Fletcher-Terry Co. v. Grzeika

• Citation: 1 Conn.App. 422,473 A.2d 1227
• Decision Date: 20 March 1984
• Docket Number: FLETCHER-TERRY,No. 2297,2297
• Court: Appellate Court of Connecticut
• Parties: TheCOMPANY v. Eugene W. GRZEIKA.

Page 1227

473 A.2d 1227

1 Conn.App. 422

The FLETCHER-TERRY COMPANY v. Eugene W. GRZEIKA.

No. 2297.

Appellate Court of Connecticut.

Argued Dec. 1, 1983.

Decided March 20, 1984.

Sherwood L. Anderson III, Bristol, for appellant (plaintiff).

Alfred F. Morrocco, Jr., Bristol, with whom, on the brief, was David R. Sirois, Bristol, for appellee (defendant).

Before TESTO, HULL and DUPONT, JJ.

HULL, Associate Justice.

This is an action to enforce a provision of an assignment contract wherein the defendant, Eugene Grzeika, was allegedly obligated to cede his patent and title rights to his invention of an improved glazier's tool over to the plaintiff, the Fletcher-Terry Company (Fletcher), his employer. The trial court declined to consider the issues relating to title to the invention and the enforceability of the contract provision pending a decision by the United States patent authorities concerning patent rights to the invention. The trial court, however, granted the defendant's request that the plaintiff pay all of the defendant's patent related expenses pursuant to another provision of the contract. The plaintiff appealed. ¹

The plaintiff, Fletcher, manufactures and sells glass cutting equipment and a variety of glazier's tools. The defendant was employed by Fletcher from October of 1958 until he voluntarily left the company in April of 1978. In 1970, the plaintiff adopted a company policy whereby certain employees were required to sign an "Employee Invention and Confidential Information Agreement" (agreement). By signing the agreement, an employee transferred to the plaintiff "[a]ll new contributions, suggestions or inventions conceived or made" by the employee relative to the plaintiff's business while working for the plaintiff. ² The defendant signed this agreement in 1970 as, at that time, his position with the company brought him within the category of employees required to sign the agreement.

Early in 1977, the defendant invented a new type of magazine for a point driver, a type of hand tool used by the plaintiff. The plaintiff submitted a joint application to the United States Patent Office, naming the defendant and another employee, who had allegedly improved upon the defendant's concept, as joint inventors. The defendant refused to sign the application or to assign any rights to the plaintiff, while the other inventor complied with the terms of the agreement. The defendant then filed a patent application solely in his name after consulting with a privately retained patent attorney. ³ The United States Patent Office then ordered an interference proceeding. ⁴

The plaintiff brought this suit alleging that the defendant had breached the agreement and requesting the court (1) to declare the plaintiff the owner of the invention; (2) to compel the defendant to transfer ownership of the invention to the plaintiff; or (3) to issue a temporary or permanent injunction restraining the defendant from assigning, transferring or abandoning his rights in the invention to anyone other than the plaintiff. A temporary injunction was issued by the trial court, Wright, J., on September 12, 1980, and a full hearing was subsequently held from April 13 through 15, 1981. On October 9, 1981, the court, Hon. John P. Cotter, state referee, adopted in full the prior decision of the court rendered on September 12, 1980, and granted a permanent injunction as requested by the plaintiff. ⁵ The plaintiff's prayer for relief relating to a declaration of the plaintiff's ownership and the transfer of ownership to the plaintiff were left undecided; the court preferring to await the decision of the Patent Office before proceeding with the question of ownership. The injunction included an order for Fletcher to pay for all of the defendant's expenses incurred relative to settling his rights concerning the invention in question. The court found that the plaintiff was obligated to pay these expenses pursuant to paragraph three of the employee invention agreement. ⁶

The issues on appeal are: (1) whether the trial court had jurisdiction to determine the question of title to the defendant's invention; (2) whether the trial court found the agreement valid and binding, in that the court ordered the plaintiff to pay the defendant's legal and other expenses pursuant to a provision of the agreement ; and (3) whether the terms of the agreement require the plaintiff, under the circumstances of the present case, to pay all of the defendant's expenses incurred relative to preserving his rights in connection with the invention.

Interference proceedings relative to the rights to a patent on the defendant's invention are merely collateral to the main issue in this case, which is whether or not Fletcher, under contract law, is entitled to all or the "entire rights" to the defendant's invention, thus including title, ownership, patent or any other rights concommitant with the invention. Thus, the enforceability of the contract is the primary issue.

State contract law is not preempted by federal law merely because intellectual property is in issue. See Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262, 99 S.Ct. 1096, 1099, 59 L.Ed.2d 296 (1979). There is a distinct division of jurisdiction between state and federal courts in matters pertaining to patents. See New Marshall Engine Co. v. Marshall Engine Co., 223 U.S. 473, 476, 32 S.Ct. 238, 239, 56 L.Ed. 513 (1912); Pratt v. Paris Gas Light & Coke Co., 168 U.S. 255, 259-60, 18 S.Ct. 62, 64, 42 L.Ed. 458 (1897); Marks v. Neufeld, 81 F.Supp. 847 (S.D.Iowa 1948); see generally 35 U.S.C. § 1 and §§ 100 through 154. " 'Federal courts have exclusive jurisdiction of all cases arising under the patent laws, but not of all questions in which a patent may be the subject matter of the controversy.' New Marshall Engine Co. v. Marshall Engine Co., 223 U.S. 473, 478, 32 S.Ct. 238, 239, 56 L.Ed. 513 [1912]; see also Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 [1969]; American Well Works v. Layne & Bowler Co., 241 U.S. 257, 259, 36 S.Ct. 585, 586, 60 L.Ed. 987 [1916]; Pratt v. Paris Gaslight & Coke Co., 168 U.S. 255, 259, 18 S.Ct. 62, 63, 42 L.Ed. 458 [1897]; Transparent Ruler Co. v. C-Thru Ruler Co., 129 Conn. 369, 373, 28 A.2d 232 [1942]; Chisum, 'The Allocation of Jurisdiction Between State and Federal Courts in Patent Litigation,' 46 Wash.L.Rev. 633 [1971]; note, 72 Harv.L.Rev. 328; note, 70 Harv.L.Rev. 509; 2 Nims, Unfair Competition and Trade-Marks § 363." Plastic & Metal Fabricators, Inc. v. Roy, 163 Conn. 257, 267, 303 A.2d 725 (1972). "[C]ourts of a state may try questions of title, and may construe and enforce contracts relating to patents. Wade v. Lawder, 165 U.S. 624, 627 [17 S.Ct. 425, 41 L.Ed. 851 (1897) ]." New Marshall Engine Co. v. Marshall Engine Co., supra, 478, 32 S.Ct. at 239.

The "Employee Invention And Confidential Information Agreement" in the present case is an assignment contract which seeks to compel the signing employee to "assign to the company the entire rights to the new contribution, suggestions and invention ...." (Emphasis added.). The trial court found that it had "no basis or authority ... upon which to support a determination of whether the defendant was the sole or joint owner of the invention in question." The plaintiff distinguishes the court's jurisdiction to determine ownership from the authority to determine who was the inventor. The plaintiff, in its brief to the trial court, conceded that "the question" "whether the defendant alone, or jointly ... is entitled to be named as the 'inventor' of the patent or patents described in the applications is solely under the jurisdiction of the Patent and Trademark Office, United States Code, Title 35; U.S. Constitution, Art. 1, Section 8." It is clear that the plaintiff seeks enforcement of the contract and not a determination of who was the "inventor." By seeking enforcement of the contract, the plaintiff seeks to compel the defendant to "assist the Company in every proper way to obtain for its benefit patents for such inventions" and to assign his entire rights, vested or not, to the plaintiff.

A patent is considered personal property, the situs of which follows the person who is the owner. See 35 U.S.C. § 261; De La Vergne Refrigerating Machine Co. v. Featherstone, 147 U.S. 209, 215-16, 13 S.Ct. 283, 284, 37 L.Ed. 138 (1893). Thus, there is no property right in the patent itself until the patent is issued. In this case, because a patent had not yet been granted, as a decision following the interference proceedings had not yet been rendered, there was no property interest in a patent and therefore no justiciable issue concerning title to the patent itself. In its memorandum of decision, the trial court stated that "[a]t this juncture most of the relief sought by the plaintiff appears inappropriate. Until the proceedings in the Patent Office are terminated, the role of this court should be to await the decision of the Patent Office."

It was unnecessary for the court to take this approach. The plaintiff was, of course, interested in who would eventually obtain the patent rights when issued, but the plaintiff's main concern, and thus the main issue to be addressed, was whether or not the assignment contract was enforceable. If the contract is enforceable, the plaintiff claims that it would be entitled to ownership rights in the invention and patent rights or title to the patent when and if a patent is granted.

The courts of this state have determined that an agreement to assign an invention and patent rights is a proper subject for specific performance. New Haven Sand Blast Co. v. Dreisbach, 102 Conn. 169, 191, 128 A. 320 (1925); Superior Electric Co. v. Burski, 24 Conn.Sup. 446, 451, 193 A.2d 898 (1963). It is recognized, therefore, that the enforcement of an invention assignment contract is properly within the jurisdiction of the Superior Court.

In Transparent Ruler Co. v. C-Thru Ruler Co., 129...