Board of Trustees v. Roche Molecular Sys., Inc.: Stanford University Patent Infringement Case Is Dismissed and University Learns Lesson in Drafting Assignment Agreements

Bd. of Trs. v. Roche Molecular Sys., Inc., 2008-1509, -1510 (CAFC Sept. 30, 2009) Opinion

On September 30, the Court of Appeals for the Federal Circuit (“CAFC”) affirmed in part, vacated in part, and remanded with instructions the District Court for the Northern District of California decision. The lower court’s decision held several Stanford University patents invalid for obviousness, dismissed Roche’s counterclaim for judgment on ownership, and declined to consider Roche’s affirmative defense based on ownership.  The CAFC vacated the lower court’s decision that Stanford’s patents were invalid and ruled that the University did not have standing to sue, because of contract language indicating that the patent rights belong to an outside corporation. Additionally, the CAFC affirmed the lower court’s decision that Roche’s counterclaim for judgment on ownership was barred due to a four-year statute of limitations.  However, unlike the lower court, the CAFC held that statute of limitations does not preclude a party from raising affirmative defenses.

PatentlyO provides an overview of the case.  Inside Higher Ed expressed surprise that the case turns on the language of Stanford’s assignment agreement and not on other substantive issues, such as the interplay with federal Bayh-Dole Act and the bona fide purchaser arguments.

Stanford University received funding from the National Institute of Health to develop a new biochemical technique called polymerase chain reaction (PCR), as part of its efforts to measure the effectiveness of antiretroviral drugs that are used to treat Human Immunodeficiency Virus (HIV).  Stanford filed three patents related to the PCR method.  The Stanford-affiliated scientists signed a copyright and patent agreement (CPA).  The CPA included a provision in which the scientists “agree to assign” the right, title, and interest in the inventions created.  However, one scientist later signed a Visitor’s Confidentiality Agreement (VCA) with Cetus (a company later purchased by Roche) in order to consult with the outside corporation and refine the PCR technique.  The VCA included “do hereby assign” language.

In holding as it did, the CAFC reasoned that the “do hereby assign” language in the VCA “effected a present assignment of …future inventions” to the company.  In contrast, Stanford’s “agree to assign” language in its CPA “reflect[ed] a mere promise to assign rights in the future, not an immediate transfer of expectant interests.”  Consequently, the outside corporation’s title in the PCR-related patents vested first, thus leaving Stanford with a defective title.  Because Stanford could not establish ownership of the patents, the university did not have standing to sue for patent infringement.

The CAFC decision will likely force colleges and universities to review their intellectual property agreements with faculty and affiliated staff to ensure assignment of rights is immediately effective once the invention is created.  Additionally, the decision will prompt schools to implement a system to review collaborative agreements faculty and staff have with outside companies.