IP Alert: "Are Your IP Assignments Effective?"
Many assignments of intellectual property are ineffective for failing to actually convey title as the parties intended.
U.S. law is clear that only individuals may be inventors, who then may assign their inventions to companies as a condition of employment. We consistently see agreements—typically in the context of initial employment—which fail to effectively convey IP rights from inventor/assignor to company/assignee. With narrow exceptions, IP rights must be affirmatively assigned.
Many companies continue to use inadequate language that amounts to little more than an agreement to assign something in the future. For example, it is common to see “Employee agrees to assign all inventions conceived during her employment.” This is not sufficient.
In a 2011 decision, Stanford v. Roche, the U.S. Supreme Court affirmed the Federal Circuit’s ruling that the phrase “will assign and do hereby assign” results in a present conveyance of title to the assignee, while the phrase “agree to assign” transfers only an expectant interest. Other case law also supports the notion that an express assignment is effective to convey future inventions during employment without the need for additional action (namely, a new assignment for each subsequent invention).
Agreements created before this decision, of course, do not take this clarification into account. As such, a company either should (i) amend the agreement to incorporate proper phrasing or (ii) obtain a post-invention agreement from the inventor that clearly assigns title.
A risk of failing to amend such assignments, or failing to use proper phrasing in future assignments, is that a company would not own title to IP it mistakenly believes is properly held, potentially impacting valuation, financing, or other commercial considerations. Should litigation occur in the future, the company may also find itself exposed to attacks on standing or title.
It is critical to revisit language in existing agreements to ensure compliance with Supreme Court guidance and ensure that future agreements are correctly phrased.
Whether assisting clients in managing their IP or representing parties in litigation, we are familiar with the issues and can address this recurring problem.
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