Tuesday, July 10, 2012

CAFC and Wyoming Supreme Court on IP assignment agreements

An issue in Preston v. Marathon Oil was whether "continued employment" was sufficient consideration to support an IP assignment agreement signed after employment began.

The CAFC noted

After oral argument, we certified the question to the Wyoming Supreme Court and on May 10, 2012, the Wyo- ming Supreme Court explained that additional considera- tion beyond continued employment is not necessary to support an intellectual property assignment agreement. Preston, 277 P.3d at 82. Describing its ruling in Hopper, the Wyoming Supreme Court stated that “public policy favored separate consideration and continued at-will employment was not sufficient consideration to support [a non-compete] agreement . . . based, in part, on the sanc- tity of the right to earn a living.” Id. at 86. The court acknowledged, however, “that there is a fundamental difference between non-competition agreements and intellectual property assignment agreements.” Id. at 87. The court therefore determined that:

[T]he stability of the business community is best served by ruling, consistent with our at-will em- ployment jurisprudence, that no additional con- sideration is required to support an employee’s post-employment execution of an agreement to as- sign 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.
Id. at 88.

From this ruling, it is clear that the April Employee Agreement is valid and enforceable with only continued employment as consideration and that the district court was correct to predict that the Wyoming state courts would so hold.

Of conception:

the level of conception must be sufficient to satisfy our case law—i.e., the idea must be “definite and permanent enough that one skilled in the art could understand the invention. . . .” Univ. of Pittsburgh v. Hedrick, 573 F.3d 1290, 1298 (Fed. Cir. 2009).

The word "absurd" arose:

Based on the district court’s findings of fact, we agree that Preston could not demonstrate invention prior to employment at Marathon. And we find this to be so even under Preston’s broad reading of the term “conceive.” Simply, Preston’s uncorroborated, “little more than a vague idea” does not meet even this standard. If we were to accept Preston’s argument that “conceive” can include having “little more than a vague idea” and that an employee need offer no proof of exactly what that idea was, Paragraph 1 of the April Employee Agreement would be rendered meaningless. This produces an absurd result that is contrary to the principles of contract interpretation under Wyoming law. Schaffer v. Standard Timber Co., 331 P.2d 611, 616 (Wyo. 1958) (contract will not be pre- sumed to have imposed an absurd condition).

The DDB case was cited:

Because the as- signment clause in the April Employee Agreement states that the employee agrees to “hereby assign” all “Intellectual Property,” it is an express assignment of rights in future inventions that automatically assigned rights to Marathon without the need for any additional act. See DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290 (Fed. Cir. 2008) (if the contract expressly grants rights in future inventions, no further act is re- quired once an invention comes into being, and the trans- fer of title occurs by operation of law). Accordingly, we find that Marathon owns the rights to the ’385 patent and ’764 patent.


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