Not necessarily. According to U.S. law, inventors are presumed to be the original owners of a patent. As a consequence, employers generally require their employees and contractors to assign all ownership rights in their inventions, and in the related patents, to the employers.
Assignments of patents are regulated by 35 U.S.C. 261. However, the language of an assignment must be chosen very carefully in order to be enforceable, as the Court of Appealsfor the Federal Circuit (CAFC) reminded us in Stanford v. Roche, 2009 WL 310809 (Fed. Cir. 2009).
The facts of Stanford begin in 1988, when Mark Holodniy joined the Department of Infectious Disease of Stanford University as a Research Fellow working on a HIV research project, which was funded by the National Institute of Health (NIH). Holodniy signed a Copyright and Patent Agreement (CPA) with Stanford, where he engaged to “agree to assign or confirm in writing” to Stanford and/or the NIH all “right, title and interest” in inventions that he would develop as a consequence of his employment.
As part of his research, in 1989 Holodniy began regular visits to Cetus. That company had developed polymerase chain reaction (PCR) techniques to measure RNA. Cetus required Holodniy to sign a Visitor’s Confidentiality Agreement (VCA) stating that he “will assign and do[es] hereby assign to CETUS, my right, title, and interest in each of the ideas, inventions and improvements” devised “as a consequence” of his work at Cetus. The PCR business of Cetus was acquired by Roche in 1991.
Holodniy’s research produced a method that used PCR to measure RNA from HIV in the blood plasma of infected humans taking certain drugs. In 1992, Stanford filed a patent application related to that invention, which became the priority for three later patents, all assigned by Holodniy to Stanford in 1995.
Stanford also filed an invention disclosure statement with the NIH and in 1995 formally notified the U.S. Government that it elected to retain title to the inventions in the three patents under the Bayh-Dole Act, 35 U.S.C. 200-212. After unsuccessfully trying to negotiate licenses to the three patents with Roche, Stanford filed suit alleging that HIV detection kits produced by Roche infringed its patents.
One of the defenses raised by Roche was that Roche was the true owner of the three patents. TheCAFC found that the contract language “agree to assign” in the CPA of 1988 was only a mere promise by Holodniy to assign future rights to Stanford and not an immediate transfer of rights. Therefore, Stanford had not immediately gained title to Holodniy’s inventions as a result of the CPA.
Instead, the CAFC found that the language in the VCA of 1989 between Holodniy and Cetus: “I will assign and do hereby assign to CETUS, my right, title, and interest in each of the ideas, inventions, and improvements” immediately provided Cetus with title to Holodniy’s inventions.
Stanford countered that 35 U.S.C. 261 makes an assignment void against a later bona fide (good faith) purchaser for valuable consideration unless that assignment is recorded with the United States Patent and Trademark Office within three months from its date or anyway before the later purchase. Therefore, Stanford argued, even if Roche had gained title to Holodniy’s inventions through the VCA, Roche had failed to record the VCA before the 1995 assignments of the three patents to Stanford, giving Stanford superior rights in the three patents. The CAFC disagreed and held that, even if Stanford had not been informed of the VCA, knowledge of the VCA was to be imputed to Stanford. The CAFC reasoned that Holdniy was an employee of Stanford when he signed the VCA and that Stanford could be charged with notice of Holodniy’s assignments because employees are agents of their employers. It was not relevant that Holodniy had no authority to assign Stanford’s patent rightsbecause the issue was whether Stanford had knowledge.
The CAFC also found that the Bayh-Dole Act did not void the assignment to Roche because the Act leaves title with the inventor or assignee unless the Government exercises its rights under the Act, which the Government did not do.
A lesson from Stanford is that an employer should use the present tense (“I do hereby assign”) and not the future tense (“I will assign”) when drafting assignment agreements with employees and contractors. An employer should also record such assignments with the United States Patent andTrademark Office timely within three months of execution and instruct employees and contractors not to sign agreements with third parties that include assignments of rights without a prior review by the employer.
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