Assigning patent rights seems routine, but doing it right and on time can make a huge difference when a court decides who really owns the patent years later.

A recent decision by the US Court of Appeals for the Federal Circuit (CAFC), Stanford University v. Roche, reinforces that, says C. Hunter Baker, counsel with Wolf, Greenfield & Sacks, P.C., a Boston intellectual property law firm.

In the US, unlike almost every other country, a patent is issued to the inventors, unless there’s an agreement stipulating otherwise. The assignment, which transfers title of the patent to the inventor’s employer, must be in writing. Wording it right is crucial.

Companies that rely on employment agreements do so at their peril. The little words, “agrees to assign” versus “hereby assigns,” can make all the difference, Baker says. The former implies future promise to assign; the latter, a present transfer of rights. The Stanford case hinged on that distinction.

When one of the inventors started work at Stanford in 1988 as a fellow, he signed a Copyright and Patent Agreement obliging him to assign his inventions to Stanford. In 1989, he visited Cetus, a biotech company, and signed its Visitor’s Confidentiality Agreement, which said that he “does hereby assign to Cetus” any invention done while working at Cetus.

In 1992, Stanford filed a patent application, and in 1999 the first patent of three patents was issued. Roche, which bought Cetus in 1991, marketed a kit that allegedly infringed Stanford’s rights. Stanford sued for patent infringement.

On Sept. 30, the CAFC ruled that Roche is the assignee of the inventor’s rights and thus owns an undivided interest in the patent because “does hereby assign” trumps “agrees to assign.” As soon as the invention came into being, it automatically belonged to Roche (the acquirer of Cetus’s rights) because of the Visitor’s Confidentiality Agreement, the court said. Stanford did not have standing to sue for patent infringement because all the owners of the patents had not been joined in the suit. Roche as a joint owner of the patents could not be excluded by Stanford.

The lesson? Employee agreements and Assignments should say “does hereby assign” inventions, Baker advises. Avoid “promises to assign,” “agrees to assign,” and “will assign”

UK Court Rules Against US Company

In other countries, patent applicants—not inventors—are the owners, so assignments are not usually required. In most instances the patent applicant is the inventor’s employer. The problem comes when US and foreign systems clash.

Cook Biotech, a US firm, tried to enforce its patent rights in the United Kingdom, claiming that Edwards Lifesciences, a Swiss company, was infringing. It was a complex case involving three inventors. One of the inventors was an employee of Cook; therefore, Cook had the rights of that inventor. However, two of the inventors were not employees of Cook, and Cook failed to get these two inventors to assign their rights to Cook before filing an international Patent Cooperation Treaty (PCT) application.

The UK High Court in June ruled that Cook did not have the right to claim priority to the US provisional application because Cook did not own all the priority rights of that provisional application when the PCT application was filed. An intervening publication, after the provisional application but before the PCT application, invalidated the patent in the UK.

The lesson? Get all rights to priority documents before filing PCT or foreign applications—or include assignee(s) and non-assigning inventors as applicants on PCT/foreign application, Baker says.

Baker, who has a Ph.D. in chemistry and an M.D. from Harvard, advises clients in the pharmaceutical, biotechnology, chemical, materials, and medical-device industries.