Editors Note: Kevin E. Flynn is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A. This is the first installment of a two-part series directed to several traps for inventors that want to retain rights to their off-hours invention.In the beginning, you have all the ownership rights —
You are a creative person. Your mind is working all the time, even when not at work and even about things fairly removed from what you do at work. A few months ago, you had a great idea. Absolutely brilliant. Many companies will want to license this idea, even your current employer.
After calling your spouse’s second cousin, an attorney in California, you feel comfortable that your current employer cannot claim ownership of your invention. It is clear sailing now.
Three traps that can cause a loss of rights
Assuming that your spouse’s second cousin was right, you are in a good position but you are not safely home yet. There are a number of traps.
1: Obtaining an unplanned co-inventor
Fact Pattern: You have a working prototype, but you want some input on how to make it cheaper/faster/more reliable. You take a really late lunch and walk across the campus to the Research and Development building and ask your friend from high-school for some pointers. Your friend is very bright and has advanced engineering degrees. Her job is to develop new product ideas for your current employer. At least one suggestion is a good one. The suggestion is added to your evolving description of the best mode of using your invention. As this suggestion is a competitive advantage, it is eventually described in one of the minor dependent claims in the application and ultimately in the issued patent.
Result: This fact patter suggests that your high school friend has become a co-inventor of at least one claim in the issued patent. In this fact pattern, your friend’s rights may have passed automatically to her employer as this employee was paid to invent and conceived of the improvement while at work during work hours. As the ownership rights to this patent are now split between you and the employer of your friend, each co-owner can make, use, sell, and offer to sell products or services that employ the patented invention. Each co-owner can license or assign the rights to others. In short, each co-owner can use the patent without being accountable (or sharing profits) with the other.
A second complication is that the failure to note your friend as a co-inventor raises an issue of whether there was (technically) fraud in an effort to conceal the true inventorship. Failure to recognize your friend as a co-inventor also prevented that co-inventor from fulfilling the duty to disclose relevant prior art to the US Patent and Trademark Office examiner as required by law.
The problem does not go away if you get the useful idea from a neighbor employed by a different employer; it just changes what person or entity becomes a co-owner. Even if the un-named co-inventor is not obligated to assign inventions to her employer, that person can license rights to use the patent, including licensing the defendant that you are suing for patent infringement.
Ways to Avoid this Trap: Avoid discussing your idea with anyone, especially with creative people who might give you useful suggestions. The risk goes down after you file the patent application since even good ideas added to your product will not put the patent application at risk. To the extent that you incorporate a useful suggestion from someone that has not assigned his or her rights to you, be sure that you patent attorney knows of the situation. It may be prudent to drop a minor claim from the claim set and avoid this problem as co-inventorship of a patent is measured by the issued patent claims not by the degree that a suggestion is useful in making a commercial product.
2: Overreaching Exit Papers
Fact Pattern: Your current employer has reduction in force (RIF) and offers a package of six months pay to resign from the company. Seeing this as an opportunity to get out and develop your invention, you accept the package. You are eventually given a meeting with the Human Relations manager and asked to sign a number of papers in order to get that last lump sum check. Eager to leave, you sign them where indicated and get your check. Unfortunately, one of the forms that you signed commits you to assign to the employer any inventions that you made during the time span of your employment.
Result: While the form may be overbroad, you signed a duty to assign certain rights as part of a series of documents you signed to get the leave package. While lawyers might challenge the breadth of the invention assignment or that it applied to your particular invention, your old employer is likely to have obtained ownership rights to your invention.
Ways to Avoid this Trap: Read the forms that you sign, especially on your way out of a company. If you don’t understand a form, ask questions. If it sounds at all problematic or irrelevant to your situation ask to take the form to your attorney before signing it. It is better that your old employer hold your exit package check for a few extra days than for you to inadvertently sign away important rights. Sometimes after giving it some thought, the representative from HR may realize that the form in question is usually only used with people that are paid to invent. The HR rep may simply waive the requirement for you to sign in an effort to get as many packages completed as possible.
On Thursday, the second installment will address the potential trap of shop rights which may provide a permanent license to your employer to use your invention.
Writer’s note: In order to keep this article short, I am forced to avoid getting into fine details, exceptions, and nuances. Thus, this article is not meant to be definitive legal advice, even if my fact pattern bears an eerie resemblance to your facts. The purpose of this article is to try to steer you clear of these three traps so that you do not need to litigate these issues and learn the hard way the various fine details, exceptions, and nuances.
Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. Kevin Flynn combines the knowledge and experience that he has obtained as an engineer, lawyer, and patent lawyer to provide guidance to clients on a range of patent and other legal issues. Questions or Comments can be sent to firstname.lastname@example.org