THE PATENT OFFICE SOCIETY ANNOUNCES THE THIRD ANNUAL JOSEPH ROSSMAN MEMORIAL AWARD FOR THE BEST ARTICLE PUBLISHED IN THE JOURNAL BETWEEN JULY 1974 AND JUNE 1975 ON A TOPIC OF IMPORTANCE TO THE PATENT SYSTEM Amount of Award: Five hundred dollars. Eligibility: Procedure: All articles appearing in the Journal of the Patent Office Society during the period beginning with the issue of July 1974 and ending with the issue of June 1975 automatically will receive consideration for the award. All authors are eligible without regard to membership in the Patent Office Society or employment by the Patent Office. The selection will be made by a panel of three judges. The award will be presented in the fall of 1975. In addition to the monetary award, an appropriate certificate will be presented. The Joseph Rossman Memorial Award was founded in honor of Dr. Joseph Rossman, 1899-1972, former Editor-in-Chief and frequent contributor to the Journal. The award is given annually and is supported by the Patent Office Society and by friends of Dr. Rossman and the Society. Any inquiries concerning the award should be addressed to the President of the Patent Office Society, Box 2089, Eads Station, Arlington, Virginia 22202. 648 Neal Orkin* Journal of the Patent Office Society THE LEGAL RIGHTS OF THE APPROACHES TO OLD INTRODUCTION Throughout the history of the United States, the courts have consistently expanded the rights of the individual-with one possible exception-the rights of the employed inventor. Most American employed inventors must, as a condition of employment, assign their patent rights to their employers upon commencement of employment. Absent a statutory remedy such as exists in most European countries,2 the American employed inventor presently has no administrative or judicial remedy to obtain compensation beyond his salary for his labors; in most cases, his only additional compensation is a possible token grant from his employer. It is the purpose of this paper to present four different approaches to employed inventor rights in the United States: (1) the status or common law approach which exists in the absence of a contract of assignment between employee and employer; (2) the contractual approach in which the employee assigns future patent rights to his employer through a contractual agreement; (3) the legislative approach in which employees are granted compensation through statutorily decreed schemes; and (4) a constitutional approach to employed * Student, Temple Univ. School of Law, Operations Research Analyst, Naval Air Development Center, Warminister, Pennsylvania. 1 Courts have to some extent expanded employed inventor rights, but only in areas in which agreements such as trailer clause contracts have been used to hinder the individual from freely making a living or changing employers. Courts have largely ignored other public policy arguments. See for example Guth V. Minnesota Mining & Mfg. Co., 72 F.2d 385, (1934), in which the court invalidated portions of an agreement in which the provisions were limitless in the extent of time and subject matter; however, the court upheld the other portions of the contract which required the employee to assign to his employer patents produced in the course of employment. 2 See Section III, infra. October, 1974, Vol. 56, No. 10 649 inventor rights which includes a discussion of the constitutionality of proposed legislation and an attempt at formulating a new judicial remedy in favor of the employed inventor based wholly on constitutional law. I. STATUS APPROACH The basic status approach, in the absence of any express or implied contract, stemmed from the masterservant relationship. The doctrine is based on courtmade rules of law which examine the relationship between employer and employee. If an employee was specifically hired to invent or whose assigned duty was to devote his efforts to a particular problem in the course of his employment, the employee is bound to assign the resulting invention to his employer. However, where the employee is not hired to invent, or where an invention is conceived independently of the employee's job, such as at home or in non-job related areas, the employer is not entitled to an assignment of the patent. If the invention results from both employer and employee contribution, such as the use of employer's facilities, then the patent belongs to the employee subject to a "shop right" in the employer." The shop right consists of a non-exclusive, non-assignable, royalty-free license to the employer to use the invention for the life of the patent.' Since there exists three determinations for invention ownership, 3 I have decided to title this portion of the paper as "Status Approach" while many other authors use the term "common law" (See Neumeyer, note 7, infra.). I have done this in order to combine both the status and contractual approaches later in the paper into "federal common law" and have therefore attempted to clarify the issues by not utilizing a double reference to "common law" (see Section IV, infra.). 4 Standard Parts v. Peck, 264 U.S. 52 (1924); Hebbard v. American Zinc, Lead and Smelting Co., 161 F.2d 339 (1947). 5 Dovel v. Sloss-Sheffield Steel & Iron Co., 139 F.2d 36 (1943); Deforest v. Owens, 49 F.2d 826 (1931); Howard v. Howe, 61 F.2d 577 (1932). 6 U.S. v. Dubilier Condenser Corp., 289 U.S. 178 (1933); Toner v. Sobelman, 86 F. Supp. 369 (1949). 7 For a more detailed discussion of the Common Law Doctrine, see: Neumeyer, "The Employed Inventor in the United States", MIT Press, 1971, p. 41-43. 650 Journal of the Patent Office Society (employer ownership, employee ownership, and employee ownership subject to an employer shop right), the common law could be quite arbitrarily applied. The shop right, for instance, remains the same, no matter how minimal the employer's contribution may be.8 II. CONTRACTUAL APPROACH (EMPLOYEE ASSIGNMENT AGREEMENTS) Without an express or implied agreement concerning employee patent rights, the employee was free to license his invention to his employer's competitors, creating a most unpleasant situation for the employer. For this reason, and the relative ease of administration, the trend has been to move from a status relationship to a contractual one. Thus, the status approach to patent rights has for most purposes been displaced by express agreements between employer and employee which require the employee to assign to the employer patents produced in the course of employment. Three different groups of employers will be examined regarding their patent policies with regard to their employees: industry, government, and universities. A. Industry As employers, American corporations usually demand of its employees the following requirements:10 (1) 8 So long as the court determines that employer contribution was sufficient warrant him a license to utilize the invention-no matter how slight his contribution had been-the employee is bound to grant him that license. Sufficiency of employer contribution for a shop right varies with the jurisdiction involved. 9 In effect, the employee would be serving two masters: his employer and the employer's competitor to whom the invention was licensed. 10 For typical employee agreements see Neumeyer, Note 7, supra pp. 157-159. The General Electric Company agreement (Form FN-348-C (3-69 Rev.) is also typical of corporate contracts; portions of this agreement are as follows: To General Electric Company: In consideration of my employment in any capacity with the General Electric Company and of the salary or wages paid for my services in the course of such employment, I agree (A) to communicate to the Company promptly and fully and to assign to the Company all inventions or significant technical or business innovations developed or conceived solely by me or jointly October, 1974, Vol. 56, No. 10 651 assignment of all patent rights in consideration of the the employee's employment; (2) prompt and full disclosure of all inventive ideas; (3) assistance of the cmployer in preparation of all necessary paperwork; and (4) maintenance of adequate records. Although most corporations demand that only technical employees sign these agreements, certain corporate employees have extended their assignment-agreements to include such employees as janitors and secretaries.11 This factor manifests the great extent to which some American corporations have gone to protect their interests. It is questionable whether a court would uphold an agreement extended to such an employee if his invention were not within the realm of the company's business; such agreement would probably be unconscionable as contrary to public policy.12 Employment is adequate consideration to support the contract; therefore the employee has no legal basis to an award other than salary.18 Awards, if any, with others from the time of entering the Company's employ until any termination of my employment, (1) which are along the lines of the business, work or investigations of the Company or of its subsidiaries or affiliate companies, or (2) which result from or are suggested by any work which I may do for or on behalf of the Company; (B) to execute all necessary papers and otherwise to assist the Company and its nominees during and subsequent to such employment in every proper way (entirely at its or their expense) to obtain for its or their own benefit patents, copyrights, or other legal protection for such inventions or innovations or for publications pertaining to them, in any and all countries, said inventions and innovations to be the exclusive property of the Company or its nominees, whether or not patented or copyrighted; (C) to make and maintain adequate and current written records of all such inventions or innovations in the form of notes, sketches, drawings or reports relating thereto, which records shall be and remain the property of and available to the Company at all times. 11 Rines, "A Plea for a Proper Balance of Proprietary Rights", IEEE Spectrum, April 1970, p. 43. 12 Although the Guth case cited in note 1 supra did not rule on this point, it is probably a good reference for demonstrating that the court would read such restrictions very narrowly by upholding the portions of the contract that were not restrictive or inequitable while striking out those provisions that the court deemed unconscionable. 13 "Employment" or "the continuation of employment" has been upheld as adequate consideration to create a legally binding contract: see Buckingham Products Co. vs. McAleer Mfg. Company, 108 F.2d |