Presented by: David Rook with Carl Ruoff and Michael Hoffman

1. Presented by: David Rook with Carl Ruoff and Michael Hoffman Lessons from Stanford v. Roche

2. 1. Background of Dispute 2. Federal Circuit Decision 3. Stanford Petitioning for Rehearing En Banc 4. University Perspective 5. Inventor Perspective 6. Questions Lessons from Stanford v. Roche

3. Holodniy and two other Stanford researchers engaged in research to quantify HIV and correlate the measurements to therapeutic effectiveness of antiretroviral drugs using PCR techniques. 1988 - Holodniy signs onto Stanford’s IP policy, which states “I agree to assign … right, title, and interest … in inventions...” 1989 – Holodniy goes to Cetus (later Roche) to learn polymerase chain reaction (“PCR”) techniques. Holodniy signs a Visitor’s Confidentiality Agreement with Cetus that “hereby assign[s] to Cetus, my right title, and interest in … inventions...” 1. Background of Dispute

4. This research results in three patented methods – not on PCR per se. 1991 - Roche purchases Cetus. 2000-2004 - Stanford attempts to negotiate an exclusive license of the patents to Roche. Background of Dispute (cont.)

5. Stanford alleges Roche’s HIV detection kits infringe the patents. Roche responds: - Stanford lacks standing to bring suit - Roche possesses ownership, license or shop rights of patents - Patents invalid District court ruled: a) patents invalid for obviousness; and b) denied Roche’s possessive assertions of ownership, etc. Both Stanford and Roche appealed. Background of Dispute (cont.)2005 - Stanford Files Patent Infringement Suit

6. Note: not an en banc decision. A. The Parties’ Patent Rights: Roche precluded by CA statute of limitations from obtaining a judgment of ownership. But, Roche can assert affirmative defense that Stanford does not own patents = no standing. 2. Federal Circuit Decision

7. Federal Circuit law resolves “the question of whether contractual language effects a present assignment of patent rights, or an agreement to assign rights in the future.” “Agree to assign” means “a mere promise to assign rights in the future, not an immediate transfer of expectant interests.” That is, a subsequent written instrument is required. “Do hereby assign” means “a present assignment of … future invention.” B. Chain of Title

8. “Once the invention is made and application for patent is filed … legal title to the rights … would be in the assignee” by operation of law. “[A]ssignor-inventor would have nothing remaining to assign.” B. Chain of title (cont.)Competing Agreements

9. Stanford bona fide purchaser per 35 USC §261? Stanford argues they were a subsequent to Cetus (Roche) good faith purchaser when Holodniy assigned to Stanford. On the facts, Court says no. Stanford had notice of Holodniy’s work with Cetus (Roche) even if Stanford lacked specific notice of the Cetus (Roche) agreement. Holodniy’s Cetus (Roche) assignment in breach of Stanford agreement creates cause of action against Holodniy – not Cetus (Roche). C. Additional Arguments

10. Bayh-Dole Act negates Holodniy assignment to Cetus? On the facts, Court says No. Court agrees - Stanford had right of second refusal after Government refrained from exercise of rights. But … “Act did not automatically void Holodniy’s assignment to Cetus.” Continuing … “[W]e see no reason why the Act voids prior contractual transfers of right.” C. Additional Arguments (cont.)

11. “Standing to sue” – party has sufficient stake in order to bring suit. “Stanford cannot establish ownership of Holodniy’s interest and lacks standing to assert its claims of infringement against Roche.” D. Stanford Lacks Standing

12. Katharine Ku, Director of Office of Technology Licensing at Stanford, informed us that they are petitioning for rehearing en banc by the Federal Circuit. Arguments: Permissive “will assign” language in Stanford’s IP policy is due to Bayh-Dole, i.e., cannot take title until know government is not interested. Patents cover quantifying HIV and correlating the measurements to therapeutic effectiveness of antiretroviral drugs using PCR techniques. Not, PCR techiques per se - too tenuous a relationship with matter learned at Cetus (Roche). 3. Stanford Petitioning for Rehearing En Banc

13. If university prefers an agreement to assign future inventions, i.e., believe Bayh-Dole requires it: Where possible, consider strengthening policing of inventor activities with other entities and/or strengthening IP policy and agreements. Where possible, consider increasing inventor obligations to inform the university. Where possible, consider establishing first right of refusal for all inventions. 4. University Perspective

14. (Cont.) Consider requiring inventors to disclose university IP policy and agreements to any third-party involved in research. Consider requiring inventors to submit all other agreements before executing, if manpower allows. 4. University Perspective (cont.)

15. B. If consistent with philosophy and IP policy of the university, IP policy and/or inventor agreements may have a present assignment of future inventions subject to Bayh-Dole provisions. Query: What if Stanford had a present assignment of future inventions in its agreement? 4. University Perspective (cont.)

16. C. Review Third Party Agreements Material Transfer Agreements should clearly state ownership rights. Customize standard MTAs? Require third-parties (that university collaborates with) to submit all documents to university for review – including but not limited to any documents to be signed by inventors. When university not directly involved, but third-party is known – place 3rd party on notice of ownership/assignment rights, requirements of the third-party, and requirements of the inventor. Seek to establish uniform agreements. 4. University Perspective (cont.)

17. Be aware of obligations to school in employee agreement and IP policy. Do not sign any documents without university’s review and/or approval in accordance with the IP policy. You risk personal responsibility if you sign these documents! 5. Inventor Perspective

18. Thank you. David Rook, Carl Ruoff and Michael Hoffman Hoffman Warnick LLC 75 State Street, 14th Floor Albany, NY 12207 (518) 449-0044 www.hoffmanwarnick.com For a copy of this presentation, please contact: hwemail@hoffmanwarnick.com 6. Questions