## Facts

- Douglas V. Shaw was hired in 1986 as an associate professor at the University of California, Davis, and was required as a condition of employment to sign a standard form containing an oath, a patent agreement, and the university patent policy.
- The patent policy in effect when Shaw signed required employees using university facilities or funds to assign to the university inventions conceived in the course of employment; in return, the employee would receive 50% of net royalties and fees obtained by the university.
- The signed patent agreement required disclosure and assignment of patentable inventions and expressly directed the employee to read the patent policy, which was printed on the same two-sided document.
- In 1990, the Regents revised the patent policy to replace the flat 50% royalty share with a lower amount under a different schedule.
- Shaw objected to applying the 1990 revision to him.
- After the revision, Shaw developed six patentable strawberry cultivars using university resources; the university sought assignments and applied the 1990 royalty schedule.
- Shaw sought a declaration that he was entitled to the 50% net royalty share provided by the policy in effect when he signed and that the university could not unilaterally change his royalty rights by revising policy.
- The trial court granted summary judgment for Shaw; the Regents appealed.

## Issues

1. Whether the patent policy in effect when Shaw signed was incorporated into the patent agreement as a binding contract term rather than a unilaterally changeable personnel policy.
2. If incorporated, whether the Regents could nevertheless apply later policy revisions to reduce Shaw’s contractual royalty share for inventions covered by the agreement.

## Decision

- The Court of Appeal affirmed the summary judgment for Shaw.
- The patent agreement was a contract that incorporated the patent policy in effect at the time Shaw was hired, including the 50% net royalty term.
- Although the Regents could revise patent policy generally, they could not apply the 1990 revision to Shaw because the written agreement fixed his royalty share at 50% of net royalties and fees.

## Legal Principles

- A policy expressly referenced in a signed agreement, and presented as part of the same instrument, may be incorporated by reference and become an enforceable contract term.
- Contractual consideration for an employee’s assignment of invention rights may include a specified royalty-sharing promise; once agreed, it is not subject to unilateral reduction by the employer.
- An institution’s general authority to revise internal policies does not permit it to alter existing contractual obligations created by a written agreement.
- Contract interpretation issues with no material factual dispute may be resolved on summary judgment.

## Conclusion

The court held that Shaw’s signed patent agreement incorporated the then-existing patent policy and contractually entitled him to 50% of net royalties and fees; the Regents could not unilaterally apply later policy changes to reduce that share.


Shaw v. Regents of Univ. of Cal., 58 Cal. App. 4th 44 (Cal. Ct. App. 1997)