Employment agreements (and patent assignment agreements generally) are governed by state contract law, and should be carefully worded as such, further keeping in mind that ordinary patent law definitions may not apply (e.g., “conception” vs. “invention”). This case provides a good example of language that was fairly successful in protecting the employer. In addition, note that the court went out of its way to endorse the language “does hereby assign” over “agrees to assign” or something similar. For the former, assignment is automatic and there is no need for a subsequent action to force an inventor to assign his rights, should a dispute arise.
Background / Facts: This case involves a patent ownership dispute between a company and its former employee. Inventor Preston’s employment agreement with Marathon included an intellectual property assignment clause in which “EMPLOYEE agrees to promptly disclose to MARATHON and does hereby assign to MARATHON all Intellectual Property” except for a specifically enumerated “list and brief description of all of EMPLOYEE’S [prior] unpatented inventions and unpublished writings.” In the agreement, “Intellectual Property” is defined to mean “all inventions, discoveries, developments, writings, computer programs and related documentation, designs, ideas, and any other work product made or conceived by EMPLOYEE during the term of employment with MARATHON which (1) relate to the present or reasonably anticipated business of the MARATHON GROUP, or (2) were made or created with the use of Confidential Information or any equipment, supplies, or facilities of the MARATHON GROUP.” Preston’s listing of his prior inventions included only the vague title “CH4 Resonating Manifold,” while the patented invention made no reference to resonating, and the district court found that the patented invention was at least not reduced to practice (i.e., not made) until well after Preston’s start date with Marathon.
Issue(s): Whether the employment agreement at issue functioned to assign rights in Preston’s invention to Marathon.
Holding(s): Yes. The plain language of the agreement indicates that any “invention” that is “made or conceived” by an employee while employed at Marathon constitutes “Intellectual Property” and is therefore automatically assigned to Marathon. Thus, if Preston’s invention was not both made and conceived prior to his employment, it constitutes “Intellectual Property” under the Employee Agreement. Because there is no dispute that Preston did not make his invention prior to his employment with Marathon, the patents are properly included as “Intellectual Property” under the plain language of the Agreement. Further, even if state law would take a broader view of “conception” than would be applied normally in the patent context, an “invention” necessarily requires at least some definite understanding of what has been invented. The listed “CH4 Resonating Manifold” and lack of supporting evidence does not satisfy even that loose standard and Preston cannot be found to be in possession of an excludable invention before he began employment at Marathon. As a final matter, the CAFC vacated the district court’s judgment that Preston breached his employment agreement by not assigning his patent rights to Marathon because, according to the terms of the agreement, the assignment was in fact automatic.