The Importance of Assigning Ownership:
To safeguard the company’s IP, it is essential to ensure that employee-inventors have properly assigned ownership of their patents to the company. Failure to do so may result in complications, including the inability to bring a patent infringement action. It is crucial to establish standing by voluntarily joining as plaintiffs, and inventors are presumed to be owners unless they have explicitly assigned their rights.
Assigning Patent Rights:
Assigning patent rights can be accomplished through a written, signed instrument. It is highly recommended to promptly record such an instrument with the United States Patent and Trademark Office (USPTO) for two primary reasons. First, recording the assignment prompts the USPTO to issue a certificate of acknowledgment, serving as prima facie evidence of the execution of the assignment. Second, timely recording ensures protection against subsequent purchasers or mortgagees who were unaware of the prior assignment.
Clarity in Assignment Obligations: FilmTec and Arachnid Rules
In determining patent ownership based on contractual obligations, courts often rely on state contract law. However, when it comes to patent assignment clauses in employment contracts, the Federal Circuit’s FilmTec rule takes precedence over state law. The FilmTec rule clarifies that an employment or assignment contract can effectuate an automatic assignment of patent rights when the language states “does hereby grant.” This language ensures that legal title is transferred to the employer upon filing a patent application.
Days after the FilmTec decision, the Federal Circuit issued the Arachnid ruling, providing guidance for instances where the employment or assignment contract does not automatically assign patent rights. The Arachnid rule establishes that phrases like “will be assigned” do not rise to the level of present assignment, and an additional act of assignment may be required to confer legal rights for patent infringement claims.
Implications of Implied Obligations and Shop Rights:
Apart from explicit assignments, implied obligations and “shop rights” can also impact patent ownership. The Supreme Court’s “hired-to-invent” doctrine implies an obligation for employee-inventors to assign their patent rights to the employer. If an employee’s invention aligns precisely with their employment contract, an implied obligation to assign may exist. Similarly, “shop rights” can grant the employer a nonexclusive and nontransferable license to use the employee’s invention.
The Federal Circuit emphasizes that the presence of implied obligations and “shop rights” depends on the specific circumstances and agreements between the parties. Factors such as the employee’s refusal to sign assignment agreements and the employer’s acquiescence play a significant role in determining the existence of these rights.
Conclusion:
Ensuring proper patent ownership is crucial for a company’s long-term success and protection of its IP. By clearly stating assignment obligations in employment agreements, promptly recording written assignments with the USPTO, and understanding the implications of implied obligations and “shop rights,” companies can minimize disputes and costly ownership mishaps.
As members of the board of directors, it is essential to appreciate the legal intricacies surrounding IP ownership. While this blog post provides a high-level overview, it is advisable to seek legal counsel for comprehensive guidance tailored to your company’s specific needs. By staying informed and proactive, the board can effectively protect the company’s IP assets and support its innovation-driven growth.
