In the past year, several court decisions have highlighted the risks associated with using “boilerplate” intellectual property assignment clauses in employment and independent contractor agreements. The latest case is Gellman v Telular Corporation, a December 2010 decision from the Eastern District of Texas. In Gellman, a consulting agreement was found to be lacking because it merely included an agreement to assign inventions, rather than an actual assignment.
In the case, the inventor (James Seivert) served as a consultant to Cellular Alarm Products, Ltd. (“CAP”). Seivert and CAP’s president were named co-inventors on a patent. Seivert and CAP negotiated a consulting agreement which stated:
All written materials and any and all ideas, discoveries, inventions, improvements, reports, programs, manuals, tapes, listings, software, systems or enhancements or modifications thereto, developed, prepared, conceived, made, discovered, or suggested by Consultant when performing services pursuant to this Agreement, including all such developments as are originated or conceived during the term of this Agreement, but are completed or reduced to practice thereafter (“Work Products”), shall be and remain the exclusive property of Cellular Alarm. Consultant agrees to execute any and all assignments or other transfer documents which are necessary, in the sole opinion of Cellular Alarm, to vest in Cellular Alarm all right, title and interest in such Work Products.
Seivert passed away before signing either the consulting agreement or a patent assignment.
The court considered whether the consulting agreement – even if it had been signed – would have been sufficient to transfer Seivert’s interest in the patent to Cellular Alarm. The court concluded that it was not sufficient:
Where the contract language is prospective and states that the work product “shall be the property of the client” and/or that “all rights thereto will be assigned” by the contractor, the contract is not a present assignment but an agreement or promise to assign in the future. . . . However, when a contractor agrees “to grant and does hereby grant” or “hereby conveys, transfers and assigns” to the client the rights and title to future inventions, no further act would be required once the invention came into being and the transfer of title would occur by operation of law.
The court’s decision emphasizes the importance of using the present tense “does hereby grant” in consulting agreements and intellectual property assignment agreements.