Earlier this week, the Supreme Court heard oral arguments for Leland Stanford Junior Universotu v. Roche,  a case that will clarify a 1980 law that governs the ownership of patents held by universities that rely on federal research funds.

The case refers back to 1988, when Mark Holodniy, then a Stanford-employed researcher, developed technology that would ultimately lead to one of the first AIDS tests. It's used to monitor the effectiveness of AIDS treatments, using polymerase chain reaction assays to measure the level of hormones in the body. However, while Holodniy was employed by Stanford, he also signed a research contract with a private pharmaceutical company to work on a similar projects. While the patents were originally granted to Stanford, Roche has been selling the technology to hospitals since 1996.

In 2005, Stanford took Roche to a federal district court in San Francisco, arguing that Roche had infringed on the school's patents. Stanford won the case, but an appeals court reversed the decision. On Monday, the case was presented in Washington to the Supreme Court. Lawyers for Roche Molecular Systems, Inc. argued that Roche's contract with the private company trumps any existing agreement with Stanford. In a broader view, the Supreme Court will decide which interests to protect: those of the government (in this case the university), or those of private businesses.

While Stanford has maintained that it seeks the intellectual property for the patent—and not the cash it creates—it's clear that lucrative patents can be a huge money-maker for universities. "Not all university inventions make a lot of money," University of California-Davis law professor Peter Lee told KQED Radio's The California Report, "but some do. So there's potentially millions of dollars at stake in the outcome of this case."

According to Bloomberg, the "case may pit universities and the federal government against companies." The article also notes that the Obama adminstration, MIT, and the Association of American Universities are backing Stanford.

Roche, based in Switzerland, argued that universities were making "hyperbolic" claims about the impact of the ruling. Bloomberg quotes the company as arguing that: "Stanford's desire for private monetary gain has nothing to do with clarity of title or bringing valuable scientific discoveries to the public...On the contrary, Stanford's effort to exclude Roche from practicing the patented invention would reduce opportunities for the public to benefit from the invention."

More than 25 organizations, private companies, and individuals have offered amici curiae, or legal opinions, to the court. In one, jointly filed by the Intel Corporation, Eli Lilly and Company, and Johnson and Johnson, among others, the private companies asserted that if Stanford was granted patent rights, it could reduce opportunities for the public to benefit from the invention.

"Stanford's novel interpretation of the Act would discourage collaboration by allowing universities and other contractors to engage in predatory behavior," they wrote in the brief. "Under Stanford's view, for example, a university could attempt to escape its contractual obligations and terminate a commercial collaborator's rights in an invention simply by sprinkling the research project with a modest amount of federal funds."

But, the Obama administration, as well as a number of high profile academic organizations have urged the court to reverse the 2009 decision. They argue that federally funded research projects are "used to advance the public interest," as opposed to corporate projects, which are used in the pursuit of maximum profit. U.S. Solicitor General Neal Katyal said that siding with Roche would frustrate "the government's ability to protect the taxpayers' multibillion-dollar investments in research and development."

A decision is expected in June.