If innovators find themselves on the wrong side of these rules, the law may deny them legal ownership of what should have been their intellectual property.
In view of the complexity, laws, and government institutions impacting intellectual property creation and enforcement, civil and structural engineers can easily lose sight of the basic premise that IP, such as patents and trade secrets, ultimately boils down to legal property. Like any other form of property, the law operates to determine legal ownership of patents and trade secrets. If innovators find themselves on the wrong side of these rules, the law may deny them legal ownership of what should have been their IP.
If engineers can’t legally show they own what they believe is their IP, whether by registration or some other means that courts will recognize, they won’t be able to enforce what they believe is their property. Civil and structural engineers should endeavor to avoid ending up in this unfortunate position.
A few IP ownership best practices and pitfalls follow, which civil and structural engineers can consider keeping in mind in managing their enterprises. This article covers ownership issues in two of the main legal pillars of IP: patent and trade secret. A second article in this series will cover ownership issues in trademark and copyright.
Patent ownership. Federal preemption of patent law is nearly universal, with the law generally requiring a registration issued by the United States Patent and Trademark Office to show patent ownership. In general, civil and structural engineers must first have an issued patent to even contemplate asserting the legal patent right to exclude. But, the rules of ownership do not stop there.
As enshrined in the U.S. Constitution, ownership first vests equally in each inventor of a U.S. patent. Inventors must contribute to at least one issued patent claim to have that ownership initially vest in them. Because inventorship plays such a critical role in patent law, naming the wrong inventors or failing to include inventors on a patent can form the basis for challenging and invalidating that patent. Also, an inventor who believes that he or she was omitted as a named inventor on a U.S. patent may bring an action to have patent inventorship changed to include him or her.
In the absence of an agreement to the contrary, the law views each named inventor as having equal ownership of a patent, including for example the right to license or assign the patent or bring a patent infringement suit. Chaotic situations often arise when joint inventors take uncoordinated or inconsistent actions regarding their patent, such as purporting to assign full rights or grant exclusive licenses simultaneously to different third parties. These types of mismanaged ownership arrangements can lead to acrimonious, costly, and ultimately counterproductive litigation.
To avoid these types of legal woes, each and every inventor contributing to at least one patent claim should be identified on a patent. Each and every inventor of a U.S. patent, particularly in situations involving joint inventorship, should execute an assignment or some other agreement determining the desired legal ownership of a patent. For example, corporate inventors often execute assignments at patent filing that transfer all patent rights in a given patent to a legal entity associated with their employer, whether it be an operating company or a holding company. Although employment agreements may stipulate that all IP created by an employee belongs to his or her employer, such employment agreements have been successfully attacked in litigation. Having each and every inventor execute an assignment at patent filing and recording that assignment with the USPTO forms the best practice for memorializing patent ownership. Entrepreneurs may follow similar best practices in assigning their patent rights to legal entities they own. Innovators may also establish more advanced ownership regimes using domestic and foreign legal entities, taking care that such regimes comply with U.S. and foreign laws such as patent, corporate, and tax law.
Trade secret ownership. Civil and structural engineers face a different paradigm for ownership with trade secrets as compared to the other IP forms such as patents. Whereas ownership in the other IP branches typically revolves around obtaining registrations or putting ownership assignments and agreements into place, most of the heavy-lifting for showing ownership of trade secrets happens internally within organizations and in court during enforcement. Although trade secrets can cover everything from secret formulas and technology to customer lists, actually owning trade secrets typically rests on internal IP processes that organizations put into place and regularly execute.
Whether enforcing trade secrets in state court or under the Defend Trade Secrets Act in federal court, trade secret ownership depends on the measures that innovators can prove they took to protect their secrets. When plaintiffs come into court alleging that another party stole their trade secrets, judges will expect that these plaintiffs made special efforts to protect the information alleged to merit trade secret protection. Although these processes vary based on the factual circumstances of each case, they often include a combination of confidentiality agreements, marking systems, procedures for controlling and limiting access to information, and other “reasonable measures” taken to protect information. Accordingly, ownership and enforcement of trade secrets can depend more on the steps that organizations take to protect the asserted trade secret than the intrinsic market value of the protected information itself.
Conclusion. Civil and structural engineers should remember that the legally operative word in intellectual property such as patents and trade secrets is property. Innovators should consider following some of the exemplary best practices mentioned above to try to ensure that what they believe to be their patents and trade secrets actually are their legal property, which they can enforce in court if necessary.
Stephen Keefe, P.E., Esq., is a principal attorney of Stephen L. Keefe LLC. After graduating from West Point with a degree in civil engineering and serving in the U.S. Army, he earned a master’s degree in civil engineering from Columbia University and practiced as a structural engineer in New York City and Virginia for six years. He served as a patent examiner at the U.S. Patent & Trademark Office, received a Juris Doctorate from the George Washington University Law School, and has practiced patent and IP law for over 12 years at leading IP law firms and as in-house corporate patent counsel. He can be contacted at firstname.lastname@example.org.Click here to read this full issue.