Who Owns The Right to University Research?

Today the Supreme Court ruled, that though universities can obtain ownership in an invention funded by the government, they do not automatically get that title.  In fact, the invention “remains the property of him who conceived it.” In other words, finders keepers (discover a new invention and you get to keep it).

Credit to Walt DisneyIn the 1961 film, The Absent Minded Professor, Professor Brainard invents a unique substance – flying rubber or Flubber.  It allows for the invention of shoes that can allow jumps of amazing heights and enables a car to fly.  Before the enactment of the 1980 Bayh-Dole Act, such an invention if created at a university and funded by federal monies would likely go nowhere; no one else could use it.  Why?  Because before the Act, universities basically could not pursue ownership of an invention such as by getting a patent.  Thus, Flubber wouldn’t be licensed to others, including a private companies like a car manfacturer, who could use it to make flying cars.

In the absence of the ability to pursue ownership of an invention, research basically came to a dead end.  If a university was to research say a cancer drug and that research was funded by the government like through the National Institutes of Health (NIH), the university could not then patent their inventions and findings because they would not have title to that invention.  Without title, and thus the ability to patent, they could not sell or license their cancer drug to a pharmaceutical company which with the resources to further develop the drug through clinical trials and bring the drug to the market.  The government would retain the rights to the invention and could choose to license it to industry.  Before the Act was passed, with billions of federal dollars spent on research, fewer than 5% of government patents were licensed to the industry.

So the Bayh-Dole Act was enacted to “promote the utilization of inventions arising from federally supported research” and “promote collaboration between commercial concerns and nonprofit organizations.”  However, the Act also ensured that the Government obtains rights in the inventions they support.

Today, a university can choose to retain the title for the same NIH funded research of a cancer drug and then license it to other entities.  As such, the university can make money off the federally funded research (raising questions of using tax payer government monies to fund research on which another can gain profit, which Justice Breyer touches on in the dissent), incentivizing such research and enabling the research to become meaningful by allowing it to be developed for practical uses by private companies and sold on the market.  At the same time, the Government will retain some rights in the invention and thus get automatic license to the invention and be able to grant a license to another.

With all this in mind comes a recent Supreme Court Decision regarding a test to measure the amount of HIV (the virus that causes AIDS) in a patient’s blood, which then can tell doctors if a treatment course is working.  Hospitals and clinics around the world use this test.  Dr. Mark Holodniy, a Stanford research fellow, developed the test in conjunction with a company called Cetus.  He then assigned his rights to the invention to Cetus.  At the same time, Stanford employees further tested the HIV measurement technique and refined the technique, obtaining several patent applications to the procedure.  Roche Molecular Systems (Roche) acquired Cetus’s rights in the invention.  In 2005, Stanford sued Roche averring that the HIV test kits infringed Stanford’s patents.  The Supreme Court (7-to-2) disagreed.

The Court, citing a previous case, found that “[in] most circumstances, an inventor must expressly grant his rights in an invention to his employer if the employer is to obtain those rights” and therefor Stanford did not automatically obtain the rights to Holodniy’s invention and could not challenge the assignment he made to Cetus.

I remember my brother telling me when he started his aerospace engineering degree at the University of Colorado, Boulder, that he had to sign an agreement basically stating that any invention he came up with while at the university belonged to the university.  This is basically a “pre” assignment of his interests and effectively gives the university ownership of his inventions.  Most universities require their employees, students, researchers, etc. to sign similar agreements.  Holodniy signed one with Stanford – but he only “agree[d] to assign.”  In other words, he promised he would assign his interest in the invention, but he did not actually do so.

Instead, Holodniy signed an agreement with Cetus as part of his with them stating he “will assign and do[es] hereby assign” to Cetus his “right, title and interest in each of the ideas, inventions and improvements” made “as a consequence of [his] access” to Cetus.  This agreement, unlike the one with Stanford, actually assigns the interest, it’s not a future promise.  Perhaps this seems like a technicality in wording.  But it’s actually a BIG difference – actually giving your interest versus promising to give it.  In the end, Stanford did not automatically have title to Holodniy’s HIV test and as the Court said “you cannot retain something unless you already have it.”

Chief Justice Roberts wrote “Although much in intellectual property law has changed in the 220 years since the first Patent Act, the basic idea that inventors have the right to patent their inventions has not.”  So I guess in the end Professor Brainard owns the rights to flubber and if the university wants to own those rights – their employee contracts better be a little more specific.copyright Disney Enterprises, Inc.

Board of Trustees of the Leland Stanford Junio University v. Roche Molecular Systems, Inc., 2011 U.S. Lexis 4183.

A few side notes:

While Justice Breyer makes an interesting point about using tax payer government monies to fund research on which an individual researcher can gain profit, I still believe the researcher should retain the rights.  The individual researcher really shouldn’t benefit, but the companies that use this research absolutely shouldn’t collect the excessive profits they do on the inventions produced by this federally funded research.  I object to companies receiving these licenses or other ownership rights in these inventions and then complaining about Research and Development costs when the research was already federally funded.  Then under the auspices of needing to recoup R&D costs, raising their prices when the public already paid for the invention. (See my series on The Costs to Live.)

I find it interesting that this case about an HIV testing kit comes out as we observe 30 years fighting against HIV/AIDS this month.

The government does divest inventors of their rights in inventions under other acts.  For instances, federally funded research on nuclear material and atomic energy and inventions made pursuant to contracts with NASA and the Department of Energy.  (My brother’s research under a government contract in aerospace engineering would then likely belong to the US).  The Bayh-Dole Act does not contain specific language that would divest an inventor like Holodniy of his right in the HIV test he invented.

Most private companies have similar provisions in their contracts, stating that any invention you make while employed by them belongs to them (e.g. a computer code developed by an employee at Microsoft).  However with private companies, there (generally) are no federal funds at issue, thus the company doesn’t need special permission to patent, license, etc. the inventions as given under the Bayh-Dole Act.

Advertisements

2 Responses to Who Owns The Right to University Research?

  1. […] 1985, the FDA licensed the first HIV test (interesting note that the Supreme Court just ruled on a case involving the intellectual property rights to a widely used HIV test). The year after, more than 38,000 cases of AIDS were reported from 85 countries.  Not until 1987 […]

  2. […] Who Owns the Right to University Research […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: