Do your employee IP agreements automatically assign future inventions?

A recent opinion issued by the Federal Circuit serves as a reminder that IP assignment clauses of employment agreements and employer IP policies must be carefully worded.  A vague obligation relating to future inventions may create questions about patent ownership if an inventor-employee leaves the company or otherwise becomes unavailable to sign patent assignment documents. 

In DDB Technologies, L.L.C. v. MLB Advanced Media, L.P., an inventor entered into an employment agreement that stated: “Employee agrees to and does hereby grant to Company or its nominee his entire right, title and interest in and to ideas, inventions, and improvements.”  In the case, the employer’s successor tried to enforce the patent but did not have a specific assignment document from the inventor.  Instead, it relied on the employment agreement and argued that the agreement automatically assigned the patent application to the employer.

The Court explained that:

“whether an assignment of patent rights in an agreement such as the one in this case is automatic, requiring no further act on the part of the assignee, or is merely a promise to assign depends on the contractual language.  If the contract expressly grants rights in future inventions . . . “the transfer of title [occurs] by operation of law. . . . Contracts that merely obligate the inventor to grant rights in the future, by contrast, ‘may vest the promisee with equitable rights in those inventions once made,’ but do not by themselves ‘vest legal title to patents on the inventions in the promisee’.”

Examining the language of the employment contract at issue, the Court found the phrase “does hereby grant and assign” sufficient to automatically grant the employer title in the employee’s patent. 

Accordingly, employers should ensure that their form employment agreements include similar text that automatically assigns future inventions.