The Future of Expectancy Interests in Patent Rights

Justice Breyer’s dissent in Stanford v. Roche focused (in part) on what he suspected was an error in the Federal Circuit’s rule distinguishing a promise to transfer from an automatic future-transfer agreement.  Justice Breyer considers a pre-invention contract as creating equitable title in the invention and that, at least historically, courts did not automatically transfer of legal title to patent rights.  Breyer’s dissent has created a large amount of uncertainty in whether the Federal Circuit’s rule of enforcing automatic transfer agreements will remain in force.

The language of automatic future transfer agreements is certainly strained and requires some disconnect from reality.  Typically, when joining a company a new employee will “hereby assign” all rights to future inventions.  Of course, at that point the new employee has no future inventions and no rights to assign.  However, when the language is written correctly, the Federal Circuit rule operates so that rights to any future invention automatically transfers to the employer at the point of invention.  (Query later how to conceptualize the “point of invention).  In many other areas of property law, this type of futures contract would not result in an automatic transfer of property rights but instead only an equitable expectancy interest and contract damages if rights were not delivered.  Copyright has a special statutory provision for works-made-for-hire that handle this situation by automatically vesting rights in the employer.

In an interesting first-response to Stanford v. Roche, Professor Hagelin (Syracuse) argues that the language of the Patent Act requires that transfer of legal title in patent right can only take place after the patent application has been filed — and therefore that the Federal Circuit rule is wrong.

Hagelin writes:

Section 261 of the Patent Act prescribes how legal title to patents and patent application may be transferred. Section 261 states: “Applications for patents, patents, or any interest therein, shall be assignable in law by an instrument in writing.” Clearly, the Patent Act contemplates that a transfer of legal title to patents and patent applications can only be accomplished after the patent has issued or the patent application has been filed. The phrase “any interest therein” in Section 261 does not alter the Patent Act’s basic requirement that legal title to patents and patent applications can only be transferred after a patent has issued or a patent application has been filed. The phrase “any interest therein” refers directly to patent applications and issued patents and covers situations in which submitters may be joint inventors or multiple assignees.

. . . .

It would seem, therefore, that the Federal Circuit’s notion of an expectant interest transforming into a legal title by operation of law, without any further act on the part of the transferor, is a fiction which flies in the face of legal and practical realities. The only way legal title in an invention can be transferred from an inventor to another party is through a written document executed after a patent has issued, or after, or concurrently with, the filing of a patent application. It does not matter whether the employee-inventor has signed an employment agreement in which he or she has agreed to presently assign patent rights in future inventions. Legal title cannot pass to the employer until an assignment document is executed after a patent has issued or a patent application has been filed, and the assignment document is recorded with the PTO.

Hagelin’s notion that title cannot transfer without recording the transfer is wrong.   However, there is merit to the general point made by both Breyer and Hagelin — that the Federal Circuit automatic transfer rule has problems.

91 thoughts on “The Future of Expectancy Interests in Patent Rights

  1. OK, the land title analogy does not quite work. I suspect you would said that a first to record system is analogous regardless of who received the grant first.

    For the moment, I will concede this point.

  2. Ned, see above.

    And your hypothetical has not been set properly – you cannot both have an assumed first to file and then premise a response on a “under our current system” – under which system would you like me to answer? If the first (your new hypothetical first to file), you need to let me know which flavor of first to file is being imagined).

  3. Ned,

    At the inchoate level, your question of “But, who has the better claim?” cannot draw parallels to the land grants or bridge titles, each of which are not inchoate rights.

    Are you beginning to see the difference in this discussion that has now spanned multiple threads?

    To borrow from the analogy from Um, no., the inchoate right is merely the invitation to the race. In that sense, no one has a better claim, precisely because the race has not been run. Each of those with the inchoate right are on equal footing.

    What they decide to do with that inchoate right is up to the runners. Exactly how they perfect that right is EXPLICITLY left up to Congress. This last point is one that you have had a hard time understanding and accepting.

  4. The PTO grants the patent to A, the first to file. Is this right?

    Of course it is. What’s the problem?

  5. Hard, further, assume a first to file system.

    Inventor A assigns his invention to B for a series of payments. B is late on his second payment. Without suing for breach or for recision, A then files a patent application on the invention. B then files, naming A as the inventor.

    The PTO grants the patent to A, the first to file. Is this right?

  6. OK, agreed. Two people can have inchoate rights to a patent on the same invention. But, who has the better claim?

    The King grants to patents to the same land. Absent anything else, who has better title. The first grantee or the second?

    I sell you my title to the Brooklyn Bridge. The next day, I sell the same title to another. Does the other have good title?

  7. Ping–

    My comments are limited to “assignment [of a present invention] agreements”, and do not extend to “agreements to assign [a future invention]“.

    The current of conditional contract terms involving conditions precedent runs deeply in the common law of contracts. How particular state law modifies that basic common law is unique to each state, and within the boundaries of state employment law is the only place discussion of “agreements to assign future inventions” should rightfully occur.

  8. EG,

    Actually, silence is the same as disagreeing with the dissent – at least to the semantic level of not agreeing.

    When reading these tea leaves, you have to ask yourself – why did no one, and I mean absolutely no one sign up with Justice Stotmayor’s opinion? It was very much a singular thought that would have been simple to agree with and note for the record that agreement – and yet no one agreed enough to say, “Hey, put my name down on that too.”

    Why is that?

    And I do find it humorous that for all of your “Let’s wait and see” opinion here, you could not help yourself from writing a fairly detailed view on this same topic over at Gene Quinn’s IPWatchdog.

    Why is that?

  9. Can a second inventor obtain better rights

    Ned, I think that you are almost at a point of understanding here. Just try to maintain the distinction between the inchoate right and the patent right. Just because you have one does not mean that you actually have the other.

    There is no law against multiple people having the same inchoate right, after all.

  10. Inviting,

    I think that your understanding – or perhaps your explication of your understanding – is almost there.

    Now you only have to think about employment law and the ability to actually contract for furture events (like making an invention)…

  11. Um no, “inchoate?”

    OK, the court held here that a completed invention creates (“vests”) a present right to a future patent in the inventor, a right that he may assign. Do you dispute that?

    This is a legal right, essentially the legal right to the patent that eventually issue even as against the inventor.

    Once vested, it is right that can be assigned.

    So, when Marshall stated that a completed invention created an inchoate right to a patent in the inventor, what did he mean? Was it a legal right that can be divested by the independent acts of another? Can a second inventor obtain better rights to the same invention while the first inventor has not abandoned his own right to a patent?

  12. I read this post with a sense of extreme irony, as Ned Heller discusses “inchoate” and the laws passed by Congress, yet refused to engage in a conversation on those very points – which run counter to his sacred cow.

    Perhaps Ned is finally understanding what Justice Marshall was referring to when JM used “inchoate,” and how his own quote defeats his desired position.

    Perhaps Ned is finally ready to admit the level of deference that Congress has for setting the parameters of the 100 meter hurdle race of perfecting inchoate rights.

  13. If my analysis above has any merit, this statement is completely incorrect.

    +1

    Legal interest in an “invention” can exist, and can be transferred, as soon as the “invention” is capable of being contractually sufficiently described. The timing of this situation does not NECESSARILY have anything to do with either the filing of a patent application or the grant of a patent.

    +1

    Further, said completion of the invention and its being contractually sufficiently described need not NECESSARILY even be sufficient for (or even related to) an application – the callout of 37 CFR 1.53 is a complete red herring, as people are free to contract with their inventions completely outside of the patent space.

  14. “The only way legal title in an invention can be transferred from an inventor to another party is through a written document executed after a patent has issued, or after, or concurrently with, the filing of a patent application.”

    If my analysis above has any merit, this statement is completely incorrect.

    Legal interest in an “invention” can exist, and can be transferred, as soon as the “invention” is capable of being contractually sufficiently described. The timing of this situation does not NECESSARILY have anything to do with either the filing of a patent application or the grant of a patent.

    For purposes of illustration, even though an “inventor” may contemplate filing an application, and may actually have prepared an application, the spec of which comports with all patenting requirements and contains allowable subject-matter, that application does not need to be filed in order for the claims as written to contractually sufficiently describe an invention.

    In this illustrative scenario, neither the act of filing that application nor the issuance of a patent on that application has any contractually transformative effect on the claims as written, as I believe is necessarily implied by Hagelin’s conclusion.

  15. There are a lot of things you can say about Chisum, patent protectionist, biased, completely re tarded when it comes to policy, verbiose, and on down the line. But there are a few things you must also recognize, he is thorough, properly organized, and usually understands the law as it stands today pretty well.

    Why he is a king among scholars is well demonstrated by the above. He is indeed the quentissential scholar.

  16. Anon, We are discussing statutes here. The statutes are not new. They go back to quite a ways.

    To understand the statutes, it is best to simply read the relevant Supreme Court cases from the beginning to see how the law developed as it did.

    If you read Chisum, he organises his treatise the same way.

    I did find out a couple of things here I did not know before. For a legal assignment, the invention must be complete.

    Second, I found out thay a bare assignment of a patent or application does not automactically assign reissues or extensions. But an assignment that includes the underlying an invention does.

    Third, it does appear that an obligation to assign inventions not yet made is equitable and does not grant one legal title. Curtis, Section 170 (cited by Breyer in Roche); Cf, United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933).

  17. I am curious as to the type of legal research you use Ned that does not work from the present day backwards in time. Why is it that your cites here are all from the 1800′s?

  18. “Fitzgerald possessed this inchoate right at the time of the assignment. The discovery had been made, and the specification prepared to obtain a patent.”

    “Fitzgerald had an inchoate right at the time of the assignment, the invention being then complete and the specification prepared.”

    “…where the conveyance is of the invention, whether before or after the patent is obtained, the rule is…that a
    conveyance of the described invention carries with it all its incidents…”

    “…the inchoate right to obtain a renewal or extension of the patent is as much an incident of the invention as the inchoate right to obtain the original patent…”

    Just as I have been saying–an example of an assignment agreement–i.e. an agreement assigning a described invention.

    Rights to obtain a patent, or a renewal or extension thereof, are inchoate rights existing only once there is a described invention (of course).

  19. It might be helpful to see what the Supreme Court said about these statutes. Check the below case. In order for legal title to vest in the assignee, cases depend upon the inchoate rights of the inventor to obtain a patent once the invention is complete. The assignment of the invention coveys legal title to the future patent rights under the statutes. But the invention must be complete.

    I have been unable to find a single case to the contrary. Does anyone know of one?

    Gayler v. Wilder, 51 U.S. 10 How. 477 477 (1850)
    link to supreme.justia.com
    “The inventor of a new and useful improvement certainly has no exclusive right to it until he obtains a patent. This right is created by the patent, and no suit can be maintained by the inventor against anyone for using it before the patent is issued. But the discoverer of a new and useful improvement is vested by law with an inchoate right to its exclusive use, which he may perfect and make absolute by proceeding in the manner which the law requires. Fitzgerald possessed this inchoate right at the time of the assignment. The discovery had been made, and the specification prepared to obtain a patent. And it appears by the language of the assignment that it was intended to operate upon the perfect legal title which Fitzgerald then had a lawful right to obtain, as well as upon the imperfect and inchoate interest which he actually possessed. The assignment requests that the patent may issue to the assignee. And there would seem to be no sound reason for defeating the intention of the parties by restraining the assignment to the latter interest and compelling them to execute another transfer unless the act of Congress makes it necessary. The Court thinks it does not. The act of 1836 declares that every patent shall be assignable in law, and that the assignment must be in writing and recorded within the time specified. But the thing to be assigned is not the mere parchment on which the grant is written. It is the monopoly which the grant confers — the right of property which it creates. And when the party has acquired an inchoate right to it, and the power to make that right perfect and absolute at his pleasure, the assignment of his whole interest, whether executed before or after the patent issued, is equally within the provisions of the act of Congress.”

    Railroad Company v. Trimble, 77 U.S. 10 Wall. 367 367 (1869)
    link to supreme.justia.com
    “We do not think the act of Congress requires it, but that when the patent issued to Fitzgerald, the legal right to the monopoly and the property it created was, by the operation of the assignment then on record, vested in Wilder.”
    The argument which controlled the judgment of the court may be thus stated: Fitzgerald had an inchoate right at the time of the assignment, the invention being then complete and the specification prepared. It appeared, by the language of the assignment, that it was intended to operate upon the perfect legal title, which he then had a lawful right to obtain,
    Page 77 U. S. 380
    as well as upon the inchoate right which he then possessed. There was no sound reason for defeating the intention of the parties by restricting the assignment to the latter interest, and compelling the parties to execute another transfer, unless the act of Congress required it, which, in the opinion of the court, it did not. The act of 1836 declares that every patent shall be assignable in law. The thing to be assigned is not the mere parchment on which the grant is written, but the monopoly which the grant confers — the right of property which it creates.”

    Hendrie v. Sayles, 98 U.S. 546 (1878)
    link to supreme.justia.com
    “Apt words are required, where the conveyance is of an existing patent, to show that the conveyance includes more than the term specified in the patent; but where the conveyance is of the invention, whether before or after the patent is obtained, the rule is otherwise, unless there is something in the instrument to indicate a different intention, the rule being that a
    Page 98 U. S. 555
    conveyance of the described invention carries with it all its incidents, and all the well considered authorities concur that the inchoate right to obtain a renewal or extension of the patent is as much an incident of the invention as the inchoate right to obtain the original patent; and if so, it follows that both are included in the instrument which conveys the described invention, without limitation or qualification. Emmons v. Sladden, 9 Off.Gaz. 354; Gayler v. Wilder, supra; Clum v. Brewer, supra; Carnan v. Bowles, 2 Bro.C.C. 84.”

  20. I believe in State law regarding wills, expectancies can be devised is the majority rule. North Carolina is an example of a minority rule jurisdiction, not sure if there are any others. Unfortunately, the readers of this column are among the least likely to be able to verify this.

  21. OT to the main topic here, but has anyone noticed that several of the forms that the Office does provide have invalid OMB numbers…?

    ..some critical forms have been illegal for more than nine months now..

  22. Ping–

    “But words and drawings do not necessarily form a patent specification.”

    When they pertain to “an invention”, yes, they do, for the purposes of a completed application under 37 CFR 1.53. They don’t necessarily contain allowable subject-matter or necessarily comport with 112 in the first instance, but they are sufficient to constitute part of a completed application as per 37 CFR 1.53.

    “a contract may still inure even though 112 may not be met.”

    That is true because it is conditional–but the initially-filed spec and claims are not required to comport with 112 in order for them to constitute a complete application under Rule 1.53. Regardless of whether the contract inures, the invention is sufficiently-well described to meet the requirements of a complete application, and can form the subject-matter of an assignment agreement.

    “An invention is simply not a patent.”

    Of course not, I never said it was. The description of an invention is, however, sufficient to constitute a specification under Rule 1.53 (or at least the claims) assuming that it meets formal requirements when used in a patent application, if ever.

    “an invention precedes an application for patent”

    You are exactly correct, but you’re missing why that is significant. The language presupposes the existence of an invention and is limited to the assignment thereof.

    “You have merely assumed that any written claim would [permit sufficiently certain ascertaining of the subject-matter of the agreement]”

    No I haven’t. All I said was that when a contract is reviewed, the subject-matter is analyzed for vagueness, assuming the issue is raised by the parties–and it is. A single claim may be sufficiently specific and certain for the purpose of adjudicating rights and obligations under a contract, but on the other hand, it may not be.

  23. I do understand how the Court works and we will likely have to continue to “agree to disagree.” Contrary to what you say, “silence” by these 6 Justices on the FilmTec issue is not the same as “deciding” that issue (or even disagreeing with the dissent), even in these circumstances. That would be like saying that, because a majority of Justices dismissed the LabCorp v. Metabolite case for cert being improvidently granted, by their “silence” they disagreed with Justice Breyer’s dissenting point on patent-eligibility under 35 USC 101.

    As usually happens (much to our dismay and discomfort), a majority SCOTUS’ simply addressed the question before it (does Bayh-Dole cause automatic vesting of title?) and no other. In fact, I suspect SCOTUS (as well as the Federal Circuit) would be amused by your thought that “silence” is equivalent to “deciding” an issue that wasn’t explicitly addressed by them.

    Only time will tell whether you’re right or I’m right. We’re both entitled to our opinions, right? Let’s wait and see what happens.

  24. Maybe I can help.

    If the drawings and the spec don’t match.. lets say a number is missing, OR, a drawing is missing, Or even the abstract doesn’t seem to line up with the summary, or all of the above in one form or another… and lets not forget the Forms that the USPTO is supposed to have before they can even go forward. Be it the CHECK to pay the Issure Fee… etc.

  25. Inviting,

    As the good professor was overly broad, you are just as guilty of being overly narrow. You are trying too hard to narrow “invention” into a “patent” or “patent application.”

    Such is a false premise.

    In practice, exactly HOW is the subject-matter of an assignment agreement able to be described with contractually-sufficient certainty and specificity? We use words and drawings to effect such a description.

    Words and drawings are what form a patent specification.

    But words and drawings do not necessarily form a patent specification. Also, what may suffice for a contract may be far different than what would suffice for an application. Quite simply, a contract may still inure even though 112 may not be met. An invention is simply not a patent. As I pointed out, it is error to simply make the assumption that the two are equivalent. You want to hold that the two are “precisely” the same – you cannot.

    Notwithstanding that difference, you also have not addressed the plain language that an invention precedes an application for patent.

    Lastly, you do not address the pure form over substance of having a mere claim as sufficiency for your “the subject-matter of the agreement must initially be able to be ascertained with sufficient certainty.” You have merely assumed that any written claim would make this so – this is not a proper assumption. This too then points out that the invention//patent difference is a two-way street and that differences can go in both directions.

    I also hope that TJ will understand the nuances that you and I discuss. That way, you will not have been wrong in vain.

  26. Ping–

    You have completely misunderstood what I said, and for that the fault is entirely mine.

    I’m just trying to be helpful to TJ, in whatever limited way possible. I’m sure he’s far deeper into this than am I, but it never hurts to have another pair of eyes looking at something.

    What I meant to say was that I agree with TJ’s sentiment, but that there is a problem with the use of the word “invention” in Section 118 that I think may preclude the successful use of his Section 118-based argument, because Section 118 can be construed to apply to ASSIGNMENT AGREEMENTS rather than to AGREEMENTS TO ASSIGN.

    TJ said: “My point was that section 118 plainly contemplates that an “assignee” can exist before the filing of an application.” While that may be true, if Section 118 applies to only assignment agreements and not to agreements to assign, Section 118 contemplates that no “assignee” can exist before the (de facto) existence of an application, supporting the “good professor’s” conclusion, and leaving TJ’s Section 118 argument dead in the water.

    Let me try again:

    In order for any contractual agreement, including an assignment agreement, to be valid and enforceable, the subject-matter of the agreement must initially be able to be ascertained with sufficient certainty and specificity to render any claim made under that agreement to be adjudicated–if not, the agreement is void for vagueness. That is what I mean by contractual sufficiency of the description of an “invention”.

    Courts will, to varying degrees depending on jurisdiction, venue, and type of agreement, try to determine the intent of the parties in order to preserve the validity of an agreement.

    With this in mind, if a contractually-sufficient determination of the subject-matter is possible, the courts can then turn to the doctrine of mistake to determine if a contract should be enforced–i.e. if there was a “meeting of the minds”, regarding unilateral or mutual mistake.

    In practice, exactly HOW is the subject-matter of an assignment agreement able to be described with contractually-sufficient certainty and specificity? We use words and drawings to effect such a description.

    Words and drawings are what form a patent specification. A patent specification is essentially the disclosure requirement for the agreement between the applicant and society in exchange for temporary monopoly rights. Just as in an assignment agreement, the subject-matter of the agreement must initially be able to be ascertained with sufficient certainty and specificity to render any claim made under that agreement to be adjudicated, otherwise the application will be rejected under 112 and there will be no enforceable agreement.

    The subject-matter of a hypothetical “invention” and any corresponding potential patent application made thereupon is precisely the same, and the manner of sufficiently describing that invention is precisely the same–therefore, any description of an invention that would be contractually sufficient would also be patently sufficient, and any that would not be patently sufficient would also not be contractually sufficient.

    So, for any assignment agreement to be potentially valid and enforceable, the invention must be sufficiently described therein, and that description consists of a de facto patent application specification–or more specifically, a set of patent claims.

    In other words, in every potentially valid and enforceable assignment agreement there exists a de facto patent application specification.

    And Section 118 appears to me to be limited to ASSIGNMENT AGREEMENTS rather than to AGREEMENTS TO ASSIGN, as it plainly contemplates an EXISTING assignment of an “invention”.

    I know this is only a simple, incomplete, and possibly wrong blog-level analysis, but I hope TJ gets some benefit nonetheless.

  27. I recognize that it is difficult sometimes to listen to what is not being said …

    Yeah, especially around here, where some numskull has dedicated his life to saying everything.

  28. EG,

    You do know how the Court works, correct? You should be aware that the opinions of the Justices are seen and reviewed by all prior to “publication.” Had anyone wanted to join the one loan voice – or the other duo, they would have.

    You quite miss the nuance here that the 6 chose not to join the three in their opinions. I do not need to show you the 6 discussing, addressing or anything to do with the FilmTech issue, because their silence speaks to the effect that I am pointing out. They chose not to join the minority view.

    I recognize that it is difficult sometimes to listen to what is not being said – but it is every bit as important to what is being said.

    The Dissent is the dissent for a reason – it means that they represent a view that did not win.

  29. Hardworking,

    I again suggest you carefully read the Opinion of the Court, including the headnotes in the slip opinion. All that those 6 Justices addressed was that Bayh-Dole does not automatically vest title in federally funded research with the contractor/grantor; there must still be an assignment of rights by the researcher to the contractor/grantor. If you can point to me where those 6 Justices addressed the FilmTech issue and especially even cited FilmTech case, I’ll listen. But the fact is that only Sotomayor’s and Breyer/Ginsburg’s concurring and dissenting opinions even discuss this issue and cite to the FilmTech case. The other 6 Justices never addressed this issue (or cite to FilmTech), so this issue remains “fair game” for future SCOTUS consideration.

  30. Sorry to throw a completely-unrelated question here:
    When there are translational errors between the PTC international application and the PTC national application (US), are you allowed to rely on the PTC international application’s original language to rectify it? (patent has been issued long time ago). Anyone knows an answer to this?

  31. Thanks for the post. In my opinion, Prof. Hagelin’s reading of Stanford v. Roche would create quite a mess and is taking that case too far. I disagree with his assessment regarding the (non-) transferability of inventions pre-application. I think the Federal Circuit gets it right in DDB Technologies and its progeny. I agree with you that his conclusion that recordation is a prerequisite to legal transfer of title is erroneous.

  32. Was that you up there in the Stands at the UT game David? So another to my list. I get it. That is why i was told to call you!

  33. “2 But the legal title to an invention can pass to another only by a conveyance which operates upon the thing invented after it has become capable of being made the subject of an application for a patent.”

    I think my formulation of this concept is much more precise than that expressed in Curtis. See upthread.

    The statement in Curtis is, again, tautological, because that which can be made the subject of an application for a patent is that which has been invented.

  34. What is the law, really? From Curtis, Treatise on the Law of Patents (1867), p.155,

    § 170. The statutes, however, which authorize the assignment
    of an invention before the patent has been obtained, appear to emhrace only the cases of perfected or completed inventions. There
    can, properly speaking, be no assignment of an inchoate or incomvlete invention, although a contract to convey a future invention may be valid, and may be enforced by a bill for a specific performance. 2 But the legal title to an invention can pass to another only by a conveyance which operates upon the thing invented after it has become capable of being made the subject of an application for a patent. This is apparent from the provisions of the statute which require the specification and the application to be made in the name of the inventor. A contract to convey a future invention, or an improvement to be made upon a past invention, cannot alone authorize a patent to be taken by the party in whose favor such contract was intended to operate.

    2 Nesmith v. Calvert, 1 Wood. & M. 34.

  35. IPB,

    I think TJ is correct.

    I further think that your reading of “invention” here is in error. And because of that, your statement of “I think that 118, as well as other provisions, contemplate that any description of an invention that would be contractually sufficient would also be patently sufficient, and any that would not be patently sufficient would also not be contractually sufficient” is also in error.

    Hide in Plain Sight and alludes to this in his reply to you above.

    And while I recognize that the patent provisions will indeed generally refer to patents, I disagree that one can simply assume that “invention” must be limited to “patented invention,” or that “invention” in a contract sense must be so limited. There is nothing, and I do mean nothing, that indicates that the patent world must subsume the contract world of inventions (for example, inventions not patentable).

    Further, the language of 118 indicates that “invention” precedes the “may make application for patent” – which in its direct language holds that invention does not need any written claims, because the invention exists prior to the “making of the application.” – How can you have claims prior to that making (of the claims)?

    Further, your assumption – for that is all that it is – that any claim automatically inures to the state of “sufficiently precise to admit of legal adjucication of the disposition of any rights obtaining therein” is not substantiated with any legal backing.

    It is pure wishful thinking.

    It sounds all pretty, but with that reasoning, any claim, no matter how poorly written, no matter even if it violates ALL other legal requirements for a valid claim would inure “property” status by being merely written. Such is truly form over substance.

    For at leaast these reasons, your “must therefore” must therefore be rejected.

  36. This is also my understanding.

    The problem lies, of course, in the use of the word “invention” in Section 118.

    Is there a legally sufficient way to describe an invention otherwise than by the accepted claim format?

    Even in a design patent drawing, there exists a solid line convention to aid in describing the invention.

    I think that 118, as well as other provisions, contemplate that any description of an invention that would be contractually sufficient would also be patently sufficient, and any that would not be patently sufficient would also not be contractually sufficient.

    S. 118 must therefore contemplate that, even in the absence of an application, a set of claims that could satisfy the claim requirement of a patent application exist–otherwise the purported object of any alleged assignment would be insufficiently precise to admit of legal adjudication of the disposition of any rights potentially obtaining therein.

    So TJ, I think that the implicit acknowledgement of the necessarily-implied existence of such claims practically means that a patent application must exist at the time of any assignment.

    Of course, any such application does not have to have been FILED, as the “good professor” suggests, in order for an assignment to take place.

  37. So I read the new version, and yes it didn’t change any conclusions, but it also didn’t address my argument. Prof. Hagelin’s new point is that section 118 does not solve the problem of a rogue inventor. I never argued that it did.

    My point was that section 118 plainly contemplates that an “assignee” can exist before the filing of an application. His theory says that an assignment cannot exist. The two conflict.

  38. EG,

    I will still take your money – even with Sotomayor’s concurrence, that was only three of the nine justices who felt so inclined.

    That is hardly the trouncing that will win you the bet.

  39. Ned,

    Definitely on point.

    Hardworking,

    You better take a closer look at what SCOTUS actually ruled on in the Stanford case (and what issues are still open for debate, i.e., the continuing validity of the holding in FilmTech). All that the majority basically said is that Bayh-Dole does not cause an automatic transfer of rights from the researcher to the university. That’s brought out in Justice Sotomayor’s concurring opinion:

    JUSTICE SOTOMAYOR, concurring.
    I agree with the Court’s resolution of this case and with its reasoning. I write separately to note that I share JUSTICE BREYER’s concerns as to the principles adopted by the Court of Appeals for the Federal Circuit in FilmTec Corp. v. Allied-Signal, Inc., 939 F. 2d 1568 (1991), and the application of those principles to agreements that implicate the Bayh-Dole Act. See post, at 6–10 (dissenting opinion). Because Stanford failed to challenge the decision below on these grounds, I agree that the appropriate disposition is to affirm. Like the dissent, however, I understand the majority opinion to permit consideration of these arguments in a future case.

  40. That would seem to depend on the specific circumstance.

    link to en.wikipedia.org

    You may have:

    1. Economic waste. The law does not favor tearing down or destroying something that is valuable (almost anything with value is “valuable”). In this case, significant destruction of the house would be required to completely replace the pipes, and so the law is hesitant to enforce damages of that nature.[citation needed]

    Perhaps this guy built a business around the invention, shame to tear it down. Why not just give them damages?

    Or you may have:

    2. Pricing in. In most cases of breach, a party to the contract simply fails to perform one or more terms. In those cases, the breaching party should have already considered the cost to perform those terms and thus “keeps” that cost when they do not perform. That party should not be entitled to keep that savings. However, in the pipe example the contractor never considered the cost of tearing down a house to fix the pipes, and so it is not reasonable to expect them to pay damages of that nature.[citation needed]

    Idk how this might apply in the patent context.

    “Most homeowners would be unable to collect damages that compensate them for replacing the pipes, but rather would be awarded damages that compensate them for the loss of value in the house. For example, say the house is worth $125,000 with copper and $120,000 with iron pipes. The homeowner would be able to collect the $5,000 difference, and nothing more.”

    Let’s say the assignee company is worth 10$ without the patent and 11$ with the patent. The assignee could recover 1$.

  41. EG,

    Rather than complain about substance, let’s take a closer look.

    to trump a prior obligation to assign future invention rights

    You do realize that your view on just what was trumped by just what else does not match the reality of this case, do you not? You have overstated the matter by comparing a present tense actual assignment with a mere promise to do something.

    Harken back to your basic contract law, and think about a promise to consider making a deal versus promising to take a future action in a currently set deal.

    You won’t go into the ambiguous and what appears to be incomplete record…

    Good, then I won’t have to accuse you of trying to blow smoke on the actual issue we are discussing.

    I’m willing to bet that Roche was as surprised as…< ?i>”

    I’m willing to take that bet. And the money. There was no surprise – it was part of their main argument.

    exalts form completely over substance

    Wwrong – for the reasons I have already shared. Just because you want to close your eyes to the substance, won’t make that substance disappear.

    And I’m also willing to bet that if this issue ever reaches SCOTUS, the Justices will adopt Breyer’s view

    I will take this bet as well. And more of your money. You do realize that this issue actually was at the Supreme Court, do you not? Guess what, Breyer’s view was not ascendant.

    With the additional benefit of hindsight, you may want to rethink your position and understanding of law here.

  42. While I remain flattered that my stylish moniker techniques have once bagian been copied, the above message has no endorsement from, nor should be confused with the real McCoy

  43. In all seriousness, couldn’t they just break that “contract to sell”?

    In all seriousness, if the seller has already shipped it to some other customer, the first buyer has a problem. But if the seller still has it, and it can be recovered by the buyer, and further supposing that the item in question is unique, why wouldn’t the court order its delivery to the buyer?

  44. Hard, Breyer pointed out that Film Tec overturned approx. 150 years of settled precedent that an obligation to assign a future invention created only an equitable obligation to assign, not legal title in the assignee.

    When you start mouthing off about the general law being consistent with the Federal Circuit rule, you seem to exhibit your own legal misunderstanding of what the general law actually is.

  45. “When you promise to sell something you won’t have till later, it’s gone as soon as it arrives, and you can’t go selling or renting the same thing to somebody else.”

    In all seriousness, couldn’t they just break that “contract to sell”?

  46. IANAE, you have to be a shill for big corporate America.

    The inventor disclosed the patent application to the company, sought a waiver and it was granted in writing. The inventor relied on that waiver to his detriment.

    What about this is not an estoppel?

  47. IANAE, “When you promise to sell something you won’t have till later, it’s gone as soon as it arrives, and you can’t go selling or renting the same thing to somebody else.”

    As pointed out by Breyer, that is not the law. All the assignee gets is an equitable right that he must enforce. This permits defenses such as SOL, estoppel and laches to be raised.

    Mein Gott, IANAE, you seem at times not to have gone to law school.

  48. Issues of fairness cannot be raised.

    There are no issues of fairness. When you sell something, it’s gone. When you promise to sell something you won’t have till later, it’s gone as soon as it arrives, and you can’t go selling or renting the same thing to somebody else.

    Because it’s what you agreed to, that’s why.

    The plumage don’t enter into it. It’s passed on.

  49. In MLB, the company gave the inventor a waiver. Now how is this not an estoppel?

    An estoppel against what?

    If the buyer tells the seller that he doesn’t intend to do anything with the item he just bought, how does that make him any less the owner of that item?

    Also, supposing the inventor offered to sell or license you such a patent. Wouldn’t you have serious doubts about whether you were buying/licensing it from the person who actually owns it? Now, consider an infringement suit as a big, clunky licensing negotiation, and tell me how fair it is to be forced to license a patent from somebody who already sold it. Whether or not his name’s on the front page.

  50. IANAE, I strongly object that the whole issue has been turned from one of an equitable obligation to assign into an legal assignment. Issues of fairness cannot be raised.

  51. TINLA, that was the law for 150 years. It puts the onus on the assignee to perfect his rights. In any action against the inventor/assignor, the inventor could raise

    - Statue of Limitations
    - Laches
    - Estoppel

    Or other legal or equitable defenses against the assignee. But under the Federal Circuit “regime” and I say that with utmost contempt, these defenses are stripped from the inventor/assignor. The company’s title is a legal title, and it does not need to proceed against the inventor at all. The assignee can sue to enforce the patent without the cooperation of the inventor, and the inventor cannot sue anyone with the standing issue sinking his case.

    In MLB, the company gave the inventor a waiver. Now how is this not an estoppel? If the company later were to try to enforce its rights against the inventor, it would be faced with all sorts of defenses from Statute of Limitation, to estoppel to laches. But in the fine realm of the Federal Circuit, the inventor simply has no case.

    This is outrageous!!!!!

  52. We will likely have to “agree to disagree” here:

    In the context of the situation in Stanford, allowing a boilerplate “I will assign and do hereby assign” provision in a Visitor Confidentiality Agreement (VCA) to trump a prior obligation to assign future invention rights is “formalistic, illogical, and unrealistic.” (I won’t go into the issue of the ambiguous and what appears to be incomplete record in the Stanford case that Breyer also rightly criticized). I’m willing to bet that Roche was as surprised as Stanford that Roche won based on this boilerplate provision in the VCA. Stanford may have gone too far in arguing that Bayh-Dole automatically created transfer of the researcher’s invention rights to Stanford. But if that researcher was truly under a prior obligation to assign his future invention rights to Stanford (again, the factual record isn’t clear on this point), to say that prior legal obligation can be trumped by the “legal fiction” of a present assignment of future rights (i.e., the boilerplate assignment provision in the Roche VCA) justs exalts form completely over substance. And I’m also willing to bet that if this issue ever reaches SCOTUS, the Justices will adopt Breyer’s view and trounce the Federal Circuit’s holding to the contrary in FilmTech. (I’m also not alone in that view.)

  53. Studies have shown that people who flunk out of college often express resentment towards the institution for many years.

  54. “Because lots of people would perceive an injustice in giving one person something that is owned by another person.”

    Lots of people percieve an injustice in having made up an imaginary right to imaginary property.

  55. IBP,

    I was merely addressing only one of the “good professor’s” statements – the one that T specifically stated.

    Whether the “good professor” then went on and addressed additional material and made or not made overbroad statements was not the subject of my post. If T meant to address other items, then T should have written a better post.

    As for the “good professor,” I concur with you that it is indeed overbroad to generalize from patent (or patent application) to invention. One only needs to remember that not all inventions are even patentable to see this. The “good professor’s” views also seem to dismiss the concept of trade secrets, as if such are also not inventions.

    Further, the “good professor’s” logic is deeply flawed in his section 3. The “good professor” mistakes the perfection of an instrument in writing with the legal acknowledgement of an intent to do something in the future. I think the “good professor” would have trouble in the real world, per HSI’s example below. Further, he conflates “recording” and “assignable in law by an instrument in writing.” The written assignment document simply may not be the same as the recording document.

    His logic is also flawed when he attempts to create a problem that does not exist as witnessed by his statemetn of “The practical problem with an attempt to file a written expectant interest in a future patent is that there is no patent application or issued patent with which to associate the expectant interest.” The subject of his “attempt to file” appears to be a recording, as opposed to an assignment. It would indeed seem therefore, that the “logical” result the “good professor” arrives at is in error due to his conflating two very different actions.

    Poor foundations make poor (ivory) towers.

    Switching gears and looking at the conclusion of the “good professor’s” article, his finding of the proper use of present tense in employment agreements is true, but divorced from the body of his paper (such a conclusion does not depend on the “good professor’s stated opinions). As to his second point, there is no gaping loophole, because that “loophole” is sufficiently closed with ordinary contract law. His questions of “how did we get to this point and what can be done now.” are answered with – “it does not matter” and “nothing need be done.”

    The “good professor” spend a lot of ink kicking up the dust of an “unethical employee-inventor.” He spends a considerable amount of time “creating” a problem “particular to patent law” that does not exist.

    But that’s what “good professors” are paid to do, is it not? Create problems and publish?

  56. Malcolm, don’t tell me you don’t know what would happen in such a situation.

    Why don’t you proceed immediately to the subtlety that you had planned to invoke once some innocent poster unwittingly gave you the obvious answer?

  57. Hard working substance Identifier,
    You sound like you are a Lawyer that is handling a womb sale before it is born? Is that what you are saying here?
    Sounds like a real Life decision that was never given to the Mother. And when it was… Someone just “STOLE THE BABY!”
    KIDNAPPING…. WOW…. THE SAME EVENT, JUST DIFFERENT TYPES OF BABIES.

  58. Ned, I’m wondering how the result would be different if the Feds instead rule that the duty to assign is not a present assignment, but that it does require equitable relief whereby the inventor must immediately assign his patent and gets immediately sued on it? It seems like a quibble over whether to split the baby lengthwise or across the middle, where one party protests the lengthwise dissection on the grounds that the infant will be harmed.

  59. Question: what if the sole named inventor of a patent testifies under oath that the invention was someone else’s idea and he/she just copied it? Would that be enough to invalidate the patent and/or render it unenforceable?

  60. In addition, how does Hagelin’s view square with the established law on “shop rights?”

    Moreover, where does 261 specify that patent rights shall only be assignable by instruments in writing?

    The main point that Haggelin does have is that interests can’t normally be assigned until they have arisen, and the interests cannot arise before invention. However, any time after the invention, the interests should be assignable. The “present assignment language” in the employment agreement might hold water under the law law as expressing an intent to assign the rights as soon as they arise, followed by silence on change of that intent serving as assent to assignemnt upon arisal of the rights. However, I wouldn’t advise relying solely on that language to secure the interests.

  61. Pity the poor fool caught in your empire without justice.

    What if it had been the other way around? What if the inventor technically had good title but the Big Evil Corporation invested its own money in “good faith” in prosecuting the patent and bringing a product to market? Would you then give BigCorp the right to sue on the patent?

    Do you only perceive an “injustice” because it’s the inventor run afoul of a patent to his own invention, or because he’s an individual trying to build a business? Because lots of people would perceive an injustice in giving one person something that is owned by another person.

    Besides, once he’s sold the patent, it doesn’t matter whether he’s the inventor. He’s simply yet another person who doesn’t own that patent and may not practice the invention without permission from the person who does.

  62. IANAE, check my response to anon above.

    You have no fricken idea. Assignment contracts can obligate an inventor to assign all inventions made during employment, or invention related to expected company business, etc. The inventor may not have any real idea that his invention, developed independently or conceived prior to employment but reduced to practice while he was an employee, might be “owned” by the company.

    The MLB decision was one such case. The inventor informed the company of the patent application and obtained a waiver. He proceeded to develop a business based on the patent. When, decades later, he sued MLB, he was tossed on standing. No SOL. No laches. No fairness.

    Guys like you, IANAE, are extremists. Pity the poor fool caught in your empire without justice.

  63. As the article correctly points out, I was wrong to say that title passes only upon recording. I should have said that title can only be perfected (protected) by recording. I will make this change in the final version of the article. I have also addressed section 118 in the most recent version of the article. Neitner the title-recording point nor section 118 changes my conclusions.

    I will post the most recent version of the article on SSRN.

  64. That is correct, it is tautological.

    But don’t you think the “good professor” is talking about more than just patents and applications when he says:

    “The only way legal title in an invention can be transferred from an inventor to another party is through a written document executed after a patent has issued, or after, or concurrently with, the filing of a patent application.” ?

    He does not limit his definition of “invention” to “that subject-matter described in patent claims”.

    Because an “invention” can of course exist in the absence of any drafted patent claim, the “good professor” statement is overbroad.

    Other ways of describing the “invention” must meet conditions of contractual sufficiency for the contract to be sued upon effectively, but need not necessarily meet conditions for patent sufficiency.

    I don’t think that the “good professor’s statement is quite limited to only [patents and patent applications]“.

  65. on how to effect an immediate transfer of expectant interests is formalistic, illogical and unrealistic.

    formalistic? Sure. But most everything in the legal world has some level of formalism. This is a feature – not a bug.

    illogical? No. You may not like the logic, but the logic makes sense given the intent of the parties. The intent to own something not in existence at the time of the agreement has parallels throughout many other human endeavors involved with “property.”. Take the manufacturing world for example and “Made to Order” with a pre-payment. It is quite logical to see “ownership” of something not yet in existence by a party that will not be making the item.

    unrealistic? On the contrary, this is very realistic. What is unrealistic is to think that somehow the concept of intellectual property is somehow immune to a concept that exists for all other “property” that can be created at a later date than an intended transaction.

    There really is substance here, EG.

  66. Ned: The assignee has title even though the inventor has for years invested his own money, time and effort in prosecuting the patent and building a buisiness around the patent in good faith belief he owns it.

    I think you mean that the other way around. Here, try it like this:

    “The inventor has for years invested his own money, time and effort in prosecuting the patent and building a buisiness around the patent in good faith belief he owns it, even though the assignee has title.”

    Also, just to be clear, we are talking about the “good faith belief” of an inventor who has signed a wholesale assignment of all rights in any future inventions, right?

  67. How is an inventor acting “in good faith belief he owns it” if that same inventor has assigned the rights away in the first place?

    Ned,

    Yet another comment by you that makes me wonder if you understand the very simplest notions of law.

    The intervening time seems to be a red herring – the timing of the question to be asked is at the point the inventor signs on the line for assigning rights away. If an inventor signs such a document, there is no “good faith belief” later that he owns something he has knowingly signed away.

    If the inventor then decides to build on, invest in, or otherwise develop something he has knowingly signed away, that inventor should not expect that his action of knowingly signing away in the first instance should have no effect.

    The moral here, is to be aware of the content of any legal document you sign. Expect that any such document to be upheld. Injustice? Fraud? Fundamentally Wrong? Well, that last question has an answer of yes, but not in the manner that Ned thinks.

  68. Generally, I don’t agree with Justice Breyer’s views on patent law (his inane discussion at oral argument in KSR about how to defeat raccoons from eating a garage door opener sensor still annoys me). But I do agree with Breyer that the Federal Circuit’s view expressed in FilmTec Corp. v. Allied Signal (and affirmed in Stanford) on how to effect an immediate transfer of expectant interests is formalistic, illogical and unrealistic. All you can really get from an employee inventor is an agreement to assign future invention rights which currently don’t exist. Allowing phrases like in Stanford (“I will assign and do hereby assign”) to effect a present assignment of future rights justs exalts form completely over substance.

  69. IBP, I agree with your analysis. But the Feds go one step further, they totally bypass the equitable title stage. The assignee has legal title without more. This means, it seems, that the assignee under the Feds theory can file suit on a patent he did not file, did not prosecute, never exercised any control over, had no knowledge of at all for years or decades while the inventor built his busines around the patent, etc., etc., etc. He can ignore the inventor and actually sue him, the inventor, for patent infringement on the inventor’s own patent!

    Think about that. The assignee has title even though the inventor has for years invested his own money, time and effort in prosecuting the patent and building a buisiness around the patent in good faith belief he owns it. If the inventor files suit aganist a third party infringer, he is tossed on standing, equities in his favor or SOL vis-a-vis a non party “owner” are not considered.

    This is the Federal Circuit rule. This is a rule of injustice and fraud. It is fundamentally wrong.

  70. Actually T, reading the words reveals that nothing is hidden.

    The only items under discussion, the objects that transfer of legal title is pointed to, are patents (which only exist after grant) and patent applications (which only exist after the application has been filed).

    The sentence is actually a throat clearing tautology – Now if you want to discuss other things besides patents and patent applications, feel free to do so, but the good professor’s statement is quite limited to only those two types of things.

  71. “Clearly, the Patent Act contemplates that a transfer of legal title to patents and patent applications can only be accomplished after the patent has issued or the patent application has been filed.”

    Once again, the word “clearly” signals that the writer is about to hide the ball. This point isn’t clear at all; it is in fact the entire point being disputed. Try again, professor.

  72. Section 261 is limited to granted patent rights and to whatever rights may exist in a patent application, but is silent on rights in an invention as considered in Section 118 and elsewhere.

    An “invention” can of course exist in the absence of either a patent or a patent application. Legal title to the rights in an invention can be transferred at any such time as a contractually sufficient definition of the “invention” can be achieved.

    A equitable interest can exist in any rights in a currently-existing invention, which equitable interest can be converted to a legal interest under agreed-upon conditions and pursuant to agreed-upon procedures.

    As long as the subject-matter of any “obligation to assign” is contractually sufficiently defined, or can be contractually sufficiently defined at a particular point in time, the obligation to assign can be enforceable.

    Bottom line: legal or equitable title in the rights in either a patent or a patent application can be totally different than legal or equitable title in the rights in an invention

  73. What a hateful greedy bunch. At least now there will be less they have to borrow. Too bad.
    And I’m sitting on at least two more GEMS! And the greedy bunch would rather fight with their BOOT STRAPS and Their TOE NAILS than…..
    Imagine all this secrecy. It was never about me. It was about what I brought to the Milk Glass.

  74. I am reluctant to write this since I was heavily involved in the case and therefore probably biased, but it strikes me that Hagelin’s theory has two problems.

    1. It is completely inconsistent with 35 USC 118, which allows “a person to whom the inventor has assigned . . . the invention” to file the patent application in place of the inventor. By definition, such an assignee cannot exist under his theory, since an assignment cannot be executed until the filing of the application.

    2. His cite to the MPEP contradicts his own argument. He notes that 37 CFR 3.21 has an explicit provision for assignments made before the patent application is filed, if the assignment is executed concurrently with the application. Hagelin calls this an “exception,” but it is an exception that is fatal to his theory. If 35 USC 261 mandates that no assignments can be made before an application is filed, then that would also prohibit assignments concurrent with the drafting of the application. Indeed the theory would seem to call for a new assignment to be executed ever time a continuation or divisional application is filed.

  75. There has always been that connection. I was denied by those that belonged to that special club. Every time I brought it up,a nail was added to my BOX.
    East Street,and then on and on.
    My life is just in very low degrees of separation. The Mississippi Queen.. I have been on it. So you see, connecting dots is easy. Getting people to understand why I knew there was a connection to all my problems was not.

  76. Hagelin’s theory strikes me as odd because it precludes the employer from choosing their counsel to draft the application. It also seems to overlook the idea’s status as a trade secret while the patent is being drafted.

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