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UC Patent Amendment: To Sign or Not to Sign?

Originally posted on December 6, 2011 by Adam Burgasser, Assistant Professor Hellman Fellow, University of California, San Diego – Department of Physics

Stanford vs. Roche Case Causes University Reaction

On December 1st, a university-wide email was sent to all faculty demanding that we sign a Patent Amendment of the 1997 UC Patent Agreement. The Amendment is in response to a recent Supreme Court decision regarding the case of Stanford vs. Roche, which centered around a patent dispute over a common HIV test developed by Prof. Mark Holodniy while working at Stanford and Roche's predecessor company, Cetus.

Holodniy signed Stanford's patent agreement, in which he "agree[d] to assign" to the university his "right, title and interest in" inventions resulting from his employment there. To work at Cetus, Holodniy also signed an agreement that he "will assign and do[es] hereby assign" to Cetus his "right, title and interest in . . . .the ideas, inventions, and improvements" made "as a consequence of [his] access" to facilities at that company. The HIV test grew out of work at both Stanford and Cetus, whereas Stanford filed three patents on the measurement process used for the test. Meanwhile, Roche acquired Cetus, won FDA approval for the test, and commercialized it.

Stanford sued Roche, claiming it had infringed on its patent. Roche claimed co-ownership given Holodniy's signed agreement. Some of the work done to develop the test was made under an NIH grant, and following provisions of the Bayh-Dole Act of 1980, Stanford elected "to retain title to any subject invention", namely the measurement methods for the HIV test. Stanford thus claimed it had "superior rights under the Bayh-Dole Act".

While the District Court agreed with Stanford, both the Court of Appeals for the Federal Circuit and the Supreme Court (on June 6, 2011) held in favor of Roche, by 7-2, holding that: "The Bayh-Dole Act does not automatically vest title to federally funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions."

[See this blog article from Patentlyo for more discussion on the issues in Stanford vs. Roche.]

"Do Hereby Assign"

It should be of no surprise then that the UC Patent Amendment adds after "my obligation to assign" the words "and do hereby assign" to the 1997 Patent Agreement, to force the automatic assignation of patent ownership to the University and (in the words of the Patent Acknowledgement FAQ) to address "the problem created by the Supreme Court decision". Three other wording changes add additional, minor clarifications to the Patent Agreement. It is the "do hereby assign" that we should be most concerned about.

The University is being exceptionally stern in its requirement to sign this amendment. In addition to its all-caps email subject line, we are told that these changes are necessary "to meet our legal obligations to sponsors of research and licensees of UC" and that "even federal contracts and grants impose invention obligations." We are also told that "As a condition of employment or visitor status, you are also required to sign additional documents requested by the University for the purpose of confirming the University's rights regarding intellectual property you create." Finally, the veiled threat: "If you are a visitor, you are also required to sign the Amendment as a condition of your access to University research facilities or contracts, grants or other funds through the University." Sign now, or you're out!

Let's look at these points in turn:

  1. "Meeting our legal obligations"
  2. "You are required to sign additional documents"
  3. "You are required to sign as a condition of your access to University research facilities, grants or other funds".
  4. Summary

1. "Meeting our legal obligations"

With regard to federal funding, the University's claim here sounds like overreach. The Stanford vs. Roche case involved a federally-funded project, and the Supreme Court clearly stated that the Bayh-Dole Act wasn't an issue. So what "legal obligations" were at stake in this case? It certainly does not appear that Stanford has been penalized by NIH, having received $413,486,858 in 2010, the 12th-highest institution in total funding that year (note: UCSD was 9th). Now, there may be behind-the-scenes agreements between UC and private donors that would constitute failure to meet a legal obligation, but shouldn't we know about these anyways? In short, the University does not make an adequate case that it would fail to meet its legal obligations without the Amendment.

[share your view]

2. "You are required to sign additional documents"

This sounded like a very scary line in its implications, but I took a look at the 1997 agreement and indeed, there it is:

"I shall execute any documents and do all things necessary, at University's expense, to assign to University all rights, title and interest therein and to assist University in securing patent or analogous protection thereon."

However, this is only "In the event any such invention be deemed by University to be patentable or protectable by an analogous property right, and the University desires…to seek patent or analogous protection therein". In other words, the University has to identify a specific invention as something they want to protect, and are willing to do the paperwork to get the patent for; then it can make us sign whatever form they need to take all rights. But here there is no invention, just the potential for future invention. Hence, the requirement to sign does not appear to apply. If it did, the University could change the Patent Agreement any time they wish (and indeed, anything they deem to be related to patent protection), and we would be forced to agree without recourse. This seems like a road we don't want to take.

[share your view]

3. "You are required to sign as a condition of your access to University research facilities, grants or other funds".

This statement suggest that visitors who refuse to sign would not be allowed to make use of labs, apply for grants, check their email, etc.; they would effectively be out of a job. This doesn't sound like the cozy University-supported creative environment we'd like to think we reside in, and I'm sure unions such as the UC/AFT would be quick to condemn such heavy-handed dealings if applied to Research Staff. Perhaps cognizant of this, the online Amendement FAQ provides no straight answer to the question "What happens if I don't sign this Amendment?" It would be helpful to know the full consequences of failing to sign, purposefully or otherwise.

[share your view]

4. In summary,

I personally do not feel the University has made its case that researchers in the UC are obliged to sign the Patent Amendment that, contrary to its claims, does infringe on the rights of researchers by automatically assigning title. It is a legal maneuver to circumvent a protection to patent assignment now made writ by the Stanford vs. Roche Supreme Court decision, without going through the usual route of negotiating with the Academic Senate or research unions. Moreover, the University is being unusually pushy in requiring us to sign the Amendment, without adequately describing what legal or employment ramifications should we as individuals or the University at large fail to do so. Perhaps the administration already knows that "the only problem, of course, is whether Universities have the bargaining power to require its employees to sign the more stringent contracts." [patentlyo]

Now I must admit, for me this is an issue of principle rather than substance, as my research does not produce much in the way of patentable results. Moreover, my baseline reaction is to do everything I can to support the University and keep it a financially viable, public institution. Had this come from the Academic Senate, I might have been quite willing to sign it without much review. But recent actions by the administration, such as giving lawyers pay raises while it raises student tuition, make me question whether they have they the best interests of the entire University in mind, or merely their own.

Posted by Gerald Barnett: Dec 16, 2011 4:49 PM

I'd like to clarify one point in this post, which does a great job of drawing attention to the issues. The Stanford v Roche case did not turn on a present assignment trumping a promise to assign. There were other factors that the courts noted. First, Stanford had a policy that provided that inventors owned their inventions “whenever possible”. Thus, if Bayh-Dole did not require university ownership (which it clearly doesn't), then Stanford's own policy allowed personal ownership. Second, Stanford knew of the consulting obligations. These were perfectly valid under Stanford's off campus-policy, no university resources. It would not have mattered if Stanford had had a present assignment statement in its patent agreement–that present assignment would have been out of scope for the work Stanford encouraged Dr. Holodniy to undertake at Cetus. The present assignment was merely the only valid assignment in play. Stanford's later effort to obtain assignment failed because Holodniy had nothing remaining to assign.

The problem arises when Holodniy comes back to Stanford and joins research within scope of his obligation to Cetus. The case hinges on whether Stanford can use a federal law to void a private deal. Clearly, the justice of the situation is that Stanford should not be permitted to void the deal. The UC response reads as if the situation to be addressed is how better to reneg on deals to make money suing erstwhile collaborators who respond poorly to a shakedown.

Moving to a present assignment strategy at a university introduces uncertainties in title, does not address matters of scope, may create substantial liability exposure for the university, eliminates the role of judgment based on circumstances in evaluating university interests, and leads to invention accumulation without commitment to development. A present assignment doesn't do anything for the situation in which someone joins university research with valid, personal obligations to another party. It's a bad response to the ruling in the case, a failure to understand a situation worth addressing, and a bad thing for a university to be doing when it comes to innovation.

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