On Monday, June 6, 2011, the Supreme Court issued its decision in Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc., concerning whether the provisions of the Bayh-Dole Act of 1980 automatically vests title to federally funded inventions in federal contractors and thereby displaces the norm that rights in the invention belong to the inventor. The majority held that the Bayh-Dole Act neither automatically vest title to federally funded inventions in federal contractors, nor authorizes contractors to unilaterally take title to such inventions.

Chief Justice Roberts delivered the opinion of the court. The court reaffirmed the general rule that “rights in an invention belong to the inventor” and “that unless there is an agreement to the contrary, an employer does not have rights in an invention ‘which is the original conception of the employee alone’”, quoting United States v. Dubilier Condenser Corp., 289 U.S., 178, 189 (1933).  

The court noted that 35 U.S.C. § 201(e) defines “subject invention” as “any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement.” The court clarified that phrase “of the contractor” does not refer to all inventions made by the contractor’s employees, but instead relates to the inventions which are owned by the federal contractor. The court stated that “[o]nly when an invention belongs to the contractor does the Bayh-Dole Act come into play. The Act’s disposition of rights does nothing more than clarify the order of priority of rights between the Federal Government and the federal contractor in a federally funded invention that already belongs to the contractor.”  

As to automatic vesting of title, the court stated that “[w]e have rejected the idea that mere employment is sufficient to vest title to an employee’s invention of the employer.” Moreover, the court pointed to the permissive election of title provisions of the Bayh-Dole Act itself as further evidence that the statutory intent was not to automatically confer title upon the federal contractors or authorize contractors to unilaterally take title to inventions developed under a federal contract. 35 U.S.C. § 202(a). Further, the court pointed out that since that the Bayh-Dole Act also provides a provision for the inventor to retain rights to his invention, “§ 202(d) assumes that the inventor had rights in the subject invention at some point, undermining the notion that the Act automatically vests title to federally funded inventions in federal contractors.”  

In adopting its position, the court acknowledged that its construction of the Bayh-Dole Act is reflective of the practice of federal contractors and the guidance of federal agencies granting contracts. The court noted that agencies that grant funds to federal contractors typically expect those contractors to obtain assignments. The court used this rationale to counter arguments that its holding would undermine the goals and framework of the Bayh- Dole Act, since with “an effective assignment, those inventions-if federally funded-become ‘subject inventions’ under the Act”.  

Justices Breyer and Ginsburg dissented, saying that allowing rights to remain vested in the inventor “allows individual inventors, for whose invention the public has paid, to avoid the Act’s corresponding restrictions and conditions.” The dissent would interpret “any invention of the contractor” to include those inventions which the federal contractor has obtained equitable title by virtue of a general invention agreement with their employee inventors.