Invention Contract - DOC

Document Sample
Invention Contract - DOC Powered By Docstoc
					5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


VOITH HYDRO, INC., a Delaware Corporation, Plaintiff, v. HYDRO WEST GROUP,
INC., a Washington Corporation, and Dr. Alexander Gokhman,Defendants.
No. C-96-1170 SC

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
CALIFORNIA

1997 U.S. Dist. LEXIS 3817

March 26, 1997, Decided
March 26, 1997, FILED

PROCEDURAL POSTURE: Plaintiff employer filed a complaint against defendants,
employee and corporation, alleging, inter alia, breach of an employee invention
agreement and of a         patent    assignment agreement against the          employee,
misappropriation of trade secrets against both defendants, and interference with contract
against the corporation.

OVERVIEW: The employee and corporation secured a patent for an invention by the
employee. The employer asserted that it had a right to the patent. The employee had
worked on the invention and had applied for a patent on part of the invention while
employed by the employer, and the employee had signed an employee invention
agreement, including a patent assignment agreement, on his first day of work for the
employer. After a trial before the court, the court held that the agreements were valid,
enforceable contracts for which the employee's job was adequate consideration.
However, the court held that neither contract was breached, that no trade secrets were
misappropriated, and that the corporation did not interfere with the contracts because the
original patent application did not include confidential matters and the actual patent
was for a different invention than that disclosed in the original application.

OUTCOME: The court ordered that judgment be entered in favor of defendants and
against the employer.



Samuel Conti, United States District Judge



Seg. 3, item 5 (2007)                                                                   1
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


OPINION: FINDINGS OF FACT AND CONCLUSIONS OF LAW

I. INTRODUCTION

  This action involves a dispute over the rights to a patent for a hydroelectric "potential
flow turbine." The potential flow turbine was invented by defendant Dr. Alexander
Gokhman and the patent is held by defendant Hydro West Group, Inc. Plaintiff Voith
Hydro, Inc. claims the right to the patent pursuant to an Employee Invention
Agreement and a Patent Assignment Agreement executed by its predecessor in interest
Allis-Chalmers and defendant Dr. Gokhman.

  Plaintiff Voith Hydro, Inc. filed a complaint[*2] on March 29, 1996, alleging, inter alia,
n1 breach of the Employee Invention Agreement and breach of the Patent Assignment
Agreement against defendant Gokhman; misappropriation of trade secrets against
defendants Gokhman and Hydro West Group, Inc.; and interference with contract against
defendant Hydro West Group, Inc. Defendants claim that the potential flow turbine is not
covered by the Employee Invention Agreement or the Patent Assignment Agreement
and therefore plaintiff has no interest in the patent. In addition, defendants contend that
the Employee Invention Agreement and the Patent Assignment Agreement are invalid
because they were not supported by adequate consideration, are unconscionable and are
contracts of adhesion.



- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

  n1 All additional claims were voluntarily withdrawn by plaintiff during trial.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -



  On March 10 through March 12, 1997, the court conducted the trial in this matter.
Having considered all of the evidence introduced at trial, together with the arguments of
counsel, the court finds that the[*3] Employee Invention Agreement and the Patent
Assignment Agreement are valid, enforceable contracts. The court also finds, however,
that the potential flow turbine is not covered by either the Employee Invention
Agreement or the Patent Assignment Agreement and therefore defendant Gokhman did


Seg. 3, item 5 (2007)                                                                     2
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


not breach either contract. The court further finds that the. defendants did not
misappropriate plaintiff's trade secrets and that defendant Hydro West, Inc. did not
interfere with plaintiff's contract with Gokhman. The court makes further findings of fact
and conclusions of law as set forth below.

II. FINDINGS OF FACT

A. Facts Relating to All Alleged Claims and Defenses

  1. Voith Hydro, Inc. ("Voith") is a Delaware corporation with its principle place of
business in York, Pennsylvania.

  2. Hydro West Group, Inc. ("Hydro West") is a Washington corporation with its
principle place of business in Bellevue, Washington.

 3. Dr. Alexander Gokhman ("Gokhman") is an individual who resides in San Francisco,
California.

  4. Gokhman received a Ph.D. in hydromachinery from the Moscow Power Institute in
1962 and has been an engineer working and teaching in the field of fluid mechanics
since[*4] that time.

  5. Gokhman conceived of the idea for a potential flow turbine in 1958 while employed
in the former Soviet Union. Drawings of the potential flow turbine were made at that
time, however, a model was never made and the invention was not pursued due to
prohibitive costs.

  6. A potential flow turbine consists of wicket gates and runner blades that work in
conjunction with the wicket gates. The potential flow turbine differs from the prior art
because potential flow theory is applied to design the shape of the wicket gates and
runner blades resulting in increased efficiency.

  7. Gokhman disclosed his idea for a potential flow turbine to Stephan Todorovski in the
1970s. Basic diagrams were made at that time.




Seg. 3, item 5 (2007)                                                                   3
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


  8. Gokhman worked for Allis-Chalmers Manufacturing Company ("Allis-Chalmers") in
York, Pennsylvania, as an engineer in Allis-Chalmers' hydroelectric turbine business
from 1981 through 1986.

  9. When he began work on January 5, 1981, Gokhman entered into an " Employee
Invention Agreement and Confidential Information Agreement" ("Invention Agreement")
with Allis-Chalmers in York, Pennsylvania. The Invention Agreement was not provided
to Gokhman prior to his first day of work. [*5]

  10. Subsection A of the Invention Agreement contains provisions regarding the
ownership of inventions and ideas conceived or developed during employment. It
specifies that any inventions and ideas conceived or developed during employment are
the property of Allis-Chalmers.

  11. Subsection B of the Invention Agreement contains provisions for the confidentiality
of the technical information and documents of Allis-Chalmers.

  12. Employee invention agreements like the Invention Agreement are commonplace,
and are routine in manufacturing companies and companies that are involved in research
and development.

  13. Gokhman was aware in 1981, prior to working for Allis-Chalmers, that it is
conventional for American companies to require an employee to sign such an
agreement. Gokhman signed a similar agreement when he was employed by the
University of Miami. Gokhman read the Invention Agreement before signing it and was
under no compulsion to sign it. Gokhman did not ask Allis-Chalmers before coming to
work whether there would be an invention assignment or confidentiality agreement.

  14. Gokhman was hired to work in the research and development division of Allis-
Chalmers and to design computer[*6] software relating to the development of hydro
turbine technology.

  15. During his employment at Allis-Chalmers, Gokhman was told that if his work was
good, he could continue working at Allis-Chalmers until he retired. However, Gokhman
understood that his employment was at will and not for a specific period of time. He did
not have a contract promising him employment for a set period of time, he did not ask for


Seg. 3, item 5 (2007)                                                                  4
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


such a contract, and he understood that Allis-Chalmers would not agree to such a
contract.

  16. Gokhman's work was satisfactory and Gokhman received positive evaluations.

  17. In 1983, Gokhman proposed to Allis-Chalmers that he be allowed to work on a
potential flow turbine invention in connection with a specific turbine project called the
Yacereta project. Allis-Chalmers was then having difficulty reaching the promised level
of efficiency in generating electricity for that project.

  18. Thereafter, Gokhman performed certain work on a potential flow turbine invention.
One set of prototype wicket gates was manufactured in connection with that invention for
the Yacereta project. However, Allis-Chalmers never fully completed the wicket gates so
that they could be tested and never[*7] tested the wicket gates. Gokhman also performed
certain computer calculations for customized runner blades that would work with the
Yacereta potential flow wicket gates to produce increased turbine efficiency.
Conventional runner blades could not be used for that purpose. However, Allis-Chalmers
never manufactured any runner blades from those computerized calculations.

  19. On September 30, 1985, Gokhman and Allis-Chalmers applied for a patent on the
potential flow wicket gates, and Gokhman simultaneously assigned the patent to Allis-
Chalmers pursuant to a Patent Assignment Agreement. This patent application (the
"1985 Patent Application") did not contain any disclosure or patent claims relating to
the runner blades which are necessary for the operation of a potential flow turbine.

 20. The 1985 Patent Application was rejected by the United States Patent and
Trademark Office ("PTO") in early 1986 because of prior art.

  21. Allis-Chalmers chose not to continue proceedings on the 1985 Patent Application
at that time because the need to increase efficiency on the Yacereta project was solved by
other means. Financial constraints also dictated that Allis-Chalmers put on hold the
development[*8] of the potential flow turbine for Yacereta.

  22. Allis-Chalmers terminated Gokhman effective March 31, 1986. Allis-Chalmers did
so as part of a general force reduction in the hydro turbine division. At the time, Allis-



Seg. 3, item 5 (2007)                                                                   5
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


Chalmers was in a bad financial state and the hydro turbine division was a candidate for
sale.

  23. Gokhman's supervisors selected him for termination because his value to the
company was more in long-term, research and development projects than in short-term
money making projects. At that time, short-term economic viability was critical to Allis-
Chalmers.

  24. At the time Gokhman's employment was being terminated, Gokhman had an exit
meeting with David Smith ("Smith"), the head of human resources. At that time, Smith
asked Gokhman to sign a routine statement ("Statement on Confidential Matters") that
reiterated the duties imposed by the Invention Agreement. The statement reminded that
the employee is required to keep secret the confidential matters of Allis-Chalmers and
its customers and that the employee is not free to use or disclose such information to
anyone outside of Allis-Chalmers either during or after their employment except upon
written consent.

  25. At that[*9] meeting, Gokhman refused to sign the Statement on Confidential
Matters. Gokhman told Smith that he felt that the Invention Agreement which he signed
when he began work, was all that was required and that the Statement on Confidential
Matters was redundant. Since the Invention Agreement included all the information in the
Statement on Confidential Matters, Smith did not press Gokhman or require him to sign
the Statement on Confidential Matters.

  26. After Gokhman's employment was terminated, he did not complain to anyone at
Allis-Chalmers or Voith about his termination. He did not file any claim with any
government agency or court. He did not contact Allis-Chalmers or Voith in any way to
complain that his termination was illegal, inappropriate or unfair.

  27. On September 25, 1986, Voith purchased the assets of Allis-Chalmers' hydro
turbine business in York, Pennsylvania. Allis-Chalmers assigned to Voith the Invention
Agreement and the Patent Assignment Agreement and all of its rights thereunder.

  28. Neither Allis-Chalmers nor Voith has further pursued the development of a
potential flow turbine. Neither Allis-Chalmers nor Voith developed a potential flow
turbine for the Yacereta project[*10] or for any other project.


Seg. 3, item 5 (2007)                                                                  6
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc




  29. After being terminated in 1986, Gokhman moved back to San Francisco, where he
had continuously owned a home prior to his being hired in 1981 by Allis-Chalmers.

  30. In the early 1990s Gokhman met with Bill Holveck, an engineer with defendant
Hydro West. They met with counsel and submitted a potential flow turbine patent
application to the PTO in 1993 ("1993 Patent Application").

  31. The 1993 Patent Application contained substantial portions of the 1985 Patent
Application relating to the wicket gates. However, the 1993 Patent Application differed
from the 1985 Patent Application because it also disclosed runner blades to work in
conjunction with the wicket gates.

  32. On August 15, 1995 U.S. Patent No. 5,441,384 (the " '384 Patent" ) was issued on
the 1993 Patent Application. No patent was ever issued on the 1985 Patent
Application.

  33. The invention disclosed in the '384 Patent is different from the invention disclosed
in the 1985 Patent Application.

  34. The 1985 Patent Application disclosed only the wicket gates to be used as part of a
potential flow turbine. The '384 Patent, in contrast, discloses a potential flow turbine
which is comprised of both[*11] wicket gates and runner blades designed using potential
flow theory. The potential flow turbine is an independent invention that must be
considered as a whole. The potential flow wicket gates enhance efficiency only as one
component of a complete potential flow turbine and do not enhance efficiency on their
own. Therefore, the wicket gates themselves cannot be considered an independent
invention an must be considered only as a component part of the whole turbine.

  35. The differences between the 1985 Patent Application and the '384 Patent include
the following:

(a) The '384 Patent includes the design of turbine runner blades in addition to the design
of the wicket gates. The 1985 Patent Application does not mention the design of turbine
runner blades. Only the set of wicket gates and runner blades operating together increase
efficiency;


Seg. 3, item 5 (2007)                                                                   7
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc




(b) The turbine set disclosed in the '384 Patent is designed using two-dimensional
potential flow theory. The two-dimensional potential flow concept for a turbine set
design is unique in the turbine industry;

(c) The 1985 Patent Application provides that the sealing lines on the wicket gates have
to be vertical cylindrical surfaces. [*12] In contrast the '384 Patent provides that the
sealing lines need only be congruent and abut the sealing lines on adjacent gates.

(d) The '384 Patent gives an expression for the whirl value along the trailing edge of the
wicket gate. If the sealing line is not a vertical cylindrical surface, then the
circumferential velocity along this line would not be a constant as claimed in the 1985
patent Application.

III. CONCLUSIONS OF LAW

A. Jurisdiction and Venue

 1. The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332, and the
Northern District of California is a proper venue for this action.

B. Applicable Law

 1. Gokhman and Allis-Chalmers entered into the Invention Agreement and the Patent
Assignment Agreement in Pennsylvania, and the contracts were performed in
Pennsylvania. Therefore, Pennsylvania law applies to this action. Cal. Civ. Code § 1646.

C. Alleged Breach of the Invention Agreement

  1. Under Pennsylvania law, to compel the assignment of the '384 Patent pursuant to an
invention assignment contract, Voith must meet the following burden:

        In an equitable action to compel the assignment of an invention[*13] of an
        employee to the employer, the employer must show by clear and
        convincing proof that (1) the invention was conceived [or developed] n2 by
        the employee while in the employ of the employer, (2) the assignment was


Seg. 3, item 5 (2007)                                                                   8
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


        governed by a valid, binding, and enforceable contract, unambiguous in its
        terms so as to warrant specific performance, and (3) all conditions and
        covenants concerning the assignment were fulfilled. The policy of the law is
        to protect the rights of the inventor, and in furtherance of that policy the
        language of an assignment agreement must be clear and precise, displaying
        the unmistakable intention that the matters involved are within the
        contemplation of the parties.

Mosser Industries, Inc. v. Hagar, 200 U.S.P.Q. 608 (Pa. Ct. Com. Pl. 1978)(citations
omitted).



- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

  n2 In Mosser, the employee entered into an agreement to assign his rights to any
invention which he may conceive of during his employment. Under the Invention
Agreement, however, Gokhman agreed to assign his rights to any invention conceived or
developed during his employment.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
[*14]

  2. The Invention Agreement is a valid, enforceable contract.

  3. The Invention Agreement is supported by adequate consideration. Gokhman entered
into the Invention Agreement on his first day of work in exchange for his employment at
Allis-Chalmers. The employment itself was therefore consideration for the Invention
Agreement. See Nat'l Risk Manag., Inc. v. Bramwell, 819 F. Supp. 417, 429 (E.D.Pa.
1993)(stating that employment itself is valid consideration for restrictive covenants
contained in an employment agreement entered into on the first day of work).

  4. The Invention Agreement is not an unconscionable adhesion contract. Such
agreements are commonplace and are a standard part of research and development.
Gokhman was aware when he agreed to work for Allis-Chalmers that such contracts were
standard practice and he expected that he would be obliged to sign such a contract when
he commenced work at Allis-Chalmers. Moreover, Gokhman had signed a similar


Seg. 3, item 5 (2007)                                                                  9
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


invention assignment agreement when he worked for the University of Miami. In
addition, Gokhman read the Invention Agreement prior to signing it, understood its terms
and made no objections at the time. Furthermore, "it is well[*15] settled that an
agreement on the part of an inventor to assign inventions developed while in the employ
of another is not inequitable, or unconscionable." Patent & Licensing Corp. v. Olsen,
188 F.2d 522, 524 (2nd Cir. 1951).

  5. Allis-Chalmers did not breach the Invention Agreement when it terminated
Gokhman's employment. The Invention Agreement does not provide for a set term of
employment. Gokhman had an at-will employment agreement with Allis-Chalmers and
was never provided with an agreement that specified that he would be employed for any
particular length of time. Although Gokhman was told that if he did good work he would
be employed until he retired, Gokhman understood that he did not have an agreement
with Allis-Chalmers that he would be employed until retirement. Gokhman also
understood that he could be terminated at any time if Allis-Chalmers had financial
difficulties.

  6. Even if a promise to employ Gokhman for a "reasonable time" is implied as
consideration for Gokhman's agreement to sign the Invention Agreement, Allis-Chalmers
in fact fully performed because it employed Gokhman for five years, which is a
reasonable time.

  7. Gokhman did not breach the Invention Agreement. [*16]

  8. Plaintiff must show that Gokhman "conceived" or "developed" the potential flow
turbine while employed at Allis-Chalmers to recover for breach of subsection A of the
Invention Agreement.

 9. Gokhman conceived of the idea for the potential flow turbine prior to commencing
work at Allis-Chalmers.

  10. Gokhman did not develop the potential flow turbine while employed at Allis-
Chalmers. Although Gokhman did some work on the potential flow turbine while
employed at Allis- Chalmers, this work does not rise to the level of "development." The
capabilities of the potential flow turbine were never brought out during Gokhman's
employment at Allis-Chalmers. The prototype wicket gates for the Yacereta project were


Seg. 3, item 5 (2007)                                                                10
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


never refined, nor were they tested. The computer calculations for corresponding runner
blades were never translated into a tangible form and were never modeled or tested. The
potential flow turbine was never put together into a working, tangible form, much less
perfected between 1981 and 1986 or anytime thereafter by Voith or Allis-Chalmers. See
Mosser, 200 U.S.P.Q. 608 (invention "developed" where the elements were combined
into a working prototype, not during prior employment[*17] where individual elements
were conceived.)

  11. Subsection B of the Invention Agreement states that Gokhman agrees "to keep
secret all confidential matters of Allis-Chalmers whether or not developed by me and I
agree not to use them or disclose them to anyone outside of Allis- Chalmers . . . ."
However, the "confidential matters" at issue here, namely the matters contained in the
1985 Patent Application, were not confidential matters of Allis-Chalmers. In fact,
Gokhman had already disclosed his conception of the potential flow turbine prior to
being employed by Allis-Chalmers. Therefore, any information relating to the potential
flow turbine was not the confidential information of Allis-Chalmers. Moreover, while
subpart B required Gokhman to deliver to Allis-Chalmers on termination any "documents
containing confidential information of Allis-Chalmers," no documents taken by
Gokhman contained information that was confidential to Allis-Chalmers.

D. Alleged Breach of the Patent Assignment Agreement

  1. The Patent Assignment Agreement is a valid, enforceable contract.

  2. The Patent Assignment Agreement was supported by adequate consideration. The
Invention Agreement required[*18] Gokhman to assign any patents obtained on
inventions conceived or developed during his employment to Allis-Chalmers. Therefore,
the Patent Assignment Agreement is ancillary to the Invention Agreement and only
serves to execute the assignment required by the Invention Agreement. As such, the
consideration for the Invention Agreement is adequate consideration for the Patent
Assignment Agreement. See Henry Hope X-Ray Products, Inc. v. Marron Carrel, 674
F.2d 1336, 1342 (9th Cir. 1982)(upholding a confidentiality agreement that was ancillary
to the taking of employment under Pennsylvania law).

  3. The Patent Assignment Agreement provides for the assignment of the invention
disclosed in the 1985 Patent Application from Gokhman to Allis-Chalmers. The


Seg. 3, item 5 (2007)                                                                11
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


invention disclosed in the 1985 Patent Application, the potential flow wicket gates, is
not the same invention as the potential flow turbine disclosed in the '384 Patent.
Accordingly, Gokhman did not breach the Patent Assignment Agreement by failing to
assign the '384 Patent to Allis-Chalmers.

E. Alleged Misappropriation of Trade Secrets

  1. Under Pennsylvania law, the elements of misappropriation of trade secrets are as
follows: [*19] (a) the plaintiff is the owner of a trade secret; (b) the plaintiff disclosed the
trade secret to defendant, or defendant wrongfully took the trade secret from the plaintiff
without plaintiff's authorization; (c) defendant was in a legal relation with reference to
plaintiff as a result of which defendant's use or disclosure of the trade secret to plaintiff's
detriment is wrongful; and (d) defendant has used or disclosed, or will use or disclose, the
trade secret to plaintiff's detriment. Greenberg v. Croydon Plastics, Inc., 378 F. Supp.
806, 811 (E.D.Pa. 1974).

  2. In this instance, the trade secret at issue, the potential flow turbine conceived by
Gokhman, was not the trade secret of Allis-Chalmers. Rather, the invention was
conceived by Gokhman and disclosed to others prior to working at Allis-Chalmers.
Accordingly, plaintiff has not met the requirement that it ever owned a trade secret in the
potential flow turbine and therefore has failed to establish the misappropriation of a trade
secret.

F. Alleged Interference with Contract

  1. To recover for interference with contract, the plaintiff must establish a disruption of
the contract at issue. As discussed above, Gokhman[*20] did not breach either the
Invention Agreement or the Patent Assignment Agreement. Accordingly, plaintiff has
failed to establish the disruption of a contract between plaintiff and Gokhman by Hydro
West and there is no basis for plaintiff's claim for interference with contract.

G. Common Law Rights to the Potential Flow Turbine

  1. In its trial brief, plaintiff contends that, in the alternative, it is entitled to common law
rights in the '384 Patent. However, plaintiff did not include any allegations of common



Seg. 3, item 5 (2007)                                                                          12
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


law rights in its complaint. Defendants objected to plaintiff's recent contentions regarding
common law rights at trial.

  2. Notwithstanding plaintiff's failure to plead for common law in its complaint, the
court finds that plaintiff is not entitled to any common law rights in the '384 Patent.

  3. Under Pennsylvania common law, "the general rule is that an individual owns the
patent rights in the subject matter of which he is an inventor even though he conceived
of the subject matter or reduced it to practice during the course of employment."
University Patents , 762 F. Supp. 1212, 1219. This is true even where the employee
uses the time and facilities of the employer. [*21]Id. This general rule, however, is
subject to the exception that "where an employee is hired to invent something or to
solve a particular problem, the property of the inventions of the employee related thereto
belongs to the employer." Id. at 1219-20.

  4. In the present case, Gokhman was not hired for the particular purpose of designing a
potential flow turbine, but rather was hired generally as a staff engineer to work in
research and development. In fact, if anything, Gokhman was hired more specifically to
work on computer programs to assist in the development of hydro turbines generally.
Once employed at Allis-Chalmers, Gokhman himself requested to work on the Yacereta
project because he thought he might be able to use potential flow theory to assist in
increasing efficiency for the project -- but was not hired specifically to do so.
Accordingly, Voith is not entitled to the assignment of the '384 Patent based on common
law.

  5. Although an employer may not be entitled to the assignment of an employee's
patent, the employer may have a common law license or " shop right" to use the
invention without paying the employee any additional compensation. Aetna-Standard
Eng'g Co. [*22] v. Rowland, 343 Pa. Super. 64, 493 A.2d 1375, (Sup.Ct.Pa. 1985). A
shop right will arise where the employee devises the invention on the employer's time
and at the latter's expense using his materials and facilities, and allows him to use the
invention without special compensation. Id.

 6. Under the facts at bar, plaintiff is not entitled to a " shop right" in the '384 Patent.
The patented invention, the potential flow turbine, was not devised during Gokhman's
employment at Allis-Chalmers. As discussed above, the potential flow turbine was


Seg. 3, item 5 (2007)                                                                    13
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


neither conceived nor developed at Allis-Chalmers. Although it is undisputed that
Gokhman used some time and resources of Allis-Chalmers to work on the potential flow
turbine for the Yacereta project, only one component of the invention, the wicket gates,
was modeled. However, the invention was never completed, perfected or reduced to
practice at Allis-Chalmers.

IV. CONCLUSION

  In accordance with the foregoing, it is hereby ORDERED that:

  (1) plaintiff failed to show that Gokhman breached either the Invention Agreement or
the Patent Assignment Agreement;

  (2) plaintiff failed to show that either Gokhman or Hydro West misappropriated[*23]
plaintiff's trade secrets;

  (3) plaintiff failed to show that Hydro West interfered with a contract between plaintiff
and Gokhman;

  (4) plaintiff is not entitled to any common law rights in the '384 Patent; and

  (5) judgment be entered in favor of defendants and against plaintiff. Plaintiff shall take
nothing on its complaint.

  IT IS SO ORDERED.

  Dated: March 26, 1997

  Samuel Conti

  United States District Judge

  JUDGMENT - ENTERED IN CIVIL DOCKET 3/26, 1997

  In accordance with the court's Findings of Fact and Conclusions of Law dated March
26, 1997, it is hereby ORDERED, ADJUDGED, and DECREED that judgment be


Seg. 3, item 5 (2007)                                                                    14
5eb7980c-113f-4f8c-97ed-c93975974952.doc5eb7980c-113f-4f8c-97ed-c93975974952.doc


entered in favor of defendants and against plaintiff. Plaintiff shall take nothing on its
complaint.

  IT IS SO ORDERED.

  Dated: March 26, 1997

  Samuel Conti

  United States District Judge




Seg. 3, item 5 (2007)                                                                 15

				
DOCUMENT INFO
Description: Invention Contract document sample