Maryland Bar Bulletin
Publications : Bar Bulletin : March 2010

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 BAR BULLETIN FOCUS: INTELLECTUAL PROPERTY  

Many employers have their employees sign patent invention agreements at the time of hire. The primary purpose of these agreements is to secure for the employer the ownership of any inventions made by employees who invent something as part of their employment duties or who use company time or resources to invent. These agreements typically include language such as the following:

"I understand and agree that any invention that I conceive, develop, or reduce to practice within the scope of my employment, or as a result of using any company information, facilities or other resources, shall belong to the company. I agree that I shall execute anything necessary to document the assignment to my employer of all rights, title and interest in any inventions."

A recent Federal Circuit Appellate case, DDB Technologies v. MLB Advanced Media, 517 F.3d 1284 (Fed. Cir. 2008) ("DDB"), held that a contractual obligation for an employee to assign invention rights in the future does not act as an actual transfer of ownership until a separate assignment is executed. This is typically handled by having the employee sign an assignment after an invention has been disclosed to the employer and even sometimes not until after a patent application has been filed.

Putting aside the logistics of tracking down employees who may refuse to sign an assignment later or who are just outright difficult to locate, the fact that ownership does not convey automatically has implications for the employers' ability to license or pursue or defend infringement actions, as well as the disposition of any damages recovered. In addition and potentially of even more significance is the fact that, without an automatic assignment, there is always the possibility of an intervening assignment to a third party, particularly in situations where inventors change employment or just simply don't understand what their obligation are.

On September 30, 2009, DDB Technologies was cited in Stanford University v. Roche Molecular Systems, 2009 WL 3110809 (Fed. Cir. 2009), an unpublished decision. Stanford University purports to follow its reasoning with respect to the issue of requiring present assignment language. A Stanford researcher had signed a typical agreement obligating him to assign his inventions to the University. In a subsequent Visitor's Confidentiality agreement with Cetus, the researcher agreed that he "will assign and do[es] hereby assign" all rights to his inventions to Cetus. A subsequent dispute between Stanford and Roche, the successor-in-interest to Cetus, arose. The Court determined that the Stanford agreement created a promise to assign, not an "immediate transfer of expectant interests." Thus the more immediate assignment of rights granted to Cetus acted to cut off Stanford's rights even though it was the assignee of record.

This case reinforced that the very typical patent assignment agreement language above does not act as a present assignment, rather it may be construed merely as an agreement to assign in the future. That severely curtails an employer's remedies if a third party is granted more immediate rights. In essence, the primary remedy available is a breach of contract, one against the employee which does nothing to secure the intellectual property rights promised to the employer.

Based on these developments it may be important for employers to review, and possibly update, their policies and agreements. The limited court treatment of the matter does provide some guidelines, and the sample language above might only need to be modified slightly to qualify as a present assignment. One such modification might appear as follows:

"I understand and agree that any invention that I conceive, develop, or reduce to practice within the scope of my employment, or as a result of using any company information, facilities or other resources, shall belong to the company. I will assign and hereby do assign all rights to any such inventions to the company. I agree that I shall execute anything necessary to document the assignment to my employer of all rights, title and interest in any inventions."

Aida M. Lebbos is an Assistant General Counsel with the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc., in Rockville, Maryland.


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Publications : Bar Bulletin: March 2010

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