It should come as no surprise to readers that Stanford perennially ranks among the nation’s top universities in patent quality, number of patents and patent revenue. Though patent revenue makes up only about 1.5 percent of Stanford’s budget, it provides a critical incentive to innovate at both the departmental and individual levels. Unfortunately, Stanford’s Copyright and Patent Agreement (CPA) has proven itself incapable of defending the University’s intellectual property, which has forced a drawn-out legal battle that has now reached the Supreme Court. The scope of the case has extended far beyond Stanford and will have significant implications for research universities nationwide.
Involved is the Bayh-Dole Act, which gives federally funded research universities the patent rights to inventions made at those universities. The court case began when a Stanford researcher in the late 1980s signed a rights agreement with Stanford, then with Cetus Corporation, a biotechnology company later acquired by Roche. In 1991, Cetus was purchased by Roche Molecular Systems, which began producing HIV detection kits incorporating Holodniy’s patented work.
. In 1992, Stanford responded by claiming that since the research was funded in part by the National Institutes of Health, it had sole title to the resulting patents under the Bayh-Dole Act. The act gives the government the option to claim title to any invention resulting from its funding or to allow the funded institution to do the same. The University attempted unsuccessfully to agree to licensing terms with Roche and sued the firm for patent infringement in 2005.
Recently, a federal appeals court ruled against Stanford, pointing out that the University’s CPA is not an assignment of rights but an “agreement to assign” such rights, and that Stanford cannot use it to claim title to the researcher’s work. The court also argued that the Bayh-Dole Act does not automatically void his assignment of rights to Cetus, and therefore Stanford has no right to his patents.
The editorial board hopes that the Supreme Court’s eventual ruling will not threaten the current university patent-licensing system. According to a brief filed by more than 40 universities, university licensing added $457 billion and 279,000 jobs to the U.S. economy between 1996 and 2007. Neal Katyal, the U.S. acting solicitor general, claimed that a district court’s ruling in Stanford v. Roche created “serious uncertainty” about university patent titles and threatens the government’s ability to promote the public interest.
The Bayh-Dole Act was passed to ensure that government-funded research would serve the public good. The law has accomplished this and had the wonderful side effect of fueling research at universities like Stanford. The court’s decision in this case must not undermine the law’s noble purpose.