The following case illustrates the problems associated with companies that do not have invention assignment agreements or with relying upon a sub-contractor that does not have the proper invention assignment procedures in place.  General Electric (“GE”) manufactures jet engines.  GE attempted to manufacture the blades with composite material.  However, the blades were subject to failure.  As a result, GE outsourced engineering and manufacturing of the composite blade to a division of Chromalloy Gas Turbine Corporation (“Chromalloy”).  Chromalloy appointed Teets as the chief engineer for the project.  Unfortunately, Chromalloy did not have an Invention Assignment Agreement in place with Teets.  Eventually, Teets invented a new process for fabricating a durable composite blade which GE purchased for its engines.  A patent application was filed.  Later, Teets asserted that he, not Chromalloy owned the invention rights in the process for fabricating the composite blade.  The lower Court held that Chromalloy at least had “shop rights” in the invention.  As such, at the least, Chromalloy could continue to sell the new composite blades to GE.  Upon appeal, the Federal Circuit held that Chromalloy had more than just “shop rights” but also owned the patent rights.  Although the Teets did not expressly assign the invention to Chromalloy, the Court construed an implied-in-fact contract to assign the invention to Chromalloy based on the particulars of the employment relationship.  Teets v. Chromalloy Gas Turbine Corporation, 83 F.3d 403 (Fed. Cir. 1996).

Based on this case, it is important to set up proper procedures and documentation to clarify ownership of intellectual property rights cases not only in the employment context but also when hiring a sub-contractor.  Employers should implement procedures to obtain invention assignment agreements from employees.  It may also be important to ensure that your sub contractors have proper invention assignments from its employees to prevent any delays in production if one of the sub-contractor’s employees objects to intellectual property ownership issues.

Should you have any questions, please feel free to contact me.

The following case illustrates a different scenario in which patent assignments arise, specifically, conflicting agreements.  A Researcher working for Leland Stanford Junior University (“Stanford”) executed a patent assignment agreement wherein the Researcher agreed to assign any inventions to Stanford.  Stanford and Cetus were jointly developing ways to determine the efficacy of antiretroviral drugs for HIV infected patients.  During the joint research work, the Researcher also executed a Visitor Confidentiality Agreement containing an invention assignment clause which assigned all inventions of the Researcher to Cetus.  Hence, Stanford’s agreement was in conflict with Cetus’ Visitor Confidentiality Agreement.

The different language used in the patent assignment clauses of the conflicting agreements was one of the key factors in deciding that Cetus owned the invention instead of Stanford.  In the patent assignment for Stanford, the Researcher promised that he “will” assign inventions to Stanford which is an assignment in the future.  In contrast, in Cetus’s Visitor Confidentiality Agreement, the language included the phrase “does hereby assign” which is a present assignment.

As a result of the joint research, Stanford ultimately filed a patent application on subject matter invented by the Researcher.  After filing the patent application, the Researcher executed a patent assignment document  which was subsequently recorded at the Patent Office.  The Court held that title or ownership of the invention still vested in Cetus.  At the time of filing the patent application, the “does hereby assign” language contained in Cetus’ Visitor Confidentiality Agreement immediately vested title in Cetus by operation of law.  The later assignment from Researcher to Stanford was ineffective.  Stanford v Roche 2008-1509, -1510 (Fed. Cir. Sept. 30, 2009).

Based on this case, it is important to understand the difference between the “will assign” language and the “does hereby assign” language that are typically found in invention assignment agreements.

I also invite you to contact me should you have any questions.

In The Euclid Chemical Company v. Vector Corrosion Technologies, Inc. (Fed. Cir. 2009), the patentee (Euclid) assigned its patent applications and patent to Vector.  Unfortunately, there was a dispute as to whether one of two patents owned by the patentee was assigned to Vector or retained by the patentee.  In particular, the assignment document stated that the patentee assigned the patentee’s patent (singular) and patent applications.  The assignment document listed only one patent and four pending patent applications.  At the time the assignment document was executed, the patentee had two patents, one of which was listed on the assignment document and the other of which was not.  The unlisted patent was related to the listed patent by a claim of priority.

The patentee contends that the unlisted patent is retained by the patentee.  Whereas, Vector (assignee) contends that the unlisted patent was assigned by virtue of the assignment document.  In support of the assignee’s position, the assignee points to the language of the assignment document that stated that the assignment included all other related patent applications. As such, the assignment document is ambiguous (i.e., open to two or more different interpretations).

As a result of the ambiguity, the parties had to litigate the issue, spend money on litigation, divert their attention from their business, etc.  Ultimately, the District Court held that the unlisted patent was assigned to Vector.  The patentee appealed the Court’s decision.  The Federal Circuit reversed the District Court’s decision for failure to fully consider evidence outside of the patent assignment document to determine the intent of the parties.  The expense of litigation and the diversion of litigation may have been avoided by drafting a clearer assignment.

If parties intend the assignment to include all related patent applications or patents, then the assignment document should so state their intentions.  It could also then list all of the patent applications and patents “by way of example and not limitation.”  The bottom line is that parties to an agreement should take the time to make clear their intent since failing to make clear their intentions in writing may lead to unwanted litigation.

Other articles that may be of interest is “Benefits of Patent Protection” which briefly discusses licensing in a different geographic or commercial market.