The US Supreme Court has found that the Bayh-Dole Act, which allows contractors to retain patent rights where inventions were developed from federally funded research, does not impact the general legal rule that the inventor is the first owner of an invention.

This case involved a dispute over the patent rights to testing kits used for the detection of the HIV virus. The inventor, a Stanford University employee, completed the development of the kits while on secondment to a company later owned by Roche Molecular Systems. On return to Stanford, the inventor tested the kits and an assignment of his rights was taken by Stanford under the Bayh-Dole Act as the research had been funded by the US government.

Stanford University took a patent infringement action against Roche for manufacturing and selling the kits. Crucially however, the inventor had signed a confidentiality agreement as part of his secondment in which he assigned to Roche (using the language “I do hereby assign”) the rights to any intellectual property developed whilst at Roche. While the inventor had entered into an employment agreement with Stanford under which he agreed to assign the rights to future intellectual property (using the language “I agree to assign”), the US Supreme Court held that the inventor’s agreement with Roche had priority. The argument that Stanford had the first right to the intellectual property under the Bayh-Dole Act was rejected by the court which found that Stanford and Roche were co-owners of the intellectual property rights. Stanford consequently had no right of action against Roche as the parties co-owned the patent.

Both the US government and Stanford have argued that this ruling undermines the purpose of the Bayh-Dole Act by allowing individual inventors to assign intellectual property rights to third parties even where the research was federally funded.

The ruling may have a far-reaching impact on the ownership of inventions derived from research funded by the US government. This case highlights that agreements assigning or determining intellectual property ownership need to be carefully worded to achieve the intended result. Universities, public funding bodies and inventors in other jurisdictions will be observing how the ruling is received outside the US.

Contributed by David Cullen and John Magee.