Addressing the issue of patent ownership in the employment context, the U.S. Court of Appeals for the Federal Circuit found that an employment contract executed after the employee began working for the employer operated to automatically assign the rights to two patents to the employer with no additional consideration other than continued employment. Preston v. Marathon Oil Co., Case Nos. 11-1013; -1026 (Fed. Cir., July 10, 2012) (O’Malley, J.).

Yale Preston, who began work for Marathon in March 2001, received a letter outlining his employment at-will with Marathon in February 2001. After he began working for Marathon, Preston executed an employment agreement that contained an intellectual property assignment provision. In that post-employment agreement, Preston identified a “CH4 Resonating Manifold” as an invention that was to be excluded from the assignment provisions. Marathon did not provide any additional consideration to Preston for signing the post-employment agreement beyond his continued employment.

From 2002 to 2003, in the context of his employment for Marathon, Preston worked on a baffle plate system used in methane gas extraction. Preston drafted conceptual drawings, met with Marathon’s engineers, engaged a third-party to manufacture baffle plates and managed the installation of the baffle plates in Marathon gas wells. Preston left Marathon in April 2003. After Preston left Marathon, both Marathon and Preston sought and received patents covering the baffle plate system.

Preston filed a lawsuit asserting, among other things patent infringement, a declaration that he is the sole inventor of the Marathon patent-at-issue and unjust enrichment based on Marathon’s use of his invention. The case presented the question of who owned two patents directed to the use of the baffle plate system.

After the district court ruled in Marathon’s favor in several summary judgment motions, Preston appealed. Preston challenged whether Preston’s continued at-will employment constituted sufficient consideration to support the assignment provisions contained in the post-employment employment agreement. The Federal Circuit certified the question to the Wyoming Supreme Court, which held that continued employment was sufficient consideration under Wyoming law. Accordingly, the Federal Circuit held that the April employment agreement was valid and enforceable.

Preston also argued that the post-employment agreement did not apply to his baffle plate system invention because he had expressly excluded the invention by noting “CH4 Resonating Manifold” as an excluded invention in the post-employment agreement. However, the Federal Circuit found that the invention could not be excluded from the scope of the assignment because Preston did not conceive of or make the invention prior to employment. The Federal Circuit found that Preston was not able to demonstrate that he had actually conceived of the invention beforehand, stating that the evidence presented by Preston showed that prior to his employment he had no more than “a vague idea” of the concept. Thus, the Federal Circuit concluded that Preston was unable to corroborate his claim of prior conception, while Marathon provided substantial testimony to the contrary. Accordingly, the Federal Circuit held that Preston did not expressly exclude the subject invention from the assignment provisions.