Companies can purchase patent invention rights from their employees through written patent invention assignment agreements. These agreements are formal contracts between the company and the employee which assign the rights of inventions the employee invents to the employer.
The patent assignment agreement between an employee and an employer comes into effect when the employee starts working at the company. The agreements can be applied through:
- The employed-to-invent doctrine is when the employer hires an employee to work on a specific invention using the facilities provided by the employer. In such cases, even if the employer does not have exclusive rights to the patent invention, he can still have “shop rights” that allow him to use the invention without cause for infringement. This is because the employee utilized the company’s assets to develop the invention
- Employees can also assign employee rights to the employer after or during the development of the invention, signing away patent invention rights to the employer
It is vital for the protection of both the employee and the employer to have a formal patent assignment agreement in place in cases where patent inventions are developed during employment contracts or agreements specifically formulated for invention-for-hire. Failure to do so can result in misunderstandings, legal cases, and expensive litigation costs.
The following case details show what happens in instances when companies don’t have formal patent invention agreement procedures in place and how it can cause problems for the employee and the employer.
Teets v. Chromalloy Gas Turbine Corporation, 83 F.3d 403
General Electrical(GE) developed a fuel-efficient jet engine called the GE90. They also developed lightweight blades for the engine, which did not work as expected, breaking upon contact with debris, birds, and freezing rain. GE contracted Chromalloy Gas Turbine Corporation (Chromalloy) to manufacture a new composite, titanium blade for their engine.
Charmalloy assigned Teets, their chief engineer, to head the project. Teets successfully invented a new, strengthened composite blade for the GE engines. The blades were sold to GE as per their contractual agreement. Chamalloy also filed a patent application for the composite blades when advised by Teets.
However, Teets did not have any invention agreement signed for future invention with his employer, Charmalloy. He later asserted his patent ownership rights, claiming himself as the sole inventor of the blades. The Court granted summary judgment in favor of Charmalloy, stating they had shop rights to the invention. They further said that the invention was developed on the employer’s property with their resources, and Teets named his employer as the co-inventor of the blade. This showed that Teets entered an implied-in-fact contract agreement with Chromalloyand gave them the rights to use or sell the patent invention.
Importance of Patent Invention Agreements with Employers
The Chromalloy case details emphasize the importance of having proper documentation and procedures for employee patent invention assignments to avoid conflicts in intellectual property rights cases. The agreements should cover the scope of potential patent assignment inventions, considering hiring sub-contractors and their employees to avoid production delays and legal patent invention ownership issues.