Argument recap: Court skeptical of federal interest in government-funded inventions.

By Ronald Mann
on Mar 1, 2011 at 1:13 pm

Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc., argued February 28, 2011, presents a classic conflict between text and policy.  The question is where title vests to inventions funded by federal grants:  Stanford (the relevant government contractor), backed by the federal government, argues for a rule vesting title in the contractor university, implied from the structure of the Bayh-Dole Act that permits contractors to retain patents instead of having them to go to the United States.  Roche (the beneficiary of a contract with the inventor) argues that the statute’s traditional role applies – vesting title in the actual inventors or their assignees.

Justices Sotomayor, Ginsburg, and Scalia interrupted Stanford’s counsel (Donald Ayer) almost as soon as he stood up to press him on a set of slippery-slope hypotheticals.  The trio started by asking what would happen if an inventor had an idea before he started working for the university.  Ayer understandably had to concede that the statute would not apply.  Justice Scalia then pressed him to justify why it should be different if the invention in question occurred (as is the case here) when the inventor is working under a contract that gives inventions to a third party (Roche’s predecessor).

Justice Alito then diverted the discussion to the weakest side of Stanford’s case, a point he would make time and time again throughout the argument: whether contractors like Stanford have been proceeding on the assumption that title vests automatically in the university.  Often supported by Justice Kagan, with both of them referring explicitly to an amicus brief from the Pharmaceutical Research and Manufacturer’s Association, they seemed persuaded that the regular government practice of requiring assignments from inventor-employees could not be reconciled with the argument that title vests automatically in the university.  Although Ayer tried to deflect the point, some Justices clearly found the point troubling: Justice Alito emphasized that it “cut pretty strongly against your argument.”

On a parallel track, Justice Scalia repeatedly emphasized his view that the government could protect itself easily, by simply mandating in its regulations, as a condition of funding, that all contractors require all of their employees to execute ironclad assignments. Justice Scalia emphasized the policy difference between a rule that explicitly vests title in the United States (which he thought palatable, and easy for Congress to draft), and a rule that implicitly vests title in the contractor, which he thought odd and inappropriate to be found by implication.

Deputy Solicitor General Malcolm Stewart argued on behalf of the United States in support of Stanford.  Faced with repeated questions from Justices Kagan, Alito, and Scalia along the lines summarized above, he doggedly emphasized the government’s view that assignments are unnecessary, and that the government’s control of federally funded inventions should not be left to the vagaries of private ordering.  The best hope for the government came from Justice Kennedy’s suggestion that the Court could reverse the Federal Circuit’s interpretation of the contracts at issue in this case, holding that Stanford’s contract was superior to Roche’s.

Appearing on behalf of Roche, Mark Fleming began by readily accepting Justice Scalia’s view that the government could solve the problem in this case simply by requiring assignments from all of its contractors.  Justices Breyer and Sotomayor pressed him on the policy implications of his view.  Justice Sotomayor asked, for example, whether there is “any conceivable reason that . . . Congress would have ever wanted the university and the inventor to be able to circumvent the act by failing to secure an assignment?”  Fleming responded that the statute was all about the relation between the university and the government, and that it made no change in the law governing initial vesting of the invention in the employee.  He emphasized the Court’s prior holding (in Dubilier) that allowed even federal employees to retain title to a federally funded invention when the government failed to obtain an appropriate assignment.

Justice Ginsburg seemed uniquely troubled by the drafting question on which the case turned in the Federal Circuit.  She was quite dubious that the case should turn on the difference between an agreement to make a future assignment like Stanford’s (“I will assign”) and a present agreement of assignment (like Cetus’s, or the form commonly used by MIT, which says “I hereby assign” or “I do assign”).  Fleming insisted that the difference is rooted in the cases, and he readily conceded that his client would have lost if it had used the language of the Stanford form instead of the broader “I do assign” language of present assignment.

The last major policy question for Fleming was Justice Kagan’s related question: why Congress would have failed to discuss something so important in the statute.  Fleming’s answer, predictably enough, is that universities had never demonstrated a need for a vesting rule, given their ready ability to force their employees to sign assignments.  He also emphasized the parallel provision in the Copyright Act (which vests copyright for works made for hire directly in the employer).  The point, he argued, would have been explicit in the Patent Act if Congress wished to overturn the baseline rule that the inventor gets the patent.