Spousal Rights to Inventions: A Latent Threat to Corporate Patent Portfolios

26 Pages Posted: 7 Nov 2019

See all articles by Daniel H. Shulman

Daniel H. Shulman

Vedder Price P.C.

Angela Upchurch

Southern Illinois University at Carbondale - School of Law

Date Written: October 28, 2019

Abstract

The intersection between patent law and family law principles has the potential to create an irreconcilable conflict in the area of patent ownership. These two legal worlds operate by virtue of different statutory provisions of automatic vesting of title that appear to be unable to coexist. Under U.S. patent law, ownership of a patent automatically vests, as personal property, in the individual inventor. Many, if not most, inventors are employees who, under some written obligation (such as a routine employment agreement), assign their ownership rights to the inventions created as part of their jobs to their employers. At the same time, however, property acquired by a married individual (in most, if not all states) is considered marital or community property of the married couple. In that case, then, when an employee invents something and acquires an interest in a patent (which the employee does automatically upon invention under U.S. law), that patent may become marital property of the couple before the employee assigns the employee’s interest to the employer. In other words, an employer who receives an assignment from the employee alone of only the employee’s interest may end up owning the patent jointly with the spouse who has his or her own undivided interest in the marital property.

This problem is particularly acute when, as is commonly the case, the assignment from the employee to the employer is a present assignment of an expectant interest which transfers legal title in the patent to the employer as soon as the patent arises. In that case, the two property regimes — patent law and marital property law — have competing, incompatible automatic vesting regimes. Patent law automatically vests ownership of patents in inventors and, by virtue of most common employment agreements, their employees; marital law, at least in community property states, automatically vests ownership of property in the spouse. The result, never previously explored, is that vast corporate patent portfolios may be subject to co-ownership with thousands of individual employee spouses (or ex-spouses).

Federal courts may not be able to resolve this conflict without wading into family law, an area traditionally left to the states. In addition, federal courts have long maintained that patent ownership is a matter of state property and contract law, making a judicial remedy on the basis of preemption unlikely. In Spousal Rights to Inventions: A Latent Threat to Corporate Patent Portfolio, we propose new federal legislation is necessary to create predictability in corporate patent ownership. Additionally, we provide some practical suggestions for employers confronted with this dilemma.

Keywords: intellectual property, patent, family law, spouses, corporate

JEL Classification: K11, K36

Suggested Citation

Shulman, Daniel H. and Upchurch, Angela, Spousal Rights to Inventions: A Latent Threat to Corporate Patent Portfolios (October 28, 2019). Seton Hall Law Review, Vol. 50, No. 1, 2020. Available at SSRN: https://ssrn.com/abstract=3476899

Daniel H. Shulman (Contact Author)

Vedder Price P.C. ( email )

1633 Broadway
New York, NY 10019
United States

Angela Upchurch

Southern Illinois University at Carbondale - School of Law ( email )

1150 Douglas Drive
Carbondale, IL 62901-6804
United States

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