Why IP Assignment Agreements Matter, Supreme Edition

The Supreme Court schooled Stanford University in legal writing in Trustees of Stanford University v. Roche Molecular Systems, ruling that sloppy drafting of an intellectual property assignment agreement required Stanford to share ownership of an important patent for HIV detection technology.

As summarized in an earlier post, the Federal Circuit Court of Appeals dismissed Stanford’s patent infringement lawsuit against Roche because a poorly drafted intellectual property assignment agreement signed by one of Stanford’s researchers in effect made Roche a co-owner of the patent and thus immune from a patent infringement lawsuit. The Stanford agreement said that the researcher “agree[d] to assign,” his rights in any inventions, i.e. at some time in the future, but that was trumped by a later assignment that the researcher signed with Roche’s predecessor, but which was phrased in the present tense (“do[es] hereby assign”), to take immediate effect.

Before the Supreme Court, Stanford’s argument focused not on the language of the assignment agreement, but on the Bayh-Dole Act, which regulates intellectual property ownership and commercial exploitation of inventions created as part of a federally funded project. Stanford argued that its HIV research project was subject to Bayh-Dole, and that the law vested ownership of the invention directly in Stanford, so that the researcher had no rights to assign to Roche.

The Supreme Court disagreed, ruling that patent law had traditionally vested initial ownership of inventions in inventors, regardless of whether they invented on their employers’ payroll. (For that reason, most employers make sure to have their researchers sign assignment agreements that transfer ownership of all inventions upon creation to the employer.) The Court admitted that the Bayh-Dole Act was not a model of clarity on the issue of initial ownership of inventions, but ruled that a statute would need to directly and unambiguously vest ownership in the research organization to change the “inventor owns” rule, but Bayh-Dole had not.

Takeaway: as we said back in January, 2010: “A lot of folks DIY basic contracts like employment agreements by cutting and pasting poorly drafted templates from the Internet. A lot of other folks sign non-disclosure and similar basic agreements without a glance at the actual contents. This case shows why neither is a good idea.” If you are a federally funded research organization subject to the Bayh-Dole Act, it would be wise to review your IP assignment agreements for compliance with the Stanford decision.

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