Employers routinely require certain highly-qualified employees to sign pre-invention agreements.  These employees include engineers and other highly qualified employees who are hired to do research and development.  These agreements typically require the employee to assign inventions and discoveries, regardless of whether the invention was conceived or developed on the employer's premises or during working hours.  

Some states have passed legislation to protect these employees from pre-invention assignment agreements that may overreach.  In Washington, RCW 49.44.140 provides that pre-invention assignment agreements do not apply to inventions developed by the employee on the employee's own time and which do not make use of employer resources or trade secrets.  There is an exception for inventions that relate either to the employer's business or to the employer's actual or anticipated research and development.
There is also an exception for inventions resulting from any work by the employee for the employer.  The employer is required to give notice of the statute's provisions to the employee.  This notice may be provided in the assignment agreement.  No separate document giving notice is required.  Waterjet Tech., Inc. v. Flow Int'l Corp., 140 Wn.2d 313, 320 - 21, 996 P.2d 598, 601 (2000).

Statutes like RCW 49.44.140 raise the issue of the respective roles of federal law and state law in determining whether an invention is assigned to an employer under a pre-invention assignment agreement.  SiRF Technology Inc. v. International Trade Commission, 2010 U.S. App. LEXIS 7423 (Fed. Cir., April 12, 2010), discusses those respective roles. 

In SiRF, the Federal Circuit reviewed a decision by the International Trade Commission which held, in part, that the patent owners, collectively referred to as "Global Locate", had standing to assert that a patent was infringed.  That issue turned on whether Global Locate was the sole owner of the patent, or whether a non-party, Magellan Corporation, was a co-owner.  This was pivotal because "Absent the voluntary joinder of all co-owners of a patent, a co-owner acting alone will lack standing."  Id. *13 (citation omitted).  The issue of whether Magellan was a co-owner turned on whether one of the inventors, Abraham, had assigned his interest in the patent to Magellan.

At the time of the invention, Abraham was an employee of Magellan.  He was subject to an assignment agreement providing that Abraham assigned, "all inventions . . . which are related to or useful in the business of the Employer . . . and which were . . . conceived . . .  during the period of the Employee's employment."  Id. *14.  The standing issue turned on whether this agreement assigned the patent to Magellan.

The Federal Circuit held that the first issue was one of federal law:  Whether the agreement provides for automatic assignment.  Id. *15.  The Court held that because the agreement uses the words "Employee assigns", the agreement expressly grants patent rights to the employer "with no further action needed on the part of the employee."  Id.  Therefore, the agreement provides for automatic assignment. 

The Federal Circuit held that the second question was one of state law:  Whether the invention is "related to or useful in the business of the Employer."  Id. *15 California provided the governing state law.  Although California Labor Code Section 2870 renders certain pre-invention assignment agreements unenforceable, there was no assertion that this statute invalidated any assignment to Magellan.  Id. *18 n. 6.  The California law of contracts therefore governed.

Under California law, the agreement was ambiguous and extrinsic evidence was admissible to interpret the agreement.  The extrinsic evidence showed that Abraham left his employment with Magellan, became an employee of Global Locate, and assigned the patent to Global Locate.  Id. *20 -23.  Global Locate then recorded the assignment with the Patent Office.  Id. *18.  However, the assignment to Magellan was earlier in time and ordinarily would have controlled over a later assignment to Global Locate. 

But the Federal Circuit held as a matter of federal law that the recordation of Global Locate's assignment "creates a presumption of validity as to the assignment and places the burden . . . on one challenging the assignment."  Id. *18.  Thus, those challenging Global Locate's standing had to prove that the patent had been previously assigned to Magellan.

The extrinsic evidence further showed that Magellan never asserted an interest in the patent, even when it sued Global Locate and Abraham for trade secret misappropriation.  Id. *20 - 23.  Magellan did not regard itself as an owner of the patent.  Id. *24.  The Federal Circuit therefore affirmed the International Trade Commission's ruling that Global Locate had standing to assert the patent. 

In SiRF Technology, the Federal Circuit alternatively applied federal and state law to hold that substantial evidence supported Global Locate's standing to assert the patent.  The state law issue was the extent to which the invention related to the employer's business or research and development.  That is the very issue that the Washington Legislature apparently addressed when it adopted RCW 49.44.140.  Although the opinion did not expressly address the issue, the opinion suggests that state statutes like RCW 49.44.140 will be enforced by federal courts and not regarded as preempted.  That is because RCW 49.44.140 focuses on the relationship between the employer's business and the invention -- an issue governed by state law.

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