James McEwen to Moderate Panel on the Impact of Stanford v. Roche on Private Party Transactions

James McEwen will be moderating a panel on The Impact of Stanford v. Roche on Private Party Transactions: Inventor Ownership and Government Rights Under Bayh-Dole in a webinar sponsored by the American Bar Association. The webinar will take place on September 28, 2011 at 1 PM Eastern Time.  As described in the webinar description: The Bayh-Dole Act is often held up as one of the most important pieces of legislation governing patent rights.  Resulting from collaborations between private institutions and the government, it is a model on which other countries have based their attempts to promote technology transfer between government and the private sector. In Stanford v. Roche, the Supreme Court upheld the Federal Circuit and found that Bayh-Dole could not be used by a university to claim ownership in a subject invention where the inventor had previously and validly assigned rights to a third party. However, this holding has left a myriad of unanswered questions as to inventor’s rights versus those of The Government under a government contract, as well as questions fundamental to how assignments are interpreted.  This program will address the decision itself, the history of Bayh-Dole, the policy questions raised in the decision, and the practical consequences to both government and commercial contractors.

For additional information or how to sign up, please visit the webinar website at: http://apps.americanbar.org/cle/programs/t11tsv1.html

9th Circuit Finds Failure to Report Subject Inventions Not a False Claim under False Claims Act

In Cafasso, United States ex rel., v. General Dynamics C4 Systems, Inc., 637 F.3d 1047 (C.A. 9 2011), Mary Angela Cafasso brought a qui tam action in Ninth Circuit Court of Appeals alleging False Claims Acts (“FCA”) violations and retaliation by General Dynamics C4 Systems, Inc. (“GDC4S”).  Ms. Cafasso worked as the chief scientist/technologist at GDC4S, a technology company that services the military. GDC4S was a participant in the Advanced Telecommunications & Information Distribution Research Program (“ATIRP”) and as a result had contracted with the Army to assign to the United States certain rights to “subject inventions” developed in performance of military contracts. These rights included a royalty-free right to use or have used on its behalf subject inventions, as well as the right to allow the Government to take over prosecution of the subject invention should GDC4S not pursue patenting of the subject invention.  ATIRP required from GDC4S timely disclosure of applicable subject inventions to the government to ensure these rights are secured. Ms. Cafasso worked in the office that identified, documented, and protected GDC4S’s intellectual property. Her responsibilities included ensuring that GDC4S complied with ATIRP’s requirements by, among other things, disclosure of subject inventions. Continue reading

Supreme Court Confirms Ownership Under Bayh-Dole

Supreme Court Confirms Established Rule That Inventor is Initial Owner of Invention    

In Bd. of Trs. of the Leland Stanford Junior Univ. v. Roche Molecular Sys., 179 L. Ed. 2d 91;79 U.S.L.W. 3475 (2011), Stanford owned patents related methods for quantifying Human Immunodeficiency Virus (HIV) in human blood samples using polymerase chain reaction (PCR) and correlating those measurements to the therapeutic effectiveness of antiretroviral drugs (hereinafter the PCR patents). The inventors, Mark Holodniy, Thomas Merigan, and David Katzenstein, were Stanford researchers who signed an agreement with Stanford agreeing to assign their rights to inventions to the university.           

One of the inventors, Mark Holodniy, later signed an agreement with Cetus, a private company, as a condition of working on PCR.  The Cetus agreement required the signor to “hereby assign” all present rights to Cetus at the time of the agreement, as well as “title, and interest in each of the ideas, inventions and improvements” that he may devise “as a consequence of” his work at Cetus.  Subsequent to signing the agreement, Mr. Holodniy returned to Stanford to continue the research, and reported his invention as a subject invention to Stanford as being within a funding agreement with National Institutes of Health.  It is unclear from the record as to whether Mr. Holodniy conceived or first actually reduced to practice the invention while at Cetus, but it is clear that the patent application was filed as if the invention were first conceived and first actually reduced to practice at Stanford and that Cetus was not aware of this filing. Inventors Thomas Merigan, and David Katzenstein did not work at Cetus and there is no issue as to whether their assignment to Stanford was affected by Mr. Holodniy’s agreement with Cetus. Continue reading

Feature Comment: Supreme Court To Decide How Technology Licensing Will Proceed Under Bayh-Dole

By James G. McEwen[1]

I.        Brief overview of Bayh-Dole Act

The Bayh-Dole Act[2], through Federal Acquisition Regulations and/or 37 CFR 401, applies to the typical government funding agreements: procurement contracts, grants, and cooperative agreements.[3]  While seemingly an obscure act, Bayh-Dole is often held up as one of the most important pieces of legislation governing patent rights resulting from collaborations between private institutions and the Government, and is a model on which other countries have based their attempts to promote technology transfer between Government and the private sector.

Under Bayh-Dole, small businesses, universities, and other non-profit organizations may elect to retain title to subject inventions rather than conferring title to the Government.[4]  In return, the Government receives a license right to the subject inventions to use for Government purposes (including procurement).[5]  Pursuant to executive order, these same rights are conferred on large contractors[6] to the extent permitted by law.[7]   Thus, under a normal funding agreement, a contractor is entitled to title in their subject inventions.

At the same time, not all inventions are subject inventions.  Thus, whether the Government obtains rights under Bayh-Dole is entirely dependent on how the invention was developed. Specifically, the Government only obtains rights to those inventions accruing under funding agreements, where the invention is first conceived or actually reduced to practice.[8]  Thus, unless the work is being performed outside of the United States,[9] the Government typically only obtains a license right as opposed to ownership to the subject invention.[10]  Importantly, this definition specifically disclaims certain inventions: i.e. those which are outside of the statement of work of a funding agreement.  As such, the Bayh-Dole Act only governs rights where the invention is an “invention of the contractor” which was “conceived or first actually reduced to practice in the performance of work under a funding agreement.”[11] Continue reading

Feature Comment: Traps for the Unwary: An Overview of Patent Issues For The Commercial Company Entering Into Federally Sponsored Research and Development Projects

By James G. McEwen[1]


For the uninitiated, contracts and agreements with the Federal Government present a dizzying array of acronyms and terms which seemingly add a layer of confusion above the already-complex subject of patent rights for parties under research and development agreements.   However, it is important to realize that, generally, contracts with the Federal Government are similar to commercial contracts (i.e., consideration, offer, and acceptance).  Thus, while generally similar in terms of appearance, the difference in a government contact becomes apparent when you realize one important fact: the contract is with the rule maker who may or may not have consented to suit according to the particular circumstance.   As a result, a Government contract can be thought of in terms of a controlled taking since the Government creates laws that govern all contracts, and is therefore in a better position as a contracting party to create mandatory clauses, and to ensure their inclusion in all contracts.

For instance, in a contract between private parties, if one party fails to include a clause, that clause is not part of the contract.  In contrast, since certain clauses are required by law, where a Government contract is concerned, omitted clauses can be included as if in the contract since the contract is otherwise ultra vires. [2]

In the context of intellectual property, many intellectual property rights are governed by such laws or by strong Federal procurement policies, and are thus “read in” to all contracts.[3]  Therefore, unlike commercial contracting, one cannot assume that since a Government contract lacks a provision that the missing provision will not be later automatically included.

This requirement is especially strong in the context of intellectual property.  For instance, when inventions are created or made under a procurement agreement with the Government, such inventions are generally referred to as “subject inventions.”  These inventions are defined by law in the Bayh-Dole Act,[4] which requires Government rights in certain inventions made in conjunction with a Government contract.[5]  Similar statutes apply in the context of other intellectual property, most notably for technical data for contracts with the Department of Defense[6].  However, since patents represent a core protection for many companies whose existence is based on exclusive use of knowledge and who are interested in working with the Government, it is important for these companies to recognize the Government’s requirements for patents, and how to account for these requirements in a manner that fits their particular marketing model. Continue reading