Jun 062011

Today the Supreme Court affirmed (decision here) the Federal Circuit in Stanford v. Roche, holding that the inventor’s agreement with Cetus, acquired by Roche, trumped Stanford’s agreement. I found it interesting to look at the differences in each court’s focus.

The federal circuit reasoned that the “agree to assign” language of the earlier assignment to Stanford reflected “a mere promise to assign rights in the future,” while the “do hereby assign” language of the VCA “effected a present assignment of Holodniy’s future inventions to Cetus.” The court concluded that “Cetus’s equitable title converted to legal title no later than the parent application’s filing date” in 1992, and takes priority over Stanford’s earlier assignment agreement.

The Supreme Court, on the other hand, did not really discuss this distinction of assignment language and instead took a more historical perspective on the patent laws. Chief Justice Roberts and the majority held that the inventor has traditionally been vested with ownership, not the employer. The Bayh-Dole Act does not automatically vest title to federally funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions. Simply put, Stanford’s position did not make the Bayh-Dole Act and the Patent Act compatible. A reasonable interpretation of Bayh-Dole could be made that did not conflict with patent ownership laws.

The opinion addressed the arguments raised by amicus briefs supporting Stanford’s position. Many such amici claimed that the language of these assignments has no substantive difference when a particular technology is not being assigned. The Supreme Court had none of this argument, especially when paying careful attention to the words of the statute. The phrase referring to inventions “of the contractor” would be superfluous under Stanford’s definition since inventions would necessarily incorporate those of the contractor if Stanford was correct. Another provision of the statute gave the inventor the ability to elect to retain title, further bolstering Roche’s argument that the Bayh-Dole Act did not mean to disrupt centuries of patent law ownership doctrine.

Also interesting is what the Stanford amici argued in regards to equitable rights. Ownership of patents is an interesting topic. While finding its origins in the Federal patent law, patents find legal title through state law. Enovsys LLC v. Nextel Commc’ns, Inc., 614 F.3d 1333, 1342 (Fed. Cir. 2010). The argument that Stanford used was that no matter how worded, an assignment of a future, as yet unconcieved, invention transfers only an equitable right to an assignment when the invention comes into existence. This argument was not addressed very clearly by the majority. Justice Breyer brought this point up many times in his dissent that the conveyance of title to this patent was equitable title, not legal title. It will be interesting to see in the future if Breyer has a point here.

In conclusion, patents are a unique form of property. While finding its origins in the Federal patent law, patents find legal title through state law. Enovsys LLC v. Nextel Commc’ns, Inc., 614 F.3d 1333, 1342 (Fed. Cir. 2010). As under the Constitution and the Patent Act, initial title to the patentable inventions vests only in natural person inventors. Finally, call me a patent geek if you wish, but I love it when opinions include quotations of § 101: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter . . . may obtain a patent therefor.” 35 U. S. C. §101.

 Posted by at 9:18 am