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A formal Invention Assignment Agreement is typically executed when the employee begins employment.The Agreement assigns certain inventions of the employee to the company.Eventually, Teets invented a new process for fabricating a durable composite blade which GE purchased for its engines. Later, Teets asserted that he, not Chromalloy owned the invention rights in the process for fabricating the composite blade.
Assignment agreements often include other standard contract language too, such as a provision requiring the losing party in a dispute to pay for attorneys' fees, or an “integration” clause, stating that the written contract represents the entire agreement between the parties (that way, neither party can later claim that they had a separate side deal or handshake agreement that doesn’t appear in the written contract).
Some states place limits on how far an inventions assignment can go in requiring an employee to give up his or her rights.
Chromalloy appointed Teets as the chief engineer for the project.
Unfortunately, Chromalloy did not have an Invention Assignment Agreement in place with Teets.
An assignment agreement transfers and assigns one party's property rights to another.
In real estate, an assignment agreement will be used by a lessee to assign the remaining term of a lease to a subtenant.
Although the Teets did not expressly assign the invention to Chromalloy, the Court construed an implied-in-fact contract to assign the invention to Chromalloy based on the particulars of the employment relationship. Chromalloy Gas Turbine Corporation, 83 F.3d 403 (Fed. Employers should implement procedures to obtain invention assignment agreements from employees.
It may also be important to ensure that your sub contractors have proper invention assignments from its employees to prevent any delays in production if one of the sub-contractor’s employees objects to intellectual property ownership issues.
As such, at the least, Chromalloy could continue to sell the new composite blades to GE.
Upon appeal, the Federal Circuit held that Chromalloy had more than just “shop rights” but also owned the patent rights. Based on this case, it is important to set up proper procedures and documentation to clarify ownership of intellectual property rights cases not only in the employment context but also when hiring a sub-contractor.