Who Owns Your Intellectual Property? You Do? Think Again!

It seems pretty cut and dried. If an employee invents a gadget or product on company time, the ownership belongs to the company, right? If that person is a contractor, the same stands; any invention within the agreement of work belongs to the company. Again...right?

Not exactly.

In June of 2011, the United States Supreme Court in Board of Trustees for Leland Stanford Junior University v. Roche Molecular Systems, Inc.outlined how important employment contracts can be when workers invent a product at work.

In a 7-2 decision, the Court held that the Bayh-Dole Act did not change the long-standing law that patents are initially awarded to inventors, not employers. (Board of Trustees for Leland Stanford Junior University v. Roche Molecular Systems, Inc., U.S. No. 09-1959) ("Stanford v. Roche").

The case arose when the inventor left employment. The issue was whether the patent moved ownership to the employer. The inventor of the patent, Mark Holodniv, worked for Stanford University as an independent contractor when his contract ended. Holodniv did not assign the rights of the patent to Stanford. He assigned it instead to Cetus, his employer. Cetus was under prior contractual duty to assign any patents for work (invention rights) to Stanford.

Stanford didn't include language in the contract to create ownership of the invention. Instead Stanford relied on the inventor to assign it to them. Big mistake for Stanford, and the United States Supreme Court decision took Stanford's ownership away and granted it back to Cetus, the company to which the inventor assigned the patent. A company may have verbiage in a contract that the inventor is required to assign ownership of the patent to the contracting company, if the inventor doesn't, there is little hope of getting ownership.

As it turned out the Court based its patent infringement holding on long-standing principles of patent ownership. The Court reminded us that the default rules for patents are different; ownership of patent rights belongs to the inventor unless very specific steps are taken to properly assign those rights to an employer or contractor.

So what does this mean for employers and employees?

"...The Supreme Court pointed to Federal Circuit precedent in the 1991FilmTec case. The Federal Circuit established a particular federal patent- law interpretation of employment agreements in FilmTec that allows contracting parties to choose language that optionally includes either a promise to cooperate and assign rights or else an automatic assignment that occurs constructively at the moment of invention. If Stanford had chosen the more stringent automatic assignment language for its employment contract, then it would have automatically taken rights to the invention."

Think about how important the work your contracted workers are doing. Should you protect it better? Or, as an employee, do you need to reconsider your contract terms? Do you know what you contract covers?

If you have a question about intellectual property and you want clarity in your contract verbiage, contact Burnett Legal Group at (402) 810-8611 or contact us online to schedule a free consultation. Our experienced attorneys can counsel you and help you make the right decisions to protect your property. 

Retrieved from: "Stanford v. Roche: a cautionary tale for employers with intellectual property" in a Blog by John Perkins of Nexsen Pruet, 7/18/2011

Case: Board of Trustees for Leland Stanford Junior University v. Roche Molecular Systems, Inc., U.S. No. 09-1959 ("Stanford v. Roche")

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