Government Contracts Monitor

Obtaining and Retaining Rights In Federally Financed Inventions after Stanford v. Roche

April 9, 2012

By: Eric Whytsell

Last June, the United States Supreme Court made clear in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc.,  131 S. Ct. 2188 (2011), that the Bayh-Dole Act does not automatically vest ownership to an invention discovered with the aid of federal funding in the hands of a federal contractor, in that case, a university.  (Click here to read Jackson Kelly’s previous article discussing the Roche decision.)  Rather, the Bayh-Dole Act applies only after the inventor has assigned his or her rights to the contractor, thereby creating the contractor’s rights in and to the invention.  In other words, the Court reaffirmed the long-standing principal of patent law that the rights in an invention belong solely to the inventor who is free to assign those rights to another party, regardless of whether federal funds were used by the inventor in discovering or conceiving of the invention. 

Now that government contractors have had an opportunity to digest the significance of the Roche decision and its impact on their existing patent rights, they should be considering what they need to do to obtain and protect their ownership rights in their employees’ inventions going forward.  In particular, contractors should:

• Require “Present” Assignments of Rights:  To ensure a valid assignment of employees’ rights in inventions to their employers, assignment documents should require a “present” conveyance of rights rather than a promise to convey such rights in the future.  Institutions should review their existing assignment documents and, where necessary, revise them to substitute language requiring that employees “will assign and hereby do assign” all of their rights in and to their inventions to the institution.  This approach avoids reliance on the sort of promises or agreements to assign that Roche warns are likely insufficient to effectively convey the employees’ rights.  Despite the practical difficulties involved, updating existing agreements and establishing new assignments with the proper language should be accomplished at the earliest opportunity practicable.  In this regard, companies should focus on “low hanging fruit.”  For example, there is no need to wait until all existing agreements are appropriately updated before inserting proper assignment language into standard employment agreements used for new hires.   
• Obtain and Promptly Record Patent-Specific Assignments:  Prior to filing a patent application with the United States Patent and Trademark Office (USPTO) relating to an employee-invented technology, an institution should require the inventor to execute an assignment specific to the technology described in the patent application.  Such an assignment reaffirms the company’s ownership, as the assignee, of that technology and should be recorded with the USPTO promptly after the filing of the patent application.  (Note that applicants must disclose to the USPTO any federal funding used in developing the subject technology.)  Contractors should also promptly record such assignments with the USPTO to ensure that any subsequent purchasers or mortgagees of the assigned rights are put on notice of the true owner of the rights.  See 35 U.S.C. § 261.  
• Institute Clear Policies Governing Private Consulting Arrangements:  Some contractors permit their employees (or, more frequently, independent contractors) to provide consulting services to outside entities.  Policies should be put in place or be revised to, for example:
  • Prohibit the employee’s or independent contractor’s execution of third party consulting agreements without prior approval by the company; 
  • Preclude the assignment of any technologies to which the contractor may be able to claim ownership under its policies;
  • Require employees or independent contractors to include in any consulting agreements they sign an acknowledgment that the employee is subject to company policies and that, in the event of a conflict between the company policies and the consulting agreement, the company’s policies control; and
  • Forbid the disclosure of information relating to ongoing research at the company that may be confidential. 

Further, even after such policies are clear, contractors must be proactive in training their employees (and independent contractors) and promptly and consistently enforcing those policies.

Eric Whytsell andRyan Aaron are the attorneys responsible for the content of this article.