Patent Law

Patent Law and employee contracts

By Lawrence B. Ebert, Esq.

patent law saves time and money by clearly delineating facts about who, what, when, where, and how inventions were developed. Patents are useful when and because they give companies the right to stop former R&D employees from taking their work to competitors. Contract and trade secret law will always be available at the margin to handle details. The point is that in a world with clearly disclosed and publicly searchable patents and assignments, company managers can focus more on how new technology should be marketed, manufactured, and distributed, and less on how to prevent employee defections (or in planning raids of other companies' R&D employees). It's partly the bright-line, standardized nature of patent rights that make them useful as an alternative to contract.

IPBiz notes that one needs to contemplate the Feb. 13 CAFC decision DDB vs. MLB. In 1998, the Barstow brothers assigned patents including US 5,526,479 to DDB. The ultimate question in the case (but NOT decided by the CAFC on Feb. 13) is whether the interest of Dr. David Barstow (?Barstow?) in these patents was PREVIOUSLY assigned to his former employer,
Schlumberger Technology Corporation (?Schlumberger?).1 Barstow, a computer scientist, worked for Schlumberger from 1980 until 1994.

The district court had found that the patents in suit fell within the scope of Barstow?s employment
agreement because they were both ?suggested by? and ?related to? his work for
Schlumberger. In determining that the patents in suit were ?suggested by? Barstow?s
work, the district court relied particularly on their relation to two prior patents issued to
Schlumberger that named Barstow as the inventor. During the prosecution of three of
the four patents in suit, one of these patents was listed by the patent examiners as prior
art (although not cited by the applicant as prior art). In determining that the patents in
suit were ?related to? Barstow?s work, the court relied in part on a 1992 letter from
Barstow to his brother Daniel which the district court interpreted as an admission by
Barstow of such a relation.

Of documentation issues, the CAFC noted:

DDB?s discovery requests could have led to the production of documents (if they
existed) such as copies of the applications for the patents in suit in Schlumberger?s files,
notes of conversations by Schlumberger employees demonstrating the extent of the
company?s knowledge of the inventions, further communications between Barstow and
Schlumberger regarding the inventions, or communications as to whether
Schlumberger?s officers or employees believed that Schlumberger had an ownership
interest in those inventions.

Judge Newman in partial dissent wrote:

It is not disputed that during Dr. Barstow's employment the responsible
Schlumberger officials agreed that the inventions relating to the computerized recall and
replay of sporting events were not within the scope of his employment agreement. In 2006,
sixteen years after the first patent application was filed (in 1990), thirteen years after the
first patent was issued (in 1993), and twelve years after Dr. Barstow left Schlumberger (in
1994), Schlumberger reportedly represented to the defendant MLB Advanced Media
(MLBAM) that Schlumberger owns the Barstow inventions and the four patents thereon,
including those filed after Dr. Barstow left Schlumberger.

(...)

Interpretation of employment contracts, including clauses establishing employer-
employee obligations with respect to inventions and patents, is a traditional state matter.
This is a quite different issue from "standing in patent cases," supra. The rule that a plaintiff
must own the property on which he sues in federal court does not preempt the laws
governing property ownership. The adjudication of property rights that arise from an
employment agreement is not preemptively removed from state law when the agreement
concerns patent property. (...) There is no conflict between the creation of the patent as a creature of federal law, and
ownership of patent property governed by state law. (...)The complex balance between an employer's rights to control its proprietary information and safeguard its commercial interests, and an employee's rights to use his
experience for purposes outside of the employer?s interests, has traditionally been subject
of state law, and when dispute arises, has been subject to trial to a jury.

Full post as published by IPBiz on February 18, 2008 (boomark / email).