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U.S. Supreme Court Rules Rights To Invention Resulting From Federal Grant Belong to Inventor
- 7/26/2011

Recently, the U.S. Supreme Court ruled in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. that rights to a patent or invention do not vest automatically in an institution simply because that institution receives federal grant dollars in connection with the invention.  Absent an agreement to the contrary, the Supreme Court upheld the Federal Circuit's conclusion that patent rights vest automatically to the inventor.

In this case, the inventor of an HIV testing kit signed an agreement with Stanford University, and agreed to assign his rights to inventions resulting from his employment with Stanford.  The inventor also executed another agreement with a company, Cetus, in which he actually assigned his rights to inventions.  The Supreme Court held that the inventor’s agreement with Stanford amounted to a promise to assign interests in the future, while his agreement with Cetus amounted to a present transfer to Cetus, which included the HIV testing kit.  Thus, Cetus had an interest in the HIV testing kit and could not be sued for patent infringement.

Central to the case was a federal law, known as the Bayh-Dole Act, which provides that patent rights from federally funded inventions may be retained by contractors.  During the case, Stanford University argued that the Bayh-Dole Act requires the inventor’s interest in the HIV testing kit vested solely in the university on the grounds that the invention stemmed from federally funded research.  The Supreme Court, noting that in the U.S. an “inventor owns the rights to his invention,” reasoned that Stanford’s conclusion is too restrictive, and would result in transfer of ownership in inventions even if only a single dollar of federally funded grant money was received.  Thus, the Court decided the case on contractual grounds. 

This case is generally viewed as one that is favorable to individual inventors and employees of federally funded institutions.  The decision may also serve as a warning for drafters of agreements that contain assignment clauses.  Had the agreement with Stanford included a provision for a present transfer of inventive rights, the outcome of this case may have been very different. 

Ostrolenk Faber LLP recommends that you always consult with an attorney before signing any agreement, particularly those that include a provision related to intellectual property.  Feel free to contact Ostrolenk Faber LLP (email@Ostrolenk.com) with any related questions.

For a complete copy of the Supreme Court decision, click here.