Stanford v. Roche – check your employment agreements

Stanford v. Roche BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY v. ROCHE MOLECULAR SYSTEMS, INC., 563 U.S. _____ (2011)

Do you have the rights you think you do? Recently, the Supreme Court affirmed that the Bayh-Dole Act did not vest title in Stanford even though its own employee made an invention and assigned rights to Stanford for a Stanford-filed patent application.

In Stanford, an employee of Stanford signed an agreement wherein he “agree[d] to assign…” his inventions to Stanford. At the time, Stanford was collaborating with a company called Cetus, and the Stanford employee began working at Cetus’s facility. The Stanford employee then signed an agreement with Cetus wherein he stated: “I will assign and do hereby assign” his inventions to Cetus. After working at Cetus’s facility for a while, the employee returned to Stanford and later participated in filing a patent application with other inventors, and then signed an assignment of his rights under the patent application to Stanford. Upon issuance, Stanford sued Roche (who had become the successor-in-interest to Cetus’s rights). Roche argued that it was a co-owner of the patent by virtue of the “I will assign and do hereby assign” language in the Cetus agreement.

The Federal Circuit had previously held in FilmTec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (Fed. Cir. 1991) that an assignment presently transferring rights in a future invention was effective to transfer legal title to that invention once it came into existence. Under FilmTec, the assignment to Cetus was effective to transfer legal title to the patent no later than the patent application’s filing date and therefore Stanford’s employee had nothing to give to Stanford when he later executed the assignment to Stanford that he had agreed to make. Stanford did not challenge FilmTec, but argued that the Bayh-Dole Act vested title in Stanford despite the assignment to Cetus. The Supreme Court held that it did not.

Justice Breyer filed a dissenting opinion that was joined by Justice Ginsburg expressing doubt about the Federal Circuit’s holding in FilmTec, stating that it appeared to him that even an agreement “to hereby assign” something that did not yet exist resulted at most in a transfer of equitable title rather than legal title. Justice Sotomayor filed a concurring opinion to state that she understood the majority’s opinion not to foreclose a future challenge to the holding in FilmTec. With three Justices keeping the door open for a future challenge to FilmTec, the validity of FilmTec is sure to be the subject of further litigation.

Stanford v. Roche – check your employment agreements

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