For the second time in a week, the Supreme Court affirmed the long-suffering Federal Circuit in a patent case.  The decision this week came in No. 09-1159, Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc. Of particular interest to Court watchers, the Court paid no heed in either case to the views of the Solicitor General, which usually has a high degree of success in pressing government views on the Court, especially in statutory cases, and has led much of the charge criticizing Federal Circuit doctrines in the past.

The case here is an interesting one as a matter of jurisprudence, posing a classic conflict between text and policy.  The question is where title vests to inventions funded by federal grants:  Stanford (the relevant government contractor), backed by the federal government, argued for a rule vesting title in the contractor university, implied from the structure of the Bayh-Dole Act that permits contractors to retain patents instead of having them to go to the United States.  Roche (the beneficiary of a contract with the inventor) argued that the statute's traditional role applies "“ vesting title in the actual inventors or their assignees.  Although the text pretty strongly favors Roche, Stanford and the United States (as amicus) presented a strong policy case for public ownership of publicly funded inventions.

On its surface, little is at stake in the case, which arises only because the contract Stanford used at the time of this invention was not written with sufficient precision to assign the invention to Stanford; modern contracts (and most contracts even at the time this case arose) explicitly transferred rights to the contractor from the employee.  On a deeper level, however, the case provides an opportunity to get a sense for the Court's perspective on the relative significance that it should accord to the individual inventor in the modern patent system.  What we learn is that the Court is not so troubled by the idea of federally funded inventions passing into private ownership as to depart from a straightforward reading of the statute.

Writing for the Court, the Chief Justice's succinct opinion treated the case as a simple one.  It started by emphasizing the baseline rule in patent law that rights in a patent traditionally vest in the inventor.  The Court has upheld this idea numerous times, in cases dating back more than 150 years.  Most importantly for present purposes, it has found it to be true even in the case of inventions made by federal employees in the scope of their employment.  The Court also noted that Congress on several occasions has departed from that rule explicitly, adopting statutes providing that title to certain classes of inventions "vests in" the United States.

Against that rhetorical backdrop, the Court could easily dismiss the idea that Bayh-Dole implicitly might vest title to inventions made by individuals working with federal grant money in their employer (Stanford University as opposed to the individual researcher).  Pulling out the Court's traditional dictionary tools, he showed how reasonable it was to treat the invention "of the contractor" as meaning an invention owned by the contractor (as opposed to one owned by the contractor's employees).

Responding to the concern that a holding permitting federally funded inventions to "vest" in private parties would wreak some earth-shattering change, the Court closed by emphasizing that existing practice is entirely consistent with its holding.   If the inventions vest in the contractor in the first place, why do contractors (like Stanford) try so hard to get employees to transfer inventions to them?  Most telling of all, citing an amicus brief from the Pharmaceutical Research and Manufacturers of America (authored by Bob Long at Covington and Burling), he emphasized the current practice of NIH, the agency at issue here (and surely one of the largest distributors of federal grant money): NIH tells its contractors that they must obtain assignments because inventions vest in employees (and thus would stay with the employees, as the Court holds here, unless there is a valid assignment).  It is difficult to think that the decision will cause any substantial dislocation when the most prominent grantor already has been acting on the assumption that the law is precisely as the Court holds here.

The short shrift the Court gave to the position of the Solicitor General (and the petitioner) is evident from the dissenting opinion filed by Justice Breyer, which Justice Ginsburg joined.  Even Justice Breyer does not go so far as to adopt the Solicitor General's view that federally funded patents vest in the contractor.  Although Justice Breyer expresses skepticism that it makes sense to let these inventions vest in the employees, his preferred disposition is to reverse on the basis of a ground not presented as a basis for review: a remand to the Federal Circuit with instructions that it reconsider the contract interpretation that permitted Stanford to lose in the first place.

Posted in B.T. Leland Stanford Jr. Univ. v. Roche, Analysis, Featured, Merits Cases

Recommended Citation: Ronald Mann, Opinion analysis: Court rejects implied vesting of patents in federal contractors, SCOTUSblog (Jun. 7, 2011, 11:18 AM), http://www.scotusblog.com/2011/06/opinion-analysis-court-rejects-implied-vesting-of-patents-in-federal-contractors/