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Keywords

contractlawsuitappealsummary judgmentpatentcorporationexpress contract
contractsummary judgmentpatentcorporationexpress contract

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Banks v. Unisys Corp., 228 F.3d 1357, 56 U.S.P.Q.2d 1222

Facts

Gerald Banks, an expert in optical engineering, was recruited by Burroughs Corporation, now part of Unisys Corporation, in 1986. Upon starting his employment in 1987, he was asked to sign an agreement to assign his inventive rights to Unisys, which he did not sign. Banks contributed to the development of an image camera and was later listed as a co-inventor on three patent applications without his consent. He filed a lawsuit against Unisys, claiming misrepresentation regarding his patent rights.

In late 1986, a headhunter recruited Banks, an expert in optical engineering, for employment with Burroughs Corporation, now wholly-owned by Unisys Corporation, its successor in interest. When Banks began employment in 1987, Unisys requested that he sign a standard form entitled 'Agreement as to Patents, Inventions and Other Creative Property Rights and Regarding Competitive Activities,' which was essentially an agreement to assign inventive rights to Unisys. Banks did not sign the agreement.

Issue

Did the employee and employer form an implied-in-fact contract by which the employee assigned his inventive rights to the employer?

Did the employee and employer form an implied-in-fact contract by which the employee assigned his inventive rights to the employer?

Rule

An individual generally owns the patent rights to inventions made during employment, unless there is an express contract stating otherwise or if the employee was hired specifically to invent. An implied-in-fact contract can be inferred from the conduct of the parties, indicating a tacit understanding regarding the assignment of rights.

The general rule is that an individual owns the patent rights to the subject matter of which he is an inventor, even though he conceived it or reduced it to practice in the course of his employment. There are two exceptions to this rule: first, an employer owns an employee's invention if the employee is a party to an express contract to that effect; second, where an employee is hired to invent something or solve a particular problem, the property of the invention related to this effort may belong to the employer.

Analysis

The court examined whether Banks' employment relationship with Unisys indicated an implied-in-fact contract for the assignment of his inventive rights. The evidence suggested that Banks did not sign the assignment agreement and that Unisys did not pursue the issue of ownership during his employment. This raised genuine issues of material fact regarding the existence of a meeting of the minds necessary for such a contract.

When applying the 'employed to invent' exception, 'a court must examine the employment relationship at the time of the inventive work to determine if the parties entered an implied-in-fact contract to assign patent rights.' State contract principles provide the rules for identifying and enforcing implied-in-fact contracts.

Conclusion

The court vacated the district court's summary judgment in favor of Unisys, determining that genuine issues of material fact existed regarding the implied-in-fact contract.

The judgment of the United States District Court for the Eastern District of Michigan is vacated, and the case is remanded for further proceedings consistent with this opinion.

Who won?

The Court of Appeals vacated the summary judgment for Unisys, indicating that genuine issues of material fact existed regarding the implied-in-fact contract. This decision favored Banks, as it allowed his claims to proceed, suggesting that the court found merit in his argument that he had not fully assigned his inventive rights to Unisys.

The court vacated the district court's summary judgment in favor of Unisys, indicating that genuine issues of material fact existed regarding the implied-in-fact contract.

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