Does the Law Permit a Seller to Assign Title Before Acquiring Title?

Alexander Shukh v. Seagate Tech. (Fed. Cir. 2015) (en banc petition)

In an en banc petition, Shukh has challenged the Federal Circuit’s “automatic assignment” rule announced in its 1991 FilmTec decision.  The basic rule from the Federal Circuit is that a pre-invention contract that states “I hereby assign” potential future inventions is deemed an effective transfer of title even though the future inventions have not yet been conceived.   The more standard interpretation of a purported transfer of a not-yet-owned property is, at most, as a conveyance of equitable rights but not legal title. See Stanford v Roche (2011) (Breyer, J., dissenting) (citing G. Curtis, A Treatise on the Law of Patents for Useful Inventions §170 (1867)).  Legal title then requires a new affirmative act by the seller once title is acquired. See Pomeroy on Equity Jurisprudence §1287 (1918); Joseph Story, Equity Jurisprudence, §1040 (1853); Murray, Corbin on Contracts §50.2 (2007); UCC Section 2-105(2) (“A purported present sale of future goods or of any interest therein operates as a contract to sell.).

This is an issue that has been boiling under the surface for some time and the court should grant en banc rehearing.

The petition raises a second issue involving attorney-client privilege that could have an important impact on patent prosecution.

Whether, in a Section 256 Correction of Inventor action, does the common interest doctrine of attorney-client privilege entitle an inventor to access and use his own invention records and communications?

A potential outcome of this decision could be further clarification as to the relationship of the attorney to inventors who are the employees of the client at a time when the inventors continue to have title to the invention at name-listing rights.

Read the petition: AMS En Banc Petition

23 thoughts on “Does the Law Permit a Seller to Assign Title Before Acquiring Title?

  1. 9

    Regarding the attorney-client privilege at the end of the post, a possible key driver is whether or not the attorney has made clear to the inventor exactly who the attorney represents.

    If the attorney is only the attorney for the corporation – and this is made clear to the inventor – then the inventor has no claim to any materials that the attorney may have because the inventor is not – and cannot claim to be – the client.

    On the other hand, if the attorney has not made it clear that he does not represent the individual inventor, then there just might be a case of “inadvertent client.”

    1. 9.1

      Anon, while the practice may have changed since I left Seagate, we always obtained assignments before we filed, and then filed powers of attorney from the Corporation to the law firm on filing.

      I was particularly hard in this point because we had had holdups by inventors in the past who refused to assign and who cost us enormous headaches. So if they refused to assign, we did not file, and they did not get their inventor awards.

  2. 8

    What troubled the Supreme Court and what should trouble most of us is the cavalier way the Federal Circuit announced its decision in Filmtec. It cited no case law or statute for its support. The entire body of case law prior to that decision was not consistent with it.

    When I first heard of the decision I could not believe that the Federal Circuit had done what it did. I just couldn’t believe it. Remarkable.

    And they did the same thing with its divided infringement case, BMC Resources. They gave us a new rule of law regarding method claims that had no prior case law support anywhere, and was not consistent with the statutes as written. That set off a series of cases where the Federal Circuit had to try to undo the damage of that decision. But what is remarkable is that the Federal Circuit would make such pronouncements in the first place – pulling things out of thin air without any support in the case law or any analysis whatsoever.

  3. 6

    I think the petition is well-drafted and presents a compelling case for en banc rehearing. Still, I’m pessimistic for the petitioner. The panel judges noted that they were bound to follow FilmTec, but they didn’t express any lament about that. My guess is that if any of the panel judges were interested in seeing FilmTec overruled, they would have said so in the opinion or a concurrence.

    It’s very tough to get seven of twelve en banc votes, and I think the petitioner probably has no votes from all three panel judges. Still, I wish you good luck, Mr. Shukh.

    1. 6.1

      Andrew, I think it would have been better for the petition to lay out how his client is materially harmed by Filmtec. If the Federal Circuit were to rule in his favor, doesn’t he still have the obligation to assign? What are we missing here? Where is the harm here?

      This is where the petition should have said that gaining access to the e-mails surrounding his invention disclosures could have shown unclean hand regarding his being named an inventor so that Seagate would be denied specific performance.

      I don’t even see the Supreme Court taking this case unless Mr Shukh’s attorney begins to show real harm to his client.

  4. 5

    I think its primary impact of moving back to the traditional rule is that an action for an assignment of equitable title might be barred by relevant statute of limitations, and also be subject to recognized equitable defenses.

    1. 5.1

      And this is where the second aspect of the petition becomes important. Seagate’s denial of access to the inventor of all the records surrounding his invention disclosures including emails implies that Seagate has something to hide. I was not previously aware that this had occurred and was previously thinking that the Seagate patent apartment had unwittingly made a mistake in failing to include the inventor on one of its patent applications. But the more I look at this the more I begin to believe that the failure to include the inventor on the relevant application was a deliberate act.

      And if it was a deliberate act, Seagate’s hands are unclean. They may not be able to obtain specific performance of the obligation to assign.

      1. 5.1.1

        Ned, since the Fed. Cir. panel has already told the D.C. to reopen this case because the alleged inventor does have an alleged personal injury to reputation [hence has standing], when this case returns to the D.C. what could be a valid basis to refuse discovery access to most of the requested documents, especially ones that the plaintiff authored? Perhaps not an actual written inventorship legal determination attorney opinion rendered only to Company management? But in my experience the latter rarely exists unless there was a formal inventorship dispute investigation? Thus, query if en banc Fed. Cir. review is even needed for that issue?

  5. 4

    My understanding of copyright law is probably imperfect, but I think that when copyright duration was extended, holders of the pre-extension copyright had to renegotiate with the creators or with the estates of the creators to obtain rights to the extension period of the copyright.

    1. 4.1

      creators or statutory successors* – and that issue is much more based on how the contract is phrased.

      If the contract was phrased “assign for this term, the renewal, and any extension thereof” & the author lives into renewal –> grantee keeps (under 1909 act). You can thank Supreme Court for that trick on statutory purposivism (this was the 1950s). If author dies before renewal term –> statutory succor could renew (under 1909 act); cutting off grantee’s rights.

      If contract phrased same way, but grant was made post-1978 [irrespective of act under which work was created]–> termination rights come into existence and those cannot be modified by contract**.

      But copyright does have the same issue with assignment before the work comes into existence. And a few others like it: e.g. gap-grants.

      *statutory successors are surviving spouse (married and ex’s); children; etc –> per stirpes.

      ** You can renegotiate the grant before termination is available – thereby nullifying the termination possibility. See Steinbeck litigation (what a happy family).

  6. 3

    The even more important and broader scope issue [which was apparently not even argued by Stanford in Stanford v Roche] is that under consistent Sup. Ct. authority since 1938 STATE employment contract law controls, not a Fed. Cir. created version of contract law.

    Dennis, this issue is raised in earlier blogs of yours you might want to cite here?

    1. 3.1

      P.S. This issue is also ignored in this en banc petition, unless the citation to Chisim’s treatise criticism of Fed. Cir. cases involving contracts leads one into it.

      1. 3.1.1

        Chisum definitely leads there.

        I pointed this out to Ned in our conversations of the Stanford decision (as well as in the “divorce-divide assets” discussions).

      2. 3.1.2

        Paul, the Federal Circuit should take this en banc and certify that question as well for briefing.

        You know it is almost ludicrous that there is no authority anywhere in the law that supports Filmtec. One would think that the en banc court might summarily vacate the panel decision and vacate Filmtec and remand back for further consideration.

      1. 3.2.1


        Not sure I understand what the issue is (precisely) that you think is the “elephant in the room.”

        Can you add more detail?

  7. 2

    Two thoughts:

    a) condition precedent

    b) what are the ramifications (if any) of the changes reflected in the AIA** for corporations to process patents (basically in lieu of inventors), which was heavily conditioned ON the ability of transferring title that is being questioned here?

    **deliberated by Congress during, but signed into law after the Stanford v Roche case, and heavily championed by “it takes a village” Lemley…

  8. 1

    This is a super interesting topic. This might also impact assignments and CIP or new matter non-prov applications based on a provisional. Is the takeaway to keep updating the assignment with fresh signature for each new matter filing following a general transfer of inchoate rights?

    1. 1.1

      As CIP’s require a new Declaration (in order to acknowledge the duty of disclosing intervening prior art), a new Assignment is always obtained (at least where I work).


          Even if the assignment is to all subsequent applications? Would you also then assign PCT applications too?

Comments are closed.