Property, intangible

a blog about ownership of intellectual property rights and its licensing

Quickly Decomposing

Agreements that assign employees’ inventions to the employer are commonplace. O’Keefe v. County of St. Clair demonstrates why.

Plaintiff John O’Keefe was an at-will Landfill/Resource Recovery Manager for the county landfill. Co-defendant CTI and Associates was a contractor at the landfill, working with O’Keefe on operations and landfill design. O’Keefe and the president of CTI came up with an improved method for treatment of landfill waste, which ultimately resulted in the issuance of Patent No. 7,347,648. There were four inventors on the patent: O’Keefe, his wife, the president of CTI, and another employee of CTI.

The county became interested in the profit-making potential of the patent, so the fight was on. A county administrator and the county’s lawyer pressured CTI and O’Keefe to turn over ownership of the patent to the county, by threatening to terminate O’Keefe’s at-will employment and dropping the contract with CTI. An agreement to add the county as a one-third owner wasn’t consummated. O’Keefe was later terminated with no explanation.

CTI and the county later created Accelerated Landfill Technology, LLC to promote the patent for licensing. Meanwhile, the O’Keefe’s had assigned their rights to Virdis Waste Control, LLC. O’Keefe alleged that the county and CTI falsely stated that they had exclusive rights to the patent. The lawyer also gave a quote to a local newspaper that “anyone who wants to use the technology would have to pay us royalties,” and that putting O’Keefe’s name on the patent was “misleading,” saying that “the County should have been put on the patent in the first place.” O’Keefe hasn’t been able to find another job, claiming that he can’t get hired because there’s a cloud on his record.

O’Keefe brought a false advertising claim under § 43(a)(1)(B) of the Lanham Act, which states:

Any person who, on or in connection with any goods or services . . . uses in commerce any . . . false or misleading description of fact, or false or misleading representation of fact, which- . . .

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such an act.

15 U.S.C. § 1125(a)(1).

Defendants filed a motion to dismiss, claiming that a patent is not “goods” or “services” and thus there was no Lanham Act claim. Unfortunately for the defendants, case law directly on point was contrary to their argument. While a false representation of patent infringement does not state a claim under § 43(a)(1)(B), a false statement that a party is an exclusive source of a product because of its patent is a viable Lanham Act claim.

Defendant also argued that the statements weren’t made in commercial advertisement and promotion, another loser. The statements to the newspaper were economically motivated and therefore commercial advertisement. O’Keefe thus successfully stated a Lanham Act claim, motion to dismiss denied, and the court retained jurisdiction over the supplemental state law claims.

All for wont of an employee assignment agreement.

O’Keefe v. County of St. Clair, No. 08-12162, 2009 WL 185659 (E.D. Mich. Jan. 23, 2009).

© 2009 Pamela Chestek

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