Patent Litigation and Licensing: The Supreme Court Rules on Ownership of Federally Funded Inventions under the Bayh-Dole Act

Sullivan & Cromwell LLP - June 9, 2011

On June 6, 2011, the Supreme Court issued its opinion in Stanford v. Roche addressing the ownership of patents arising out of federally funded research under the Bayh-Dole Act. Enacted in 1980, the Bayh-Dole Act established procedures under which universities and other persons, small businesses or nonprofit organizations may obtain title to patents that result from federally funded research. In Stanford, the Court held in a 7-2 decision that the Bayh-Dole Act does not automatically vest title to an invention developed by an employee of a university or other federally funded entity in that entity. Rather, an effective assignment between the inventor and his or her employer is needed for the employer to obtain title to the invention. The opinion thus confirms that the Bayh-Dole Act does not alter the normal rules regarding assignment of inventions from inventors to their employers or others. Although not addressed in the majority opinion, the concurring and dissenting opinions also raise questions regarding whether a present assignment of rights in a future invention can automatically convey legal title to such an invention.