Appleton v. Bacon, 67 U.S. 699 (1862)
John North was an employee of American Book and Paper Folding Company, hired to design and improve various paper folding machines. That company ceased operation in 1857 and Bacon purchased all the patents, including one issued to North.
North kept a machine he had been working on and improved it further in 1858 before filing for patent protection and that patent issued later the same year. And, at that point North assigned rights to Appleton. One oddity – the patent office actually issued the new patent in Bacon’s name, something that the Supreme Court called “a very grave irregularity” that “has not been explained.”
On appeal, Bacon argued that he owned the invention based upon the prior employment agreement. However, the Supreme Court sided with Appleton, concluding that the keys to the invention came-about after North’s contract had ended.
Parties engaging the services of an inventor, under an agreement that he shall devote his ingenuity to the perfecting of a machine for their benefit, can lay no claim to improvements conceived by him after the expiration of such agreement.
Id. See Catherine L. Fisk, Removing the “Fuel of Interest’ from the “Fire of Genius’: Law and the Employee-Inventor, 1830-1930, 65 U. Chi. L. Rev. 1127, 1198 (1998) (“The question the Court resolved was simply one of fact: who was the inventor working for at the time he developed the patented invention?”).
* Note – the quote above comes from the syllabus of the case as issued by the court in 1862.
Surely as a statement of law this cannot be correct. If the parties want to contract such that future improvements—even those conceived after the employment has ended—belong to the assignee, surely they are free to agree to such, no? Is this really like a Brulotte rule, where such a contract is simply unenforceable?
I do not see the blockquoted text in the linked opinion. From where did that blockquote come?
That quote is in the Syllabus in the different JUSTIA link to Appleton v. Bacon & North from the cited reporter “67 U.S. (2 Black) 699”:
“Syllabus
Parties engaging the services of an inventor under an agreement that he shall devote his ingenuity to the perfecting of a machine for their benefit can lay no claim to improvements conceived by him after the expiration of such agreement.”
[And yes the enforceability [or its length or extend] of employment agreement provisions in general are public policy issues and state statute issues.]
Removing the “Fuel of Interest’ from the “Fire of Genius’.
That says it all. Contracts that bind people not to work in their area or take all the IP that they produce, though not currently employed, are a modern form of slavery.
Good point. I am glad that Prof C highlighted this case. I had not learned this point back when I took patent law (nor Brulotte, come to that). I wonder how many other IP-specific limitations on freedom of contract are kicking around out there in the old case law.
On reflection, I agree with Night Writer that this limitation on freedom of contract is good public policy. It is not exactly intuitive, however, against the backdrop of the rest of the common law. This sort of thing should be covered in patent law law school courses. Did anyone here learn about this case back in law school?
Greg, other IP-specific public policy limitations on freedom of contract can include patent license agreements with anti-trust implications, required patent license fees after patent expirations or patent invalidations, restraints on alienation running with chattel goods after they are validly sold, overriding Government contract statutes or regulations, prohibitions of reexaminations, unreasonable non-compete agreements, unreasonable trade secrecy agreements, trademark licenses with no quality control provisions, etc.
Greg, where the rubber hits the road on this issue is national trade secret law and progressive (good in my opinion) California law that voids employment contracts that restrict people from working in their area.
But all the fights on this issue are going to come from SV trying to continue to strengthen Trade Secret law and state laws.
[G]ood… California law… voids employment contracts that restrict people from working in their area.
Agreed. CA law on this point is a model for other states.
I wonder if Bacon had purchased all the company’s assets including the machine that North kept working on.
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