InsideCounsel » June 2008
Workers’ Rights
Employee inventions may lead to patent battles with employers.
In 1990, David Barstow was pursuing a dream. By day, he wrote computer code for the oil and gas drilling operations of his employer Schlumberger Technology Corp. At night and on weekends, he worked with his brother Daniel on a very different project: software that would produce computer simulations of live sporting events.
As the years passed, the brothers’ continuing work seemed to be successful, and they ultimately received four patents on their technology.
In 1994, David lost his job at Schlumberger and went into business for himself. He and Daniel set up DDB Technologies with high hopes of commercializing their sports software.
David’s dream, however, slowly turned into a nightmare. His company’s efforts to make and sell the software didn’t go well. Attempts to license the four patents resulted in just one licensee, SportsLine.com.
But according to Michael Gannon, an IP attorney at McDonnell Boehnen Hulbert & Berghoff, many other Web sites, including Major League Baseball’s Web site, are using the Barstows’ patented technologies. Gannon represents DDB.
So DDB, to which David and Daniel assigned their patent rights, filed a patent infringement suit in 2004 against MLB Advanced Media (MLBAM), which operates Major League Baseball’s Web site. MLBAM fought DDB for almost two years.
Then in April 2006, the company purchased the right to use the patents—but not from DDB. Schlumberger, asserting that it owned David’s rights in the patents, sold those rights to MLBAM along with a retroactive patent license. Now David risks losing all his patent rights to MLBAM. And he is suing Schlumberger for fraud.
This case underscores the problems that can arise when employees create inventions. “It’s typical for an employee to create an invention, think he owns it and leave the company without getting any clarity about who [really] owns it,” says James M. Matulis, an IP attorney at Fowler White Boggs Banker. “This is a cautionary tale.”
Patent Peril
Like many businesses, Schlumberger uses employment agreements that specify when the company owns employees’ inventions. Schlumberger’s agreement with David, however, was broader than most. It gave the company ownership of all employee inventions that “relate in any way” to Schlumberger’s business or “are suggested by” any work the employee did for Schlumberger.
David claims his sports-related software had nothing to do with his work for the company. Schlumberger initially agreed. While David was working on his invention, both Charles Huston, Schlumberger’s general counsel for software matters, and Dr. Reid Smith, the director of the lab in which David worked, stated that the sports software belonged to David, not Schlumberger. However, 16 years after the first patent application was filed and 12 years after David had left the company, Schlumberger changed its mind. It asserted that it owned all of David’s rights in the inventions.
