A Challenge to Inventorship Reveals Possible Issues Regarding Transfers of Ownership

In Shukh v. Seagate Technology, LLC, [2014-1406] (Fed. Cir. 2015), the Federal Circuit reversed summary judgment against Shukh claim to be named as a co-inventor for defendants, holding that Shukh’s reputational interest in being named an inventor gave him standing to challenge inventorship under 35 USC 256.

Shukh’s first argument was that Filmtec Corp. v, Allied-Signal, Inc., should be reversed.  Under Filmtec, Dr. Shukh’s assignment in the Employment Agreement of his ownership
and financial interests in his inventions conveyed legal in his inventions to Seagate, depriving him of standing to contest inventorship of the patent.  The Federal Circuit observed that  as a panel, it could not overrule that holding without en banc action — hardly a ringing endorsement of the immediate assignment doctrine of Filmtec.

While Filmtec has inspired us all to use the language “agree to assign, and hereby do assign.”  Perhaps we should do more.  An express statement that rights in any inventions vest immediately upon creation with the employer might provide some rights to the employer.  The employer might also incorporate assignment language in its invention disclosure statement:

I agree that all rights in the inventions disclosed herein belonged to the EMPLOYER from the moment they were created, and agree to assign, and hereby do assign any rights I may have in them to EMPLOYER,and authorize EMPLOYER to file a patent application thereon.  I further grant the the Chief Technology Officer of EMPLOYER a durable, irrevocable power of attorney to declarations, oaths, and other patent application papers, including assignments to EMPLOYER, if I am unable or unwilling to do so.

However, the Federal Circuit concluded that “concrete and particularized reputational
injury can give rise to Article III standing” to challenge inventorship of a patent, noting that “being considered an inventor of important subject matter is a mark of success in one’s field, comparable to being an author of an important scientific paper.”


“I agree to assign and hereby do assign”

Personalized User Model, LLP v. Google Inc., [2014-1841, 2015-1022] (August 18, 2015), reminds us that an employee agreement will preferably include a immediate assignment of the employee’s inventions. Personalized User Model sued Google for patent infringement.  In the course of discovery, Google learned that the patented inventions were conceived while one of the co-inventors was employed by SRI.  In a move worthy of Harvey Specter and Mike Ross in Suits, Google attempted to acquire SRI’s rights in the invention.  Unfortunately for Google, the Federal Circuit agreed with the district court that the statute or limitations prevented Google from asserting a breach of contract action against the co-inventor.  The result likely would have be very different, if, instead of simply agreeing to assign inventions conceived during employment:

I agree to execute such documents, disclose and deliver all information and data, and to do all things which may be necessary or in the opinion of SRI reasonably desirable, in order to effect transfer of ownership in or to impart a full understanding of such discoveries, improvements and inventions to SRI.

the agreement provided that the inventions automatically belonged to SRI.  While one can forgive this lapse in an agreement drafted more than thirty years ago, today it is generally advisable to have an automatic assignment.  Several years ago in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 583 F.3d 832, 842 (Fed. Cir. 2009) the Federal Circuit explained that the language “agree to assign” is merely an agreement to assign in the future requiring a subsequent written instrument.  In contrast, the words “do hereby assign” have been construed as a current  assignment of future inventions.  See FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1572-73 (Fed. Cir. 1991).  If SRI’s agreement had included a current assignment of future inventions, SRI would have had ownership rights to sell to Google, irrespective of any breach by the employee.

Personalized User Model is a great reason to review existing employee agreements, and to make sure that they include a current assignment of future inventions.  Of course, if your agreement does provide include a current assignment, you have to make sure that the rest of your paperwork is consistent.  Thus, rather than having the inventor subsequently execute an assignment of a particular invention, one should have the inventor execute a confirmation of the prior assignment of that invention.  Furthermore, if because of some business arrangement, a company want to assign rights to some third party, the company must do so itself (because of the automatic assignment), and an assignment from the employee would be ineffective to do so, because the rights had already been assigned to the company.  Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 583 F.3d 832, 842 (Fed. Cir. 2009).


Ownership of Inventions

A critical component of IP Management is the acquisition of IP.  It is therefore appropriate that the inaugural post of this blog addresses acquiring ownership of inventions — in this case employee inventions.  An employer does not automatically own the inventions or its employees merely by virtue of the employer/employee relationship.  The employer only owns inventions that the employee has agreed to assign.  Sometimes this agreement is implied, for example when the employee is specifically hired to invent or is later assigned the task of inventing.  However, most times agreement is express.  Such an agreement can be oral, but as the saying goes, oral contracts aren’t worth the paper they are printed on.  An agreement with an employee to assign inventions should be in writing.

What should this written agreement say?  After Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 583 F.3d 832, 842 (Fed. Cir. 2009), we know that an agreement to assign, is just that — an agreement to do something in the futureSuch an agreement can be trumped by an automatic assginment.  Thus is seems prudent to combine a promise to assign with a present assignment:

I agree to assign, and hereby do assign, to Employer all right, title, and interest in and to the Inventions.

Of course, this leaves open the question of what is an “Invention,” but that is a topic for another pose.