Patent Jurisprudence

i.  Commercialization of Federally-Funded Inventions: the Bayh-Dole Act

The University Small Business Patent Procedures Act (commonly referred to as the “Bayh-Dole Act”) was passed by Congress in 1980.  The Act encourages the utilization and commercialization of federally funded inventions. 

In the late 1980s, Stanford research scientists collaborated with a private biotechnology company, Cetus, in developing a technique to measure the effectiveness of HIV therapies.  Dr. Holodniy, a research scientist at Stanford, utilized Cetus’s technology and government funding to contribute to the technique.  When Dr. Holodniy joined Stanford, he signed a contract (a “Copyright and Patent Agreement”) committing him to assign any future patent rights to Stanford; later he signed another agreement (a “Visitor’s Confidentiality Agreement”), which assigned his patent rights to Cetus.  In 1991, Roche acquired Cetus’s assets and commercialized the HIV measurement technique.   By 1995, Stanford had filed a patent application relating to the technique (naming Dr. Holodniy and several other scientists as inventors), and had notified the government that it intended to retain title to the inventions pursuant to the Bayh-Dole Act.  In 2005, the Board of Trustees of Stanford University filed suit against Roche for patent infringement. The U.S. District Court for the Northern District of California ruled for Stanford, but the Court of Appeals for the Federal Circuit disagreed, holding that Holodniy’s Copyright and Patent Agreement with Stanford was a mere promise to assign, while the Visitor’s Confidentiality Agreement was an effective assignment of rights to Cetus.  The Federal Circuit rejected Stanford’s argument that the Bayh-Dole Act allocated superior rights to the university, thus “negating” any assignment to Cetus.

In Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc. (09-1159), the Supreme Court affirmed by a vote of 7-2, holding that the language of the Bayh-Dole Act does not automatically vest title in the recipients of federal research funding (“federal contractors”).  In delivering the majority opinion, Chief Justice Roberts argued that the general rule of U.S. patent jurisprudence is to recognize the inventor as the holder of the rights to an invention, unless there is an agreement to the contrary.  He concluded that “invention of the contractor” language in the Bayh-Dole Act does not operate to vest title to inventions in federal contractors, but rather refers to inventions that belong to the federal contractor for some independent reason.  The Court also argued that the Bayh-Dole Act’s provision enabling federal contractors to “elect to retain title” confirms its holding.  According to this argument, the word “retain” signals the holding of rights already obtained; such language only assures federal contractors that “they may keep title to whatever it is they already have.”  Chief Justice Roberts contended that Congress would have used clearer language if it had intended to make sweeping changes to patent jurisprudence by depriving inventors of their rights in their inventions.  Writing for the dissent, Justice Breyer agreed that the statutory objective of the Bayh-Dole Act is to ensure the commercialization of federally funded inventions, but he also argued that this operates against a background of rules that balance public, private, and governmental interests.  Taking issue with Federal Circuit jurisprudence in the arena of patent assignment agreements (a point on which Justice Sotomayor concurred), he argued that the case should have been remanded to enable further consideration about how best to ensure a proper balance among the Bayh-Dole Act’s objectives, public interests, and the rights of inventors. 

ii.  Liability for Actively Inducing Another to Infringe a Patent 

In Global-Tech Appliances, Inc. v. SEB S.A. (10-6), the Court held that liability for inducing another party to infringe a patent requires knowledge that an activity being encouraged or facilitated constitutes patent infringement.  Accordingly, the Court overruled the Federal Circuit's determination that deliberate indifference to a known risk of patent infringement would be sufficient to hold a party liable for inducing another to infringe.  However, drawing on the doctrine of "willful blindness" in criminal law, the Court affirmed the Federal Circuit's conclusion that the defendants Pentalpha and its owner Global-Tech should be held liable for inducing other companies (Sunbeam, Fingerhut, and Montgomery Ward) to violate SEB's patent on a deep fryer design.  Justice Kennedy dissented with respect to the incorporation of the doctrine of willful blindness; he argued that to draw this doctrine into determinations of liability for inducement was to broaden the Patent Act's prohibition by analogy, and to substitute willful blindness for a knowledge requirement.

iii.  Standard of Proof for Asserting an Invalidity Defense to a Claim of Patent Infringement

In Microsoft Corporation v. i4i Limited Partnership (10-290), the Court held that a party wishing to defend against a claim of patent infringement by asserting the patent is invalid (i.e. that the invention doesn't meet the legal requirements for granting a patent) must prove the facts involved in that defense by the high standard of "clear and convincing evidence."  Writing for the majority, Justice Sotomayor argued that Congress' incorporation of language into the Patent Act expressing a presumption in favor of validity (after an application has been scrutinized by the Patent and Trademark Office, and a patent has been granted) carried with it a "cluster of ideas" from prior common law cases dictating the "clear and convincing" standard of proof for the invalidity defense.  She also noted longstanding precedents in the Federal Circuit for applying this heightened standard, precedents that Congress had not elected to legislatively overrule.  Justice Breyer, joined by Justices Scalia and Alito, wrote a concurring opinion in order to emphasize that the heightened evidentiary standard would not apply to situations where an invalidity defense raises mixed questions of fact and law.  Justice Thomas, while concurring in the judgment, disagreed with the argument that Congress' incorporation of a particular presumption could carry with it a "cluster of ideas" dictating a particular evidentiary standard.