Yale Preston v. Marathon Oil Company, et al.


Docket No. 2011-1013, -1026

BRYSON, DYK, O’MALLEY
July 10, 2012

Brief summary: DC correctly found that Marathon owned patents through employment agreement even though separate written assignment was not executed.

Summary: The question in this case is whether Preston assigned his rights pursuant to an employment agreement to Marathon Oil. Two empolyment-related documents were signed by both parties and were important to this case: a Feb. 22, 2001 letter (signed by both parties) from a Marathon subsidiary noting its “employment at will” policy and an April 5, 2001 Marathon Oil Company and Subsidiaries Employee Agreement which includes an “Intellectual Property” section. The IP section stated that Preston “does hereby assign to MARATHON all Intellectual Property”) and a “Previous Inventions and Writings” section requiring “a list and brief description of all of EMPLOYEE’S unpatented inventions and unpublished writings.” Preston wrote “CH4 Resonating Manifold” under that section. Preston began working for the company in March, 2001. In August 2002, Preston proposed using baffles to reduce water in a methane well annulus to a co-employee, including a drawing. The baffle system was installed in three wells in early 2003 and Preston left Marathon in April 2003. Marathon then began the patenting process and Preston did not object to another employee being named a co-inventor (issued as the ‘385 patent). Preston filed his own application on June 5, 2003, which issued as the ‘764 patent. Marathon sued Preston for breaching his employee agreement by refusing to assign his ‘764 patent to Marathon. The DC entered a judgment that: (1) declaring that Preston is the sole inventor of the Marathon ’385 patent and that Smith was misjoined as an inventor; (2) ordering the PTO to issue a new certificate reflecting that Preston is the sole inventor of that patent; (3) declaring Marathon the owner of the ’764 (Preston) and ’385 patents pursuant to Preston’s employment agreement and that Preston is in breach of the agreement for failing to assign his rights, as he promised to do; and, (4) even if Marathon did not own the rights to the patents—by assignment or otherwise, it had a shop right to practice the inventions reflected therein. Preston unsuccessfully argued to the FC that the April employment agreement was unenforceable for lack of consideration (under Wyoming law, “continued employment as consideration”). Preston also argued that he had conceived of the invention before joining Marathon (e.g., the “CH4 Resonating Manifold”) but the DC determined that “’invention,’ as recited in the April Employee Agreement, requires both conception and reduction to practice” and that Preston had “little more than a vague idea” before signing the agreement (“no physical manifestations or detailed drawings of the patented baffle system existed prior to Preston’s employment at Marathon”;”[W]e still find that an invention necessarily requires at least some definite understanding of what has been invented.”) For support, the panel pointed to DDB Techs. (FC 2008), which held that “if the contract expressly grants rights in future inventions, no further act is required once an invention comes into being, and the transfer of title occurs by operation of law.” Thus, the DC decision was affirmed.

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