Comments on: Assigning Future Rights

By: Willem Wiggers

Willem Wiggers — Wed, 28 Oct 2009 21:13:10 +0000

Under continental European legal systems (both French and German oriented) the distinction Mike makes is very clear. A completed transfer (of rights, goods real estate or what have you) requires:
(i) a valid title (e.g., obligations to sell vs. purchase),
(ii) an agreement to transfer, and
(iii) the actual formality of the transfer (e.g., a notarial deed or the factual handing over of the goods.
The distinction between (i) and (ii) and its effects is what Mike signals and, as I understand Common Law, what in fact distinguished European legal systems. Indeed the distinction permits non-transfer as a consequence of the seller not transferring/assigning its rights. Under European systems this would not be problematic, since specific performance is preferred over damages, also in case of a transfer of goods or rights. Including the words hereby emphasizes that the act of transfer is effected by the same writing that reflects the sale and purchase. See my blog on this contract drafting matter: http://www.weagree.com/weblog?topic=14

As regards future rights, the new Dutch Civil Code (1992) explicitly allows such transfer, provided that the future rights are sufficiently determined or determinable (which is generally interpreted broadly, so as to cover many aspects).

Willem

By: Ken Adams

Ken Adams — Wed, 28 Oct 2009 01:14:08 +0000

Mike: I'm sure you'd be disappointed if I didn't get all schoolmarmish on you and mention that the construction does hereby assign is archaic. Use instead hereby assigns. Ken

By: Mike

Mike — Tue, 27 Oct 2009 21:22:34 +0000

Ken -
I’m not going to disagree with you that the mixing of language types may not be perfect, but that’s the way the language was structured in the early cases and repeatedly approved of by the Fed. Cir. Dare I say “tested.”

Nevertheless, focusing on what the court says in those cases, all you really need is the language of performance: Inventor does hereby assign to Company all rights in all Future Inventions. The courts refer to this as a “present assignment of future expectant interest.”

But, in practice, no one uses the “present assignment of future expectant interest” as the ONLY assignment except as a back-up when someone forgets to follow-up with a “traditional” assignment. There are lots of reasons for this. Generally speaking, the language of the present assignment of future expectant interest is too squishy because of the nature of the “future expectant interest.” So relying solely on the present assignment simply moves the fight to whether a particular invention fits within the definition of a “Future Invention.” But by simply getting a straight-forward, traditional assignment at the time there is “future” invention, you put those questions to rest.

In addition, the present assignment of a future expectant interest doesn’t “record well” at the Patent Office. It’s better to have the straight-forward, traditional assignment that lists with specificity the application and the invention.

By: Mark Anderson

Mark Anderson — Tue, 27 Oct 2009 09:47:12 +0000

I would also use the formula of “hereby assigns and agrees to assign.” But this is another area where the underlying law needs to be considered before deciding which approach to take.

From the comments above, it seems that the US courts will interpret a present assignment of future rights as coming into effect when the rights come into existence. To my mind, this is a convenient legal fiction, and does not follow normal principles of what words mean. I am not saying this is wrong, but it does require a knowledge of law in order to interpret the words used. This potentially strays into Ken’s “magic words” territory.

Under UK copyright legislation (s91, CDPA 1988 http://www.opsi.gov.uk/acts/acts1988/ukpga_19880048_en_5#pt1-ch5-pb1-l1g91), a present assignment of future copyright will take effect when the copyright comes into existence. There is no equivalent to this provision in UK patent legislation.

By: D. C. Toedt

D. C. Toedt — Mon, 26 Oct 2009 19:54:56 +0000

The recent Fed. Cir. case, I believe, was Stanford University v. Roche Molecular Systems, Inc., No. 2008-1509, -1510 (Fed. Cir. revised Oct. 1, 2009), summarized in a blog posting I did earlier this month.

By: randomjohn

randomjohn — Mon, 26 Oct 2009 17:54:02 +0000

Mike is right. I think there was a more-recent case on this issue (which is probably what Mike is thinking of), but the “big one” last year was DDB Technologies, Inc. v. MLB Advanced Media, L.P., No. 2007-1211 (Fed. Cir. Feb. 13, 2008).

From Mondaq’s summary http://www.mondaq.com/article.asp?articleid=60318:

In applying federal law, the court looked to the language of the assignment-of-inventions clause in the employment contract, which provided that Barstow “agrees to and does hereby grant and assign” to Schlumberger all inventions falling within the scope of the agreement, together with their related patent rights. The Federal Circuit, citing Speedplay and Filmtec, held that where an employment contract contains such a present grant of rights in future inventions and related patent rights (as opposed to a mere promise to assign in the future), title to the patent transfers to the employer immediately and by operation of law upon the invention’s creation.

From that, it seems clear that choices b and c (obligation and policy) are decidedly inferior to choice a (present assignment of future inventions).

By: Ken Adams

Ken Adams — Mon, 26 Oct 2009 14:29:35 +0000

Mike: Mixing language of obligation and language of performance in the manner you propose is, in terms of semantics, problematic. Ken

By: Mike

Mike — Mon, 26 Oct 2009 14:10:22 +0000

Richard Schafer is correct. The language that has been smiled upon by courts is something like: “Inventor shall assign, and does hereby assign, to Company all rights in Future Inventions.”

The obligation language without the performance language only transfers equitable title to future inventions. This is a problem if you happen since equitable title does not get you standing to sue for patent infringement. There are a line of cases stemming from Filmtec Corp. v. Allied-Signal, Inc. (939 F.2d 1568) and Arachnid Inc. v. Merit Industries (939 F.2d 1574) that discuss these issues in detail. I believe there was even a new Fed. Cir. opinion on this topic issued within the last couple months.

By: Richard Schafer

Richard Schafer — Sun, 25 Oct 2009 19:01:22 +0000

In the patent world, assignments and employment agreements routinely use language of performance. There is caselaw that specifically distinguishes the obligation (which the obligee may refuse to perform in the future) from the performance. If the inventor is only obligated to assign, but for whatever reason fails to do so, the company never gets the assignment, but if the language was of performance, then it does. So language of performance is strongly preferred, at least in that scenario. I don’t think I’ve ever seen language of policy.

I’m not aware of any caselaw that has a problem with a present assignment of future rights.