A recent Federal Circuit case may cause companies to reconsider their form of patent assignment agreements and give greater consideration to the effect of community property laws on patent rights. Patent rights initially vest in the individual inventor. This general rule applies even if the inventor created the invention in the course of his employment. For this reason, companies whose business involves developing patentable technology often ask their employees to sign agreements assigning their patent rights to the company.
Impact of Community Property Law on Patent Ownership
In a recent case decided by the Federal Circuit, Enovsys LLC v. Nextel Communications, Inc., Enovsys brought suit against Sprint Nextel Corporation, contending that Sprint Nextel had infringed two of Enovsys' patents. Sprint Nextel argued that Enovsys did not have standing to sue because Enovsys was not the sole owner of the patents and all of the patent owners were not made a party to the suit. Sprint Nextel argued that, under community property law, the ex-wife of one of the two inventors was part owner of the patents and should have been made a party to the suit. The court then analyzed whether the inventor's ex-wife had an ownership interest in the patents even though she, herself, was not an inventor.
The court noted that "[w]ho has legal title to a patent is a question of state law" and "under California law, all property acquired by a married person during marriage is presumed to be community property." This presumption applied to the two patents at issue in this case because the inventions were conceived, and the patent applications filed, while the inventor in question was married. "Prior to the divorce, the patents were thus presumptively community property in which [the spouse of the inventor] had an undivided half-interest."
After the inventor and spouse divorced, the inventor assigned his rights in the two patents to Enovsys; however, the spouse did not execute a similar assignment.
Despite the presumption that a spouse has an undivided half-interest, the court ultimately found that Enovsys was the sole owner of the patents and had standing to sue Sprint Nextel because, during the course of their divorce proceedings, the inventor and spouse both declared that they had no community assets or liabilities.
Although Enovsys ultimately prevailed on the patent ownership issue in this case, the court's analysis raises important issues concerning the intersection between community property law and patent rights. Employers, or other parties, who obtain patent rights through an assignment from an inventor subject to community property laws should consider whether they need to have the inventor's spouse consent to the assignment.