The Language “Shall Be the Property Of” Is a Promise of Future Assignment—Not a Present Automatic Transfer of Intellectual Property Rights

Omni Medsci, Inc. v. Apple Inc., Nos. 2020-1715, 2020-1716 (Fed. Cir. August 2, 2021)

The alleged infringer appealed the district court’s denial of its motion to dismiss the complaint for lack of standing. The district court held the patentee had standing because the bylaw of the university where the inventor was a tenured professor did not effectuate a present automatic assignment of the inventor’s patent rights, and thus it did not negate the inventor’s later assignment to the patentee. The Federal Circuit panel affirmed.

Here, a professor at the University of Michigan agreed to abide by bylaws that stated “Patents and copyrights issued or acquired as a result of or in connection with administration, research, or other educational activities conducted by members of the University staff . . . shall be the property of the University.” The professor later assigned patents to Omni Medsci, Inc., which sued Apple. Apple moved to dismiss arguing that the university, not the professor, owned the patent rights.

Judge Linn, writing for the majority, explained that the issue on appeal turned on a question of contract interpretation. Depending on the language, an assignment clause may presently assign a to-be-issued patent automatically—in which case no further acts to effectuate the assignment are necessary—or may promise an assignment in the future. According to the majority, the language “shall be the property of the University” was a promise of a future assignment, not a present automatic transfer. First, the language-at-issue did not use present-tense words of execution. Second, the bylaw used the language-at-issue in other sections as a statement of an intended outcome, not a present assignment. Third, as confirmed by its own text, the bylaw merely provided the conditions governing an assignment and did not effectuate a present transfer of rights. Finally, the language-at-issue stood in contrast to the unambiguous present assignment language used in the university’s Invention Report form.

Judge Newman dissented. She disagreed that the bylaw and other university documents did not achieve their intended purpose of assigning inventions to the university. She explained the majority ruling overturned decades of unchallenged understanding and implementation of the university’s agreements and policy.

Read the full decision here.