IP: In Preston v. Marathon Oil, Federal Circuit helps clarify who owns a patent

Case helps provide a federal-level, unified resolution to the question of whether continued employment constitutes sufficient consideration for an assignment contract

It is a common misconception that an employer automatically owns all rights to the patents invented by its employees. The general rule is that, in the absence of an agreement to the contrary, an invention and any patents covering that invention belong to the employee/inventor. While state law will give an employer “shop rights” to use such an invention, this can create uncertainty and make it difficult to sell or transfer the business.

An employer, therefore, as a condition of employment, usually require that its employees sign agreements that assign inventions (and other intellectual property) created by the employee as a part of their employment to the employer. Contract law requires mutual consideration, however, for an agreement to be enforceable. Companies often struggle with whether simply providing an employee with continued employment constitutes sufficient consideration to support an assignment contract.

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William Lenz

William J. Lenz is a partner at Neal, Gerber & Eisenberg LLP and represents clients in a wide variety of intellectual...

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Contributing Author

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Jessica Rissman Cohen

Jessica Rissman Cohen is an intellectual property associate who manages her clients’ portfolios of patents and trademarks. She prosecutes trademarks and patents and handles related...

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