Property, intangible

a blog about ownership of intellectual property rights and its licensing

Unexciting Patent Ownership Decision

No one else seems to have reported much on this case, which is understandable – there’s not really any new ground covered.  But it is a Federal Circuit decision, so I’ll give you a brief summary.

Yale Preston was an employee of Marathon Oil Co. A few days after his employment began, at the same time he was doing other paperwork like his W-4, he signed an employment agreement that said:

3. Disclosure and Assignment of Intellectual Property.
EMPLOYEE agrees to promptly disclose to MARATHON and does hereby assign to MARATHON all Intellectual Property, and EMPLOYEE agrees to execute such other documents as MARATHON may request in order to effectuate such assignment.

While employed by Marathon, Preston invented what Marathon’s patent application titled “Baffle System for Two Phase-Annular Flow” and what Preston had titled in his own patent application “Method and System for Producing Gas and Liquid in a Subterranean Well.”  And here we see the problem – a dispute between Marathon and Preston over who owed the invention.  Preston refused to sign the assignment to Marathon for its application and as a result various lawsuits were filed on various theories, all of which hinged on who owned what.

Preston argued that his offer letter was his employment agreement and the later-executed agreement, the one with the invention assignment, was not valid because the agreement lacked consideration. Both the district court and the appeals court had separately certified the question to the Wyoming Supreme Court, which said:

[T]he stability of the business community is best served by ruling, consistent with our at-will employment jurisprudence, that no additional consideration is required to support an employee’s post-employment execution of an agreement to assign intellectual property to his employer. If the employee does not agree to that modification of the terms of his employment, he can terminate the relationship without any penalties.

Thus, the assignment provision in Preston’s employment agreement was valid.

The district court further held that the employment agreement obliged Preston to assign the patent to Marathon and that he was in breach of his employment agreement by not doing so. The Federal Circuit disagreed with only the latter half of this conclusion; it found that the agreement itself effected the assignment and therefore there was no breach.

Of interest also, the employment agreement provided new employees with an opportunity to exclude “unpatented inventions” created before their employment. Preston wrote “CH4 Resonating Manifold” on his form but no one at the time inquired about what that was. Marathon nevertheless muddled through the problem; after a bench trial the district court found that the “CH4 Resonating Manifold” was nothing more than a “vague idea,” not an invention, and therefore was not excluded by the agreement.  The appeals court agreed.

Dennis Crouch at Patently-O has more background on the non-cooperating inventor assignment of Marathon’s application here.

Preston v. Marathon Oil Co., Nos. 2011-1013, -1026 (Fed. Cir. July 10, 2012).
Preston v. Marathon Oil Co., No. 08-CV-239-J (D. Wy. Dec. 28, 2009) (Findings of Fact and Conclusions of Law).

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One response to “Unexciting Patent Ownership Decision”

  1. Patent litigations like this one remind me of my law school IP professor who told us that she delayed — and tried to avoid — signing one of these agreements at her current post. They’re almost like signing away your first-born child. But all desirable schools seem to require them now, so it looks like there’s not much chance for escape.