IP Newsletter | Spring 2015
	PATENT
	Employee's Improper Assignment of In-Service Invention May Breach Duty of Care
	The Supreme Court recently held that an employee subject to a pre-existing assignment contract breached a duty of care to his employer by assigning his in-service invention to a co-inventor (who was not employed with the same employer) without notifying the employer. The Supreme Court found that the employee owed damages to the employer based on his share of the invention (Supreme Court decision 2011 Da 77320, rendered on November 13, 2014). Notably, the non-employee (co-inventor) who assisted in developing the invention was found to be jointly liable for the tort and resulting damages. Facts The defendant employee ("D1") was a director of the plaintiff employer ("P"). Under an existing agreement between D1 and P, all of D1's in-service inventions were automatically assigned to P, unless P declined the assignment. D1 and another defendant ("D2"), an outside researcher not employed by P and not bound by D1 and P's agreement, jointly completed an invention relating to a light-weight and high-strength die casting alloy. The subject matter of the invention would have been within the scope of D1's employment. Both D1 and D2 were aware that the invention would have been important to P's business. Nevertheless, D1 assigned his share of the invention to D2 without notifying P. D2 then obtained a patent on the invention in its own name and licensed the patent to another company (who was introduced to D2 by D1). P subsequently sued both D1 and D2 for tort damages, rather than filing a breach of contract action against D1 alone. Supreme Court Decision The Supreme Court held that, in view of the pre-existing assignment clause, D1 owed a legal duty to P to cooperate with P in obtaining a patent for the employee's in-service invention in the employer's name, as well as to maintain secrecy of the invention in the interim. As a result, the Supreme Court determined that D1 and D2 conspired to commit a tortious breach of duty because both D1 and D2 knew of the importance of the invention to P's business. In particular, D1 had failed to notify P of the completion of the in-service invention, and instead, facilitated D2's patent application on the invention and subsequent licensing of the patent. Thus, the Supreme Court held that D1 and D2 were jointly liable for damages to P equivalent to D1's share of the invention, i.e., 50% of the royalties paid for the invention. The Supreme Court's decision confirms that an employee's violation of a pre-existing assignment agreement assigning his inventions to his employer, beyond being a simple contract violation, may constitute a tortious breach of the employee's duty of care to the employer, significantly expanding the scope of the employer's remedies for any breach of the agreement. Further, even though this particular case involved civil tort claims, it is possible that criminal proceedings might be instituted for extreme violations.
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