Board of Trustees of Leland Stanford Jr Univ v. Roche Molecular Sys Inc

Bd. of Tr. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 583 F.3d 832 (Fed. Cir. 2009).

I. Facts of the Case

The Board of Trustees of Leland Stanford Junior University (University) brought suit against Roche Molecular Systems, Inc. (Roche) claiming that Roche's HIV detection kits infringed the University's three patents claiming methods for quantifying HIV in blood samples.

The three patents - 5,968,730 (730 patent), 6,503,705 (705 patent), and 7,129,041 (041 patent) - issued on October 19, 1999; January 7, 2003; and October 31, 2006; respectively. The patents claimed methods for quantifying HIV in infected human blood samples to measure the effectiveness of antiretroviral drugs. The claims use a polymerase chain reaction (PCR) from a parent application and the technology employed is the result of researchers from the University and a third-party company, Cetus. The University and Cetus signed written agreements covering their collaborations. Additionally, the researchers for the University signed over rights to inventions to the University and Cetus. The agreements provided licenses to Cetus for any inventions by the University with respect to the PCR technology. The inventions were possible because of government funding and the government retained certain rights as stated by the patent applications.

In 1991, Roche purchased Cetus's business in relation to the PCR technology including the agreements with the University. Roche then began to produce the alleged infringing HIV detection kits, before the patents were filed in 1992.

In 2000, Roche was notified of the University's ownership of the technology and was offered an exclusive license to the patents. No agreement was reached, and the University filed suit in 2005.

II. Procedural Posture

The University filed suit in 2005 claiming infringement of its three patents by Roche in the Northern District of California. Roche answered and counterclaimed that the University lacked standing, that Roche possesses rights to the patent through its acquisition of Cetus, and that the patent claims were invalid.

The parties filed cross-motions for summary judgment on Roche's patent rights. The district court denied Roche's motion and granted the University's in part on the findings that Roche's ownership claims were barred by California's statute of limitations, the license claims failed because the University did not consent, and Roche had no shop rights.

Roche petitioned the Court for a writ of mandamus to vacate this ruling, but was denied. A Markham hearing was held for claim construction. The district court granted Roche's motion for summary judgment that the claims were invalid as obvious. The University appealed the invalidity and claim construction and Roche cross-appealed the ownership rights to the Federal Circuit.

III. Holdings

The district court's determination to deny Roche's assertion of ownership of the patents as being barred by the statute of limitations was in error. The Court held the statute of limitations bars Roche from obtaining a judgment of ownership, but does not prevent Roche from raising the affirmative defense of ownership to show the University had no standing.

The University has defective title with regards to the patents.

The University is not a bona fide purchaser of the inventor's assignment under 35 USC § 261.

The agreement between Cetus/Roche and the inventor is not void under the Bayh-Dole Act.

The California Business and Professional Code did not void the agreement between Cetus/Roche and the inventor. (not discussed).

The counterclaim by Roche of ownership is barred by California's statute of limitations as constructive notice of asserted ownership was given in the presentation by the University to Roche to grant the license.

IV. Critical Analysis

Typically, state law would govern a contractual transfer of ownership of a patent. However, the Court stated that "the question of whether contractual language effects a present assignment of patent rights, or an agreement to assign rights in the future, is resolved by Federal Circuit law." 583 F.3d at 841. The Court, in essence, reiterated an earlier decision that although state law governs contract interpretation, when it is a matter of patent assignment being present or future, that is the province of the Federal Circuit.

The Court looked at whether the inventor's agreement with the University resulted in the University having a defective title to the patent interests. It found that it was defective because the agreement with Cetus/Roche was a present assignment of interests, while the agreement with the University was a promise to assign sometime in the future. Therefore, Cetus/Roche immediately gained an equitable title that would revert to a legal title once there is an invention and a patent is filed. As a result, the inventor would lose all interests at that time, and would not have any interests to assign the University in the future.

The University asserted that it was bona fide purchaser under 35 USC § 261. The statute states that a bona fide purchaser for good and valuable consideration takes title clear of assignments if not provided notice or the assignment is not filed with the USPTO. The inventor's assignment to Cetus/Roche was not filed and there was no dispute to the University's consideration for purchase. However, the Court found the University had constructive notice as the inventor was an agent of the University.

The University also asserted that the agreement between the inventor and Cetus/Roche was void under the Bayh-Dole Act which was to protect Government rights in inventions made possible through federal grant money. The Court stated this did not apply in agreements between companies and employees, but only the Government and the company.

V. Case Disposition

The Court affirmed the dismissal of Roche's ownership counterclaim, vacated the judgment that the patent was invalid for obviousness, and remanded with instructions to dismiss the claim by the University for lack of standing.

VI. Future Importance/Unanswered Questions

One part of the Court's analysis that is missing is why the dates of the agreements were not considered relevant. The inventor promised assignment of rights to the University in an agreement a year before it agreed to presently assign those same rights to Cetus/Roche. Given that notice was easily found by the Court in analyzing the University's claims, it would be expected that Cetus/Roche was under notice that the inventor had promised assignment in the future to the University.

Another point of possible ambiguity, when determining when Cetus/Roche's equitable title becomes a legal title, it states upon invention and filing of the patent. In these matters, would a patent application have to have been filed, or is it simply the invention?

The University raises the issue that the information learned from Cetus by the inventor was non-confidential. The Court did not address this point. The Court determined that because information from visits to Cetus was used by the inventor in developing the patents, the title is traced back to Cetus. It is assumed the Court saw the information as confidential, but what if it was not? It would seem that nonconfidential information would not provide Cetus with the interests. This raising another issue of what if the inventor uses modified technology learned? In this case, the inventor used the exact same technology he learned from visiting Cetus in reducing to practice the patents. What if he had to modify the technology to reduce to practice, how much modification would be necessary before the University's title is no longer defective?

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