17 February 2013

Patents, Invention, Employment and Slavery

Lock and ChainDo you know who ‘owns’ your inventions?

I read a fascinating story last week, entitled ‘How the Patent Office Helped to End Slavery’.  It has all the elements a good story needs – celebrity (Jefferson Davis, the future Confederate president), adversity (the denial of the rights of a slave, Benjamin Montgomery), conflict (the Union versus the Confederate patent offices), and the triumph of good over evil (emancipation, and victory of the Union patent laws).

In a nutshell, the question arose as to who ‘owned’ inventions made by slaves, and was thus entitled to ownership of any resulting patent.  It will come as no surprise to learn that slave-owners, such as Jefferson Davis’ brother Joseph, considered that they were entitled to the fruits of the ingenuity of their human chattels. 

However, the US Commissioner of Patents, Joseph Holt, disagreed.  In 1857 he ruled, essentially, that since slaves had no legal rights, they could not possess rights as inventors, and therefore they had no recognisable intellectual property that could be transferred to their owners.  Since neither Jefferson nor Joseph Davis was the first and true inventor of the improved riverboat propeller invented by Joseph’s slave Benjamin Montgomery, and nor could they be the legitimate assignees of any purported ‘rights’ to the invention (since no such rights ever existed), the USPTO simply refused to grant patents to either one of the brothers, or indeed to any other slaveholders who sought to claim ownership of inventions devised by their slaves.

Although the Confederate enacted its own patent law which secured ownership by slaveholders of inventions developed by their slaves, it appears that no such patents were ever granted (and if they had been granted, they would not have been in force for very long).

While ownership of inventions by slave owners is no longer an issue in developed nations, the right of one party to claim ownership of an invention made by another, remains very much a live issue.  We are fortunate that, nowadays, all free women and men are entitled, the the first instance, to ownership of the products of their own ingenuity, should they choose to capitalise on that right.  However, it remains the case that many inventions for which patent rights are sought are made by employees in the course of employment, and are claimed as the property of their employers.

But Employers are not Slave-Holders!

The big differences, of course, between ‘employment’ and ‘slavery’ are that, as a general rule, modern employees enter into contracts of employment of their own free will, are (hopefully) adequately compensated for their physical and intellectual contributions, and are entitled to terminate those contracts, on reasonable terms, at any time.  Employees continue to enjoy (in principle, at least) the same individual rights as any other member of society.  As a result, they are entitled to ownership of their own inventions, and to freely-assign those rights to any other party as they see fit.

However, rights to any invention made by an employee in the normal course of their employment will generally accrue to the employer, who has paid the employee a wage for the labour which resulted in the invention.  Failing this (or, additionally, by way of confirmation) the employee inventor may execute an express assignment document transferring the invention to the employer.

What the modern employer, and the nineteenth-century slave-holder have in common is that neither one of them automatically owns the rights to an invention made by another.

Rights in an Invention

Despite what you may have heard, the fundamental principle that rights originate in the inventive activity of the individual inventor is no different under the US law (with its traditional – though shortly-to-be-revoked – ‘first-to-invent’ rule of patent-eligibility) than under the laws of any other country.  No matter where you go, if you want to have a patent granted to you, you must be either:
  1. the inventor of the new technology; or
  2. a person (or corporation) able validly to claim that the inventor’s rights have been legally transferred to you.
The only difference between the ‘first-to-invent’ and ‘first-to-file’ regimes is that when an invention happens to be independently (and coincidentally) invented by two different people, the first-to-invent approach allows the patent to be granted to whomever devised the invention first, while the first-to-file approach grants the patent to whomever gets to the patent office first.  No patent office in the developed world grants valid patents to people who are not either independent inventors of the claimed technology, or persons to whom they have (directly or indirectly) assigned their rights.

The point of all this is that ownership of an invention by anyone other than a person who is actually an independent inventor (i.e. did not learn of the invention from someone else) is never an automatic right.  In the case of an employee, the contract of employment may define the working conditions and expectations of the employee’s role, and specify the ownership of any intellectual property developed in the course of that role.  If not, or if this ownership is unclear, it may be necessary to clarify the situation by requesting that the employee sign a further contract expressly assigning the invention, and any resulting patent rights, to the employer.  It may also be necessary to ensure that the inventor has been adequately compensated for the transfer of rights to the employer.

‘Entitlement’ in Australia

In Australia, a patent cannot be granted if the applicant has not filed a statement, or ‘Notice of Entitlement’, setting out the basis for its ownership of the invention, and its entitlement to hold the granted patent.  The Australian Patent Office generally accepts these notifications on face value – it does not conduct any further enquiries to verify the validity of the claim to ownership.  The verification of entitlement details, and the preparation and filing of the Notice of Entitlement, are generally carried out by an Australian Patent Attorney, so the Office perhaps has little reason to doubt the contents of the Notice of Entitllement.  The Attorney plays an important role here, in ensuring that any resulting granted patent properly identifies the inventors as well as the assignee, and is not vulnerable to subsequent attack on the basis of fraud or lack of entitlement.

Under the Raising the Bar law reforms, which come into effect on 15 April 2013, it will be necessary to furnish correct entitlement details when requesting examination of an Australian patent application (if this has not been done earlier).  If you are working with an Australian patent attorney, please therefore ensure that you provide entitlement details at the earliest possible opportunity, to ensure that the lack of these details when requesting examination does not cause the application to lapse!

Conclusion

In free countries, we no longer have to worry about whether the inventor has any rights to his or her inventions in the first place!  The act of invention creates potential rights accruing to all free persons, which they may keep for themselves, or assign to another entity in exchange for good and valuable consideration – whether that be a salary, a royalty on future use of the invention, or an express assignment transferring the rights to another individual or entity.

The take-home message, for all inventors, their employers, and/or any other entities claiming to hold rights in an invention, is that establishing a legal chain of title from an inventor to an ultimate owner of the patent rights remains as important today as it was in 1857.  Get it wrong, and you may not have a valid patent to enforce!  At least these days, it is not necessary to worry about whether an inventor has any rights in an invention.  All free persons have rights, which they may exercise in any way they see fit, within the boundaries permitted by the law.

Image Copyright (c) 123RF Stock Photos

1 comment:

Stan E. Delo said...

Hello Mark-
A very interesting article, very well written as usual.
The historical perspective is especially fascinating for me, as my family came
to North America very early, as in say about the late 1700's, before the
Australian colonial experiment was initiated if I recall it correctly. They were
Huguenots, fleeing persecution by the French government at the time, hence my
last name of Delo, which was spelled DeLoeu (Of the Sea, or fishermen) before
they Americanized the name when they came to their new home.

Your discussion of property rights is especially
perceptive in my view, as it took so long for American politicians to recognize
the rights of women, and especially black Americans to be able to vote and have
any substantial rights at all, let alone property rights. Just the whole concept
of folks *owning* others is a major embarrassment in my opinion, but I was not
there at the time of course.

The ability to have Legal property rights is key here, as
it goes to the courts or the Federal government to decide if they should be
allowed, somewhat usurping the traditional US custom of first recognizing the
individual states' rights to determine issues like voting rights and property
rights as the first and only authority in the matters.

Then comes hence IP law, which supersedes state law, and
goes right past the traditional states law jurisprudence, which still mostly
governs contract law here in the US, with very few exceptions. A bit of a sticky
wicket, but it still seems to work very well, as a sort of division of authority
which I think is still a very important feature of the American
experiment.

Here in the US, it is pretty normal for corporations
especially to require new employees to sign an employment contract that usually
stipulates that anything *invented* by the employee is automatically the
property of the corporation, and often even perhaps as long as 3 years past
their leaving their employment. Most times, even if the employee develops it on
their own time and expense, it will still be considered as the property of the
corporation, and I think assignment is really not an issue, because the contract
spells it out very clearly, so assignment happens later because the corporation
needs to credit All of the inventors, or the patent could perhaps be found to be
invalid later.

Cheers,
Stan~

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