not to hear the appeal, saying the universities were making “hyperbolic” claims about the impact of the appeals court ruling.

“Stanford’s desire for private monetary gain has nothing to do with clarity of title or bringing valuable scientific discoveries to the public,” the Basel, Switzerland-based company argued. “On the contrary, Stanford’s effort to exclude Roche from practicing the patented invention would reduce opportunities for the public to benefit from the invention.”

Holodniy was working to develop a test for HIV, the virus that causes AIDS, using polymerase chain reaction technology. That technique, called PCR, involves making billions of copies of DNA sequences from a small number of starting molecules.

Research Conducted

When Holodniy began working as a fellow at Stanford in 1988, he signed an agreement saying he would assign his patent rights to the university.

The following year Holodniy began making visits to Cetus, which was collaborating with Stanford on the research. He signed an agreement giving that company rights to inventions stemming from his work there. Roche later bought Cetus’s PCR business.

Holodniy’s research, along with that of other Stanford employees, eventually led to three patents being issued to the university.

Stanford contends that the 1980 Bayh-Dole Act supersedes any agreement between Cetus and Holodniy. Because the underlying research was funded in part by the federal government, the Bayh- Dole Act barred Holodniy from assigning his rights to Cetus, Stanford says.

The law “carefully restricts the circumstances in which an individual inventor may acquire an ownership interest in a federally funded invention,” Stanford argued.

The Federal Circuit disagreed. The panel said that Holodniy’s agreement with Stanford was only a promise to assign his rights at a future date, meaning that the Cetus transfer took priority.

“Nothing in the act provided Stanford with the power to void a prior, otherwise valid assignment of patent rights,” Roche argued.

The case is Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, 09-1159. The justices will hear arguments and rule in the first half of next year.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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