Assigning Future Interests: Federal Circuit Denies Review of FilmTec

by Dennis Crouch

When I taught licensing, I turned to Ray Nimmer’s text.  Nimmer & Jeff Dodd are also authors of the treatise Modern Licensing Law. Although a number of patent transfer issues are straightforward, one that continues to lay confusion is the purported assignment of ownership of patent rights covering a yet-to-be-concieved invention.

In his case against Seagate, Alexander Shukh had asked the Federal Circuit to revisit the automatic-assignment rule of FilmTec.  However, that en banc request has now been denied.

Nimmer & Dodd had filed an amicus brief supporting Shukh’s now failed petition for en banc rehearing on this question of whether FilmTec remains good law and the extent that federal law (instead of state law) governs patent rights transfers. The Nimmer brief does not expressly argue for a particular answer, but does ask the courts to settle the matter.

[C]onfusion arises when dealing with agreements and assignments for inventions yet to be created. The precise issue is whether an “assignment” of future inventions, i.e., either an actual assignment or an agreement to assign, will create mere equitable property rights or will effect actual transfer of legal title, once the invention comes into existence.

Prior to FilmTec… the general rule was that, while “an agreement to assign in the future inventions not yet developed may vest the promisee with equitable rights in those inventions once made, such an agreement does not by itself vest legal title to patents on the inventions in the promisee.” Arachnid (Fed. Cir. 1991). This rule was of apparent long pedigree. . . .

In FilmTec, however, the Court held that, “[i]f an assignment of rights in an invention is made prior to the existence of the invention, this may be viewed as an assignment of an expectant interest,” and that “[o]nce the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee.” Under this “automatic assignment” rule, equitable title to a future invention automatically ripens into legal ownership in an assignee, even though the “assignor” was no longer employed by the assignee when the patent application for the invention had been filed.

FilmTec has been widely criticized. In Stanford, Justice Breyer argued in dissent that the “Federal Circuit provided no explanation for what seems a significant change in the law” and that the FilmTec rule “undercuts the objectives of the Bayh-Dole Act.” Concurring with the majority, Justice Sotomayor nonetheless shared Justice Breyer’s concerns and noted that she understood “the majority opinion to permit consideration of these arguments in a future case.”

Read the brief: NimmerBrief; Shukh Petition; and Seagate Response.

Next Stop SCOTUS?: It is unclear whether Shukh will push this to the Supreme Court, but the Court has at least acknowledged that the issue exists and potentially problematic.  The problem with Shukh’s case is that we have not seen a clear explanation of the controvery – how a shift in the law gives Shukh the win.



36 thoughts on “Assigning Future Interests: Federal Circuit Denies Review of FilmTec

  1. 7

    OT but the CAFC has, in a fractured en banc opinion, approved of Tam’s “expressive” trademark and rejected the “non-disparaging” requirement as unconstitutional.

    Courts have been slow to appreciate the expressive power of trademarks. Words—even a single word—can be powerful. Mr. Simon Shiao Tam named his band THE SLANTS to make a statement about racial and cultural issues in this country. With his band name, Mr. Tam conveys more about our society than many volumes of undisputedly protected speech.

    So, too, does the T-shirt with a four year old whipping a finger at Judge Prost. Let’s join together and bless that expression with a trademark because trademarks are all about “expression.”

    Sure they are.

    1. 7.1

      Footnote 1: We limit our holding in this case to the constitutionality
      of the § 2(a) disparagement provision. Recognizing,
      however, that other portions of § 2 may likewise
      constitute government regulation of expression based on
      message, such as the exclusions of immoral or scandalous
      marks, we leave to future panels the consideration of the
      § 2 provisions other than the disparagement provision at
      issue here.

      Good times.

      1. 7.1.1

        You poor bleeding (liberal) heart must cringe at the thought of a lack of political correctness – even as you here on this blog are the most offensive poster.

        Good times indeed.

    2. 7.2

      As I start to jump into the more than hundred pages of the decision, I do wonder how a certain set of National Football League fans are going to be reading this decision….

    3. 7.3

      Great dissents by Dyk (joined by Lourie and Reyna in parts) and by Reyna.

      Judge Reyna: To borrow a phrase from Justice Stevens, few of us
      would march our sons and daughters off to war to preserve the citizen’s right to be the exclusive purveyor of “OLD COON SMOKING TOBACCO.” See Young, 427 U.S. at 70; McCann v. Anthony, 21 Mo. App. 83, 91-92

      Indeed. But you could probably assemble a small army in the Redskins partking lot on Sunday. Not sure about the “marching”, though — kinda difficult when you’re plastered on beer.

      1. 7.3.1

        may have a problem because he does recognize that one can not refuse to register a mark that has political speech. Thus the mark Redskins might be denied registration because it only disparages and does not have any political speech content, but one could not deny registration of Redskins S*ck .

        I presume, you endorse the latter mark.

  2. 6

    Since patents are federally conferred grants, guaranteed by the US Constitution, they are governed primarily by federal, not state law. For example, 35 USC 152 provides that “patents may be granted to the assignee of the inventor of record . . .” This is a clear example of a future interest assignment that Congress has approved, since patents do not exist at the time of application — they are issued after allowance and payment of fees.

    Royalties are also assignments of future interest, since they accrue from sales made after a license agreement has been entered. Again, federal law, including patent misuse and antitrust, control royalty agreements.

    Similarly, assignments of inventions made within the scope of employment are well-established assignments of future interest that are governed by federal law. En banc review was properly denied and certiorari is a non-starter.

  3. 5

    OT but the latest Finnegan AIA blog has interesting statistics on a huge difference in instituted IPR outcomes depending on the subject matter of the patent. E.g., “Instituted claims in [sic-from] technology center 1600, which covers patents in the fields of biotechnology and organic chemistry (including pharmaceuticals), have had the highest instituted [IPR] claim survival rate at 42.67%. This is approximately 2.5 times higher than the average survival rate of 16.80% for all technologies. At the other end of the spectrum, no instituted claim has survived in [from] technology center 2900, which covers design patents.”

  4. 4

    I was waiting for a copyright expert to chime in but as a partial comment on Paul’s Erie Doctrine, there is a Federal scheme to vest ownership of copyrights in employers, even without an assignment, prospective or retrospective. Called a “work-for-hire,” this applies to any works created during the scope of the employees duties. Of course, employee needs to be defined, but it has been. Also, with an agreement, independent contractors can prospectively assign copyright-able works under the same rubric. (But, apparently, limited to an enumerated list of 9 types, for reasons beyond me.)

    Ownership can be transferred in the usual ways. These are all covered by state law.

    1. 4.1

      Independent contractors are not apart of work for hire doctrine.*

      * Two groups create work for hire copyrights:
      (1) under section (1) of the “work for hire” definition under § 101 – Employees can assign future interest, subject to certain writing and signatory requirements.
      (2) Independent contractors /employees within the 9 enumerated “collective” endeavors that are listed under section (2) of § 101’s definition of work for hire [think movies, SAT questions, etc].

      I asked my copyright professor about the difference between common law/ state law equitable title and legal title with respect to work for hire issues – his response: he didn’t know a single case to address the issue. I suspect that since Congress passed a specific statute its fine because the interest created is different – a work for hire copyright doesn’t vest in the “author” as we think, it vests in the organization (the employer or entity in the written agreement).

      All other copyrights vest in the author. And, may be transferred only by writing (see section 204).

      Patent law is untethered from this statutory framework. But, that might not be a bad thing (judicial efficiency, resources, etc).


          drop by,

          Thanks. My main point was that there exists a Federal statue that covers assignment of expectations. Also interesting is your oblique allusion to authors as we think of them:

          17 USC 102(a) “Copyright in a work protected under this title vests initially in the author…”

          This is like inventors but in (b): “In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title…”

          Unlike inventions, in some cases, the assignee stands in the shoes of an author (inventor), although discussion elsewhere here indicates it is getting to be that way for patents.

      1. 4.1.2

        Second side note: this “work for hire” was a 1976 act creation – it was a compromise amongst the interested parties because the 1909 act caused hell with copyright creation – publication with notice of owner required complete ownership at publication. Pre-1909 work arounds consisted of author assigning entire state common law interest for publication with reversion etc to regain federal protection after publication.

        Congress recognized this was a pain in the butt. So made it better in some regards* and worse in others **.

        Better: split copyright interests (e.g., movie rights separate from literary)
        Worse: fragmented rights & a complex termination of transfers framework


          Sorry – should have been clearer – 1909 act § 26 included a work for hire provision. The 1976 act amended it to include the 9 categories and not just employees.

  5. 3

    35 U.S.C. 152 Issue of patent to assignee.
    Patents may be granted to the assignee of the inventor of record in the Patent and Trademark Office, upon the application made and the specification sworn to by the inventor, except as otherwise provided in this title.

    I think everyone has to address this statute because it specifically requires that the inventor swear to the specification of the application purportedly assigned to an assignee “of record.”

    The issue of ownership always comes up when the inventor has not signed the specification. I would read this statute as forbidding issuing a patent to an assignee unless the inventor has sworn to the specification. I would also read the statute as forbidding any purported assignee from acquiring legal ownership unless the inventor actually signs specification.

    There is also the issue of §118 and how it might apply, because as Paul Morgan has already said, the issue of assignment is one of state law.

    1. 3.1

      Ned – you are missing the explicit point being raised her – that the AIA changed what it required (and skirts in under the “except as otherwise provided” proviso.


          Let me tantalize by adding another question:

          Why did the AIA remove (lock, stock, and barrel) all indications to the phrase “without deceptive intent“….?

          (I do know the proffered rationale, although that rationale simply smacks too thin)


            Let me tantalize by adding another question:

            Or you could just spit it out like an adult who knows English.


              Or not – What’s the matter, Malcolm, having trouble connecting the dots?

              Maybe you want some child to help you?

    1. 2.1

      Yes Section 118 allows easier application FILING by allowing filing by a: “..person to whom the inventor has assigned or agreed in writing is under an obligation to assign the invention may make an application for patent. A person who otherwise shows sufficient proprietary interest in the matter justifying such action, may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties..”

      But that language does not change or control who actually legally owns the application.


          I would not be so quick to make that statement, Paul.

          That’s nice. Paul already made the statement so it doesn’t really matter what you would do.


            You read right past the words “not so quick”…

            Try again – it’s a short and declarative sentence, the kind that you say that you want.

  6. 1

    Is this contract law issue still validly considered an issue of Federal law rather than state law?

    1. 1.1

      By way of further explanation, another example is is Gellman v. Telular Corp. (Fed. Cir. 2011). As reported by Prof. Crouch in his blog he also made the point that the Fed. Cir. did not make any reference to state law as to any of the disputed ownership contracts involved.
      The “comment” I published was that: This continued ignoring of state contract law by the Fed. Cir. is ripe for a Sup. Ct. attack by someone. See for example the Jan./Feb. 2011 ABA IPL “LANDSLIDE” magazine article on p. 24 with extensive legal research on inconsistencies and conflicts in Fed. Cir. cases with basic Sup. Ct. principles on the normal [unless federally essential] utilization of state law versus “federal common law.” The Fed. Cir. did that with serious consequences in Board of Trustees of the Leland Stanford Jr. University v. Roche Molecular Systems, Inc., 583 F.3d 832, 841 (Fed. Cir. 2009). That case should have applied applicable state employee contract law, instead of the Fed. Cir. making up its own contract law. That should have been required by the fundamental Sup. Ct. Erie v. Tomkins decision, and subsequent Sup. Ct decisions.
      The tendency to ignore Erie v. Tomkins and its requirement to apply state law in Federal Courts [unless the issue is controlled by Federal Law] was also demonstrated in the 2013 unanimous Supreme Court decision that a malpractice claim against a patent attorney does not arise under the patent laws and was properly decided in a state court. Gunn v. Minton.

      1. 1.1.1

        Once again, I think you are in error in your thinking of the Stanford v Roche case.

        The consequence there was NOT a misapplication of law, but rather was an assignment written poorly – under application or any law.


          A hindsight tense change in the CA employment agreement would not have changed the Stanford outcome, but so is making an assumption that the outcome in the case would have been the same even if applicable CA law had been applied. But see the above-cited Jan./Feb. 2011 ABA IPL “LANDSLIDE”article.

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