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A critic given to melodrama, observing American legal principles governing ownership of inventions, might be tempted to paraphrase Rousseau’s lament: “Man was born free, and everywhere he is in chains.” In America, inventions are born to employees, and everywhere they are in the hands of employers. The combined pressure of pre-invention assignments and “smart software” technology has accelerated the trend away from employee ownership of patents. Once inventions were presumed to belong to the inventor. Now they are presumed to belong to the inventor’s employer, regardless of the parties’ intentions. But the law has no jurisdiction over intellection. Courts cannot create a collective mind. Inventive genius is an individual trait, and every new idea is the child of a single human mind. As the law slides away from these simple realities, it fosters a risk that America may run short of inventions in the next century. The Constitution authorizes Congress “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their Writings and Discoveries.” The Patent Act provides that “a person shall be entitled to a patent.” Thus American law, constitutional and statutory, sees the patent holder as an individual — an inventor, a person. This is based on the understanding that inventive genius is an individualized attribute. Traditionally, American case law drew a fundamental distinction between mere mechanical skill and inventive genius. The products of ordinary mechanical skill were deemed the property of the employer, who provided the resources and compensation needed to exploit that skill. But since inventive genius was viewed as an individualized attribute, the employee, in the absence of an express agreement to the contrary, owned any resulting patents. The Supreme Court articulated this distinction in Dalzell v. Dueber Watch Case Manufacturing Co., 149 U.S. 315 (1893), and repeated it 40 years later in United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933): “[A] manufacturing corporation which has employed a skilled workman, for a stated compensation, to take charge of its works, and to devote his time and services to devising and making improvements in articles there manufactured, is not entitled to a conveyance of patents obtained for inventions made by him while so employed, in the absence of express agreement to that effect.” The advent of the modern corporation, with research-and-development departments organized to harness inventive energies, led to a new set of distinctions. Rather than differentiating between mechanical skill and inventive genius, the later case law distinguished among those employees hired for the purpose of inventing a specific device or process, those employees hired to invent generally, and those employees without inventive duties. Specific inventive employment. Where an employee was hired for the purpose of inventing a specific device or process, the law found that the patent belonged to the employer, even in the absence of any express agreement. The employee was under an implied obligation to assign any patents related to the invention to the employer. The assignment was justified because the employee accepted his employment and his wages knowing that his employer expected an invention in return. General inventive employment. Where an employee invented a device or process outside the employer’s specification, then it was deemed to belong to the employee, even if the employee had been hired for his inventive talents. Unlike the specific inventive employment situation, there was no expectation that the employee would invent outside the employer’s specification. But the employer was not left empty-handed. In deference to the fact that the employer’s resources were involved with the inventive process, the employer was awarded a so-called shop right to use the invention. Although the scope of the shop right varied with the circumstances of the invention, it customarily entailed a nonexclusive right to use, manufacture, and sell the invention without financial obligation to the inventor. In most cases, it lasted the life of the patent, even if the employee-inventor left the company sooner. General employment. Where an employee was not hired to invent, but invented a device or process on his own time and at his own expense, then that employee retained the patent rights. This held true even if the invention related to the employer’s business. The employer did not even receive a shop right. These classifications were sensible, and they were fair. They reflected no particular bias toward employees or employers. Today, rather than rely on the vagaries of the common law to assure ownership of intellectual property, most employers require their employees to sign preinvention assignment agreements as a condition of employment. Customarily, these assignments cover any inventions developed during the individual’s term of employment that either involve use of company resources or relate to company business. In construing these assignments, the law has placed its thumb on the scales for employers. All doubts are resolved in favor of assignment. Patent law in this regard has moved in a direction opposite that of copyright law. (Under copyright law, an author is presumed to own all rights, transfers are narrowly construed, and doubts are usually resolved in the author’s favor.) In Cubic Corp. v. Marty, 185 Cal. App. 3d 438 (1986), a California appellate court considered an assignment agreement providing that the employer would pay all expenses related to obtaining the patent, $75 upon execution of a patent application, and an additional $75 upon obtaining the patent. The court characterized the assignment as an adhesion contract, “written entirely by a party with superior bargaining power, leaving the weaker party in a ‘take-it-or-leave-it’ position.” Nevertheless, the court ruled the contract enforceable. It found that the employee’s employment, pay raise, and $150 bonus together amounted to adequate consideration. Thus the court upheld the employee’s termination and awarded the employer $34,102 in damages for his refusal to assign the patent. The most disturbing manifestation of the pro-employer bias appeared in a 1996 decision of the U.S. Court of Appeals for the Federal Circuit. In Teets v. Chromalloy Gas Turbine Corp., 83 F.3d 403 (Fed. Cir. 1996), the General Electric Co. asked Chromalloy to develop a leading edge to turbine blades for its new engine. GE told the company to use known, rather than invented, processes. Chromalloy assigned the project to engineer J. Michael Teets. Chromalloy had no express agreement of any kind with Teets and had never asked him to sign an assignment agreement. Indeed, the division responsible for the project had never applied for a patent. Clearly, Teets was not hired to invent. He was an employee at will working without a contract — unlike his manager, who had signed a pre-invention assignment agreement. True, Teets’ development work entailed the use of company resources, and under common law principles his employer was arguably entitled to a shop right to his resulting invention (as the lower court had concluded). But his employer apparently failed to anticipate the possibility of his work resulting in a patentable invention. If it had, it would have required him to sign a preinvention assignment. Nevertheless, since Teets developed a patentable process using company resources, the Federal Circuit found an implied agreement by Teets to assign any patent rights to Chromalloy. Teets v. Chromalloy represents a significant expansion of employer rights to patentable inventions developed by employees. With hardly an acknowledgement of the Supreme Court’s decisions in Dalzell and Dubilier Condenser, the Federal Circuit effectively overturned them. They had held that, in the absence of an express agreement, inventions by employees who were not hired to develop specific devices belonged to the employees. Now, the law presumed such devices belonged to the employers. While the presumptions applicable to pre-invention assignments have operated against employee ownership of patents in the legal sphere, “smart software” programs are working against employee ownership in the technological sphere. To an increasing extent, high-tech companies are relying on these programs to “invent” new devices. They accomplish this feat by a math-based imitation of biological evolution: The programs examine successive generations of solutions to technological problems and select the best ones. Experts may debate whether this process constitutes true invention, but patent attorneys apparently believe it does. Linden Innovation Research, based in Ashburn, Va., owns a patent to a satellite communications antenna. The antenna was designed by a software program created by Dr. Derek Linden, the company’s chief technical officer. Computer programs developed by Engineous Software Inc., of Morrisville, N.C., have generated jet engine design improvements so advanced that two patent applications have been filed on them. This technological trend will further undermine the old presumption that inventions belong to individual employees. Marxists once argued over who should own the means of production. That debate seems quaint. In the 21st century, the vital issue may be who owns the means of invention. In a world where stock options create cadres of employee-millionaires, where labor shortages allow employees to ascend rapidly from job to higher-paying job, where recruiters regularly raid corporate workplaces searching for mobile talent – it may seem senseless to worry about motivating creative employees. But legal principles are not shaped to serve particular economic climates. They are, like marriage vows, supposed to apply in good times and bad, in economic sickness and in economic health. No one expects the current boom to last forever. When the inevitable slowdown arrives, the current bias in patent law against employee ownership may come back to haunt us, discouraging the very creative energies needed to foster a recovery. Lawrence J. Siskind is a partner at San Francisco’s Harvey Siskind Jacobs, specializing in intellectual property law. This article was distributed by the American Lawyer Media News Service.

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