The U.S. Supreme Court held that the Bayh-Dole Act does not override U.S. patent law’s maxim that an individual inventor will own a patent unless the inventor expressly assigned the patent to another entity.
In Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems Inc., the Court reviewed a Federal Court decision in which a Stanford University researcher signed an agreement that obligated the researcher to assign his inventions to the University. However, the agreement did not by itself automatically assign inventions to the University. (For details about the agreement in question and the Federal Circuit’s analysis of the agreement, see my previous blog post on the Federal Circuit decision.) Thus, the Supreme Court considered whether the inventor was permitted to assign the invention to a third party, even though the invention was created during federally funded research.
Passed in 1980, the Bayh-Dole Act states that research institutions, federal contractors, small businesses and others who develop technology with the support of federal funding may retain ownership of that technology. In return, the developer is expected to file for patent protection and make the patents available through commercial licensing.
The court held that the Bayh-Dole Act is a permissive statute, and not a restrictive one:
The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have. Such a provision makes sense in a statute specifying the respective rights and responsibilities of federal contractors and the Government.
The court also issued a cautionary note for private companies that have similar language in their employee agreements by stating: “We have rejected the idea that mere employment is sufficient to vest title to an employee’s invention in the employer.”
The Court’s decision should prompt any business that is engaged in R&D to review its employee and consultant agreements. In the agreements, developers should not merely “agree to assign” inventions. Instead, the agreements should be sufficiently effective to automatically assign the inventions to the company. Neither the Bayh-Dole Act nor U.S. patent law will protect a company when its own contracts are poorly drafted.
This case underscores the vast differences between copyright and patent law; particularly considering the federal-funding angle, I somewhat expected the Court to rule in favor of the employer. Anyway, this patent litigation should serve as a lesson (especially to universities) that it’s not always enough to reduce agreements to writing; you also have to make sure that such agreements are legally airtight.