Wednesday, May 21, 2008
Spell it Out
Sometimes it is tempting to sell, or attempt to sell, an invention without filing a patent application for it. This can be budget wise and economical. But it is also very dangerous. The Washington case in Oliver v. Flow International, 137 Wash. App. 655, 155 P.3d 140 (2006), exemplifies some of these dangers. Oliver sold his invention to Flow for $150,000 plus royalties. Flow never filed any patent application on the invention and never sold any products under the invention, and consequently there were no royalties. Oliver sued for failure to commercialize the invention and file patent applications on the invention which duties he claimed were implied by the contract and the reason for the royalty language. The Washington court ruled that there was no such language in the contract, and the court would not imply that duty. Thus, Oliver lost. Not discussed was that due to the one year “on sale” bar of patent law, because Flow never filed a patent application, the invention became dedicated to the public. The bottom line, if you want the contracting party to have a duty, such as to commercialize or seek a patent, you need to spell it out. Oliver could have included language that Flow was required to make verifiable concrete efforts to commercialize the invention. Oliver could have included language spelling out who had obligation to file and prosecute patent applications and maintain them. Olive could have required milestones relating to commercializations and sales such that if the milestones weren't being met the invention reverted back. But, as the case shows, if it isn't spelled out, it might not be enforceable.