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Max Fogiel, Validity of the Employment Contract, 39 J. PAT. OFF. SOC'y 153 (February
1957).
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Max Fogiel, Validity of the Employment Contract, 39 J. Pat. Off. Soc'y 153 (1957).
APA 7th ed.
Fogiel, Max. (1957). Validity of the employment contract. Journal of the Patent
Office Society, 39(2), 153-156.
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Max Fogiel, "Validity of the Employment Contract," Journal of the Patent Office
Society 39, no. 2 (February 1957): 153-156
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Max Fogiel, 'Validity of the Employment Contract' (1957) 39 J Pat Off Soc'y 153
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February, 1957, Vol. XXXIX, No. 2 153
Validity of the Employment
Contract
At the present time it is the practice of every engineering and
development dompany to require its technical personnel to sign
a patent agreement as a condition of employment with the
company.
Th e contract broadly specifies that any invention which the
employee conceives during his period of employment shall be-
come the property of the company. The contract also contains
the clause that the employee must submit to the company all of
his inventions conceived within six months after he has left the
employ of the company.
Assuming a typical situation where an employee leaves one
company and immediately enters the employ of another similar
company, discrepancy arises between the two contracts which the
employee has signed. Assuming the normal case where the
employee performs the same type of work in both companies,
which company is entitled to the patent rights of the individual's
inventions for the six months following his change of employ-
ment?
The contract that the employee has signed with his former
employer directs him to yield all patent rights during this period
to his former employer. On the other hand, however, the con-
tract he signed with his new employer insists that all rights be
given to his present employer.
Since the employee cannot obviously satisfy the terms of both
contracts, which one of the two contracts is the valid one? The
contract signed with his former employer predominates with
respect to time, but the contract appears to cease binding the
employee when the latter leaves the company. Thus, the con-
sideration which gives validity to the contract is based on the
employment of the individual. Consideration is legally defined
as a benefit given to the promisor, or a detriment suffered by
the promissee. It is something given in exchange for a promise.
Once the individual has left his employer this consideration no
longer exists and consequently the contract is rendered invalid.
A contract can not be upheld unless it has consideration.
While the preceding situation has not as yet arisen before'the
courts, it will be interesting to observe what the opinions of the
courts are in such a common occurrence.
Aside from this controversial clause, the basic contents of the
contract have been generally upheld by the courts. An employee
involved in a work project of the company is responsible for
submitting to the company all of his improvements and inven-
tions relating to the work project.
Journal of the Patent Office Society
The courts have ruled that it is essential for the existence and
welfare of a company to acquire patent rights to all inventions
which arise through the expenditure of company capital. Since
the company has risked capital for the development of such
inventions, it is entitled to the returns which the assuming of
such a risk has produced.
Consequently, if the courts cannot render one of the contracts
invalid and feel that both contracts must be equally upheld, a
fair and simple solution to the problem may be arrived at by
assigning patent rights to that company which engaged in the
relating work project. Such an assignment will be consistent
with the doctrine that a company is entitled to the rights of an
invention conceived by its employee if it has contributed finan-
cially toward its development. The assignment will also be
consistent with past court rulings that an employee may retain
patent rights to his invention if he has developed it on his own
and it was unrelated to the activities of the company which
employed him.
In the rare event that a legal feud arise between two companies
which have both sponsored the same type of work activity, the
problem may be fairly resolved by designating that both com-
panies share in the assignment. In this manner the validity of
both contracts signed by the employee may be upheld and the
interest of justice will probably thereby be served best.
MAx FoaIEL
New York, N. Y.
