Acquiring the rights to employees’ inventions

Bill_Samore_02By William J. Samore, attorney, Fay Sharpe LLP

How does a company obtain the patent rights to something invented by an employee?

The current rule, decided in Filmtec Corp., v. Allied-signal Inc., 939 F.2d 1568 (Fed. Cir. 1991), is that when an employment contract creates a present grant of rights in future inventions and related patent rights, the title to the patent transfers to the employer upon creation of the invention. In other words, when employment contract language uses the present tense (e.g., I “herby assign” my rights), title transfers automatically upon creation of the invention.

On the other hand, if the employment contract uses the future tense (e.g., I “will assign” my rights), the company may get only equitable rights (not legal title), and, in this situation, if the employee refuses to assign rights to the company, it may have to obtain a court order forcing the employee to transfer rights. This rule thus creates a trap for the unwary. The rule created by Filmtec was challenged in a petition for en banc rehearing in the case Alexander Shukh v. Seagate (Fed. Cir. 2015), but the petition was denied, and so Filmtec remains the law.

A company can also include an assignment clause in the invention disclosure form signed by the inventor. This can ensure that invention rights are assigned to it if problems later arise when an employee refuses to sign an assignment document for the invention. Companies often have employees complete an invention disclosure form regarding their invention. In the invention disclosure form, the employee/inventor typically provides a general description of the invention. Including an assignment clause in the invention disclosure form gives a company another potential way to ensure that it acquires the rights to the invention from the employee.

William J. Samore is an attorney with Fay Sharpe LLP. If you have questions about patents and patent law, reach him at william.samore@faysharpe.com or (216) 363-9178.