University Learns Harsh Lesson on Assignment Agreements

A university that has assignment agreements with its faculty likely expects to own the patents on inventions they produce. Yet, depending on the language in the agreement, that institution of higher learning could be in for a harsh lesson. Does the phrase “agree to assign” in a copyright and patent agreement reflect an immediate transfer of expectant interests — or a promise to assign rights in the future? The U.S. Court of Appeals for the Federal Circuit weighed in. Case in point: Bd. of Trustees v. Roche Molecular Sys.

COURSE OUTLINE

Researchers at Stanford University and Cetus, a private company, developed a technique to measure the effectiveness of antiretroviral drugs used to treat HIV. As the named assignee, Stanford obtained three patents related to the technique.

The Stanford-affiliated researchers had signed a “copyright and patent agreement” (CPA) with a provision whereby they “agree to assign” to Stanford their right, title and interest in the inventions created. One scientist, Dr. Holodniy, also signed a “visitor’s confidentiality agreement” (VCA) with Cetus with a provision stating he “will assign and do hereby assign” his right, title and interest in the inventions to Cetus.

Roche subsequently purchased the division of Cetus that worked on the technique, including the division’s agreements with Stanford and its researchers, and began manufacturing HIV detection kits. Stanford filed suit against Roche, alleging the kits infringed its patents. Roche asserted that Stanford didn’t have the required standing to bring an infringement claim because Roche actually owned the patents.

LANGUAGE ART

On appeal, the U.S. Court of Appeals for the Federal Circuit explained that the language used in the CPA — “agree to assign” — reflects a promise to assign rights in the future, not an immediate transfer of expectant interests. In the court’s view, Holodniy agreed only to assign his rights to Stanford at an undetermined time. And the court concluded that Stanford, therefore, didn’t immediately gain title to Holodniy’s inventions as a result of the CPA or at the time the inventions were created.

On the other hand, the VCA’s language — “do hereby assign” — represented a present assignment of his future inventions to Cetus, according to the court, and Cetus immediately gained equitable title to the inventions. Under the VCA, legal title accrued to Cetus when the invention was made and a patent application filed. At that point, the court concluded, the inventor had nothing left to assign to Stanford.

LET'S REVIEW

The lesson of this case? Universities should review both their agreements with affiliated inventors and any collaborative agreements with outside corporations. University administrators may want to enlist counsel to revise their agreements to ensure these arrangements include the appropriate rights, title and interests.

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