Last week the United States Supreme Court clarified the respective invention ownership rights between federal contractors and their employee-inventors under the Bayh-Dole Act (35 U.S.C. §§201(e), (c), 202(a)) (the “Act”) in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. (Sup. Ct. June 6, 2011). While blandly holding that the Bayh-Dole Act of 1980 does not automatically vest title to federally-funded inventions in federal contractors, the Court left intact a Federal Circuit rule that Justice Breyer in dissent characterized as “a technical drafting trap for the unwary.” The trap is sprung by the slight linguistic differences between the phrases “agree to assign” and “do hereby assign.” This case has implications on compliance with federal contracts and the practice of technology transfer, and should increase the scrutiny given invention assignment agreements between acquisition targets and their employee inventors.
In Stanford v. Roche, the Court analyzed the allocation of rights to “subject inventions,” which are defined under the Act as an “invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement.” Stanford argued the Act divests the contractor’s employees’ rights to their inventions made in the performance of work under a federal funding agreement, and assigns them to the federal contractor employer, unless they have expressly elected otherwise. The Court disagreed, holding the Act does not contradict legal precedent that allows employee inventors to retain title to their subject inventions absent an express assignment otherwise, and thus concluded that the invention in question was not “an invention of the contractor” and therefore not a “subject invention” to which Stanford could retain title.
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