Yesterday, the United States Supreme Court held that the University and Small Business Patent Procedures Act of 1980 (the Bayh-Dole Act) does not automatically vest title to federally funded inventions in the federal contractor.  Board of Trustees of Leland Stanford Junior Univ. v. Roche Molecular Systems, Inc., 563 U.S. __ (2011).

In a 7-2 decision, the Supreme Court upheld long-standing precedent that patent rights initially vest in individual inventors, and noted that a federally funded contractor, such as a university, may only “elect to retain title” under the Bayh-Dole Act if title has been granted by the inventor.  Following this reasoning, the Court clarified the Bayh-Dole Act thus:

“The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.”  Further, “[o]nly when an invention belongs to the contractor does the Bayh-Dole Act come into play.  The Act’s disposition of rights…serves to clarify the order of priority of rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor.”

Accordingly, a federal contractor, such as a university, does not automatically obtain rights to an invention simply because it occurred as a result of federal funding.  Rather, such rights must be transferred from the inventor.  Moreover, that a federal contractor may “elect to retain title” to the invention occurs with regard to the federal government, not the inventor.

Since the Bayh-Dole Act was passed in 1980, it has influenced how universities and companies view technology and ownership.  The present interpretation of the Act handed down by the Supreme Court will no doubt be of particular interest to any entity participating in federally sponsored innovation.

  1. here to read the opinion. 

Also, be sure to check out the next edition of the Malloy & Malloy newsletter for more on this important decision.