Preston v. Marathon Oil Co.

United States Court of Appeals
for the Federal Circuit
__________________________
YALE PRESTON,
Plaintiff-Appellant,
v.
MARATHON OIL COMPANY AND THOMAS SMITH,
Defendants-Cross Appellants,
and
JOHN DOES 1-10,
Defendants.
__________________________
2011-1013,-1026
__________________________
Appeals from the United States District Court for the
District of Wyoming in 08-CV-0239, Judge Alan B. John-
son.
___________________________
Decided: July 10, 2012
___________________________
MITCHELL H. EDWARDS, Nicholas & Tangeman, LLC,
of Laramie, Wyoming, argued for plaintiff-appellant.
With him on the brief was PHILIP A. NICHOLAS.
SHANE P. COLEMAN, Holland & Hart, LLP, of Billings,
Montana, argued for defendants-cross appellants.
PRESTON v. MARATHON OIL CO 2
__________________________
Before BRYSON, DYK and O’MALLEY, Circuit Judges.
O’MALLEY, Circuit Judge.
DECISION
This case presents the question of whether Plaintiff-
Appellant Yale Preston (“Preston”) owns United States
Patent Nos. 6,959,764 (“the ’764 patent”) and 7,207,385
(“the ’385 patent”), or whether he assigned rights in those
patents to Defendant-Cross-Appellant Marathon Oil
Company (“Marathon”) pursuant to an employment
agreement entered into shortly after he began work as an
at-will employee. In the alternative, Marathon asserts
that it has a common law shop right to use the invention
or otherwise owns the invention because Marathon Engi-
neer Thomas Smith, one of the defendants in this action,
is a co-inventor.
Following several summary judgment motions and a
bench trial, the district court entered the following judg-
ments relevant to this appeal: (1) declaring that Preston
is the sole inventor of the ’385 patent and that Smith was
misjoined as an inventor; (2) ordering the PTO to issue a
new certificate reflecting that Preston is the sole inventor
of that patent; (3) declaring Marathon the owner of the
’764 and ’385 patents pursuant to Preston’s employment
agreement and that Preston is in breach of the agreement
for failing to assign his rights, as he promised to do. The
district court also entered summary judgment in favor of
Marathon on its shop right claim, finding that, even if
Marathon did not own the rights to the patents—by
assignment or otherwise, it had a shop right to practice
the inventions reflected therein.
3 PRESTON v. MARATHON OIL CO
On appeal, Preston challenges the district court’s
summary judgment ruling regarding Marathon’s asserted
shop right and the post-trial judgment regarding the
assignment of his ownership interest in the relevant
technology to Marathon. We affirm-in-part and vacate-in-
part. We affirm the district court’s judgment that Preston
assigned his rights in the ’385 and ’764 inventions to
Marathon pursuant to his employment agreement with
Marathon. Because that assignment was automatic,
however, we vacate the district court’s judgment that
Preston is in breach of that agreement. For the reasons
explained below, we do not reach the lower court’s other
judgments.
BACKGROUND
1. Preston’s Employment Agreements
In a letter dated February 22, 2001, Pennaco Energy,
Inc. (“Pennaco”), a wholly-owned subsidiary of Marathon
(collectively, Pennaco and Marathon are referred to as
“Marathon”), offered employment to Preston as a relief
pumper in Marathon’s coal bed methane well operation in
the Powder River Basin in northeastern Wyoming. In
addition to describing Preston’s proposed responsibilities,
compensation, and benefits, the letter indicated that
Preston was being hired “under the policy of ‘employment
at will’ whereby you or the Company is free to terminate
the employment relationship at any time and for any
reason without cause or liability other than as prescribed
by law.” Preston countersigned the letter on February 27,
2001.
Preston started work for Marathon sometime in
March 2001, although there is a factual dispute as to the
PRESTON v. MARATHON OIL CO 4
precise date. 1 On April 5, 2001, Preston signed a docu-
ment entitled Marathon Oil Company and Subsidiaries
Employee Agreement (the “April Employee Agreement”).
Brenda Williams signed on behalf of Marathon on the
same date. The parties agree that the April Employee
Agreement was executed after Preston began employment
and constitutes a separate employment document from
the February letter. The April Employee Agreement
contained the following provisions relevant to this dis-
pute:
1. Definitions
** * *
(d) “Intellectual Property” means all inven-
tions, discoveries, developments, writings,
computer programs and related documenta-
tion, designs, ideas, and any other work prod-
uct made or conceived by EMPLOYEE during
the term of employment with MARATHON
which (1) relate to the present or reasonably
anticipated business of the MARATHON
GROUP, or (2) were made or created with the
use of Confidential Information or any equip-
ment, supplies, or facilities of the
MARATHON GROUP. Such property made
1 Preston contends that he began work on March 1,
2001. After a bench trial, the district court in this case
made a factual finding that Preston began employment
with Marathon on March 30, 2001. See Preston v. Mara-
thon Oil Co., Case No. 08-cv-239, slip op. at 3 (D. Wyo.
Aug. 10, 2010) (“Findings of Fact and Conclusions of
Law”). Though Preston disputes this finding, we express
no opinion on its propriety because resolution of this
factual dispute is not necessary to resolve the appeal
before us.
5 PRESTON v. MARATHON OIL CO
or conceived by EMPLOYEE (or for which
EMPLOYEE files a patent or copyright appli-
cation) within one year after termination of
employment with MARATHON will be pre-
sumed to have been made or conceived during
such employment.
** * *
3. Disclosure and Assignment of Intellec-
tual Property.
EMPLOYEE agrees to promptly disclose to
MARATHON and does hereby assign to
MARATHON all Intellectual Property, and
EMPLOYEE agrees to execute such other
documents as MARATHON may request in
order to effectuate such assignment.
4. Previous Inventions and Writings.
Below is a list and brief description of all of
EMPLOYEE’S unpatented inventions and un-
published writings. MARATHON agrees that
such inventions and writings are NOT Intel-
lectual Property and are NOT the property of
MARATHON hereunder. If no listing is
made, EMPLOYEE has no such inventions or
properties.
Under Paragraph 4, Preston wrote “CH4 Resonating
Manifold.” 2
2 CH4 is the chemical formula for methane; as de-
scribed below, the parties dispute whether “CH4 Resonat-
ing Manifold” refers to the claimed invention, or another
apparatus.
PRESTON v. MARATHON OIL CO 6
Although the agreement provides that it “shall be
governed and construed in accordance with Ohio law,”
both parties agree that Wyoming law applies pursuant to
the appropriate choice of law rules. It is undisputed that
Marathon did not provide any additional consideration to
Preston for signing this document beyond his continued
employment by Marathon.
2. The Patented Technology
The technology at issue relates to the improvement of
machinery used to extract methane gas from water-
saturated coal in a coal bed methane gas well. One way
to extract the gas is to pump water out of a coal seam
aquifer, which relieves the pressure holding the methane
and allows the methane to escape up the well. The wells
include an inner tubing that runs through the center of
the well casing to the surface of the coal formation. Water
is pumped up through the inner tubing, allowing methane
gas to be produced through the “annulus” of the well, or
the area surrounding the inner tubing inside the well
casing. Once the methane reaches the top, it is collected
by gathering lines at a “manifold,” from which it is trans-
ferred through downstream market pipelines.
One problem that occurs in coal bed methane gas
wells is that water columns form in the annulus, which is
the path by which gas flows to be released from the well.
The water can push the gas down into the well bore and
cause gas to enter the “water conduit,” which causes what
is known as “gas locking.” “Gas locking” is undesirable
because it makes the pump less efficient and causes the
pump to age quickly with less water in the pump for
lubrication and cooling purposes. The invention at issue
in this case includes the placement of baffle plates in the
annulus of the well. The baffle plates contain holes that
7 PRESTON v. MARATHON OIL CO
function to separate the water and gas, thereby allowing
the gas to escape more easily.
Figure 1 of the ’764 patent is a diagram of a typical
coal bed methane well.
PRESTON v. MARATHON OIL CO 8
In this diagram, the pump 30 pumps water 40 from
the well bore 28 out of the well through the water conduit
32, which reduces pressure on the gas 42 and allows it to
escape through the gas flow path or annulus 44. The
“manifold” would be the portion above the surface that
collects gas from several wells into a single gathering line.
3. Installation of Preston’s Baffle System
In August 2002, Preston was promoted to SCADA Op-
erator, 3 a position which involves collection of raw well
data, such as gas production levels and liquid levels.
Around that time, Preston first raised the idea of using
baffles to reduce water in a methane well annulus to a co-
employee, Jeb Beachem. Preston showed him a “concep-
tual” drawing of his baffle system. Beachem suggested
Preston share this idea with Preston’s supervisor, Chuck
Cornelius, who put Preston in touch with Marathon
Engineer Thomas Smith.
Over the 2002 Thanksgiving weekend, Preston cre-
ated two-dimensional drawings of his baffle plates using a
company computer. In December 2002, Preston met with
Smith and discussed his baffle system. 4 Thereafter,
Preston hired a company on Marathon’s behalf to make
baffle plates to begin installation in Marathon’s wells.
3 SCADA stands for Supervisory Control and Data
Acquisition, and relates to a system that permits supervi-
sory control of certain aspects of the various wells being
operated.
4 The parties dispute whether this conversation
with Smith was a collaboration, during which Smith
added value to the patented system, or was simply a
discussion during which Preston laid out his invention for
Smith. Because we do not analyze the propriety of the
district court’s ruling on inventorship, we do not resolve
this dispute.
9 PRESTON v. MARATHON OIL CO
Preston contends he only ordered 12 baffle plates, but the
district court found that, in fact, 40 baffle plates were
ordered. Supporting this finding is an invoice addressed
to Preston identifying 40 baffle plates that were pur-
chased for the price of $3,157.50, which Marathon paid.
Preston personally participated in the installation of
his baffle system in three wells from January 31, 2003
through February 23, 2003. Preston’s employment with
Marathon ended effective April 15, 2003. Between April
2003 and July 11, 2003, Marathon installed Preston’s
baffle system in eight additional wells. Preston contends
that he did not consent to or authorize the installation of
his system in the eight additional wells, and the district
court found that undisputed evidence shows that Preston
was not aware of the installation in the other eight wells.
Marathon removed the baffles in all eleven wells between
the end of 2003 and May 2006.
4. Evidence of Preston’s Development of the
Baffle System
As discussed below, the parties dispute the extent to
which Preston developed his baffle system before coming
to work at Marathon. Preston himself offered inconsis-
tent testimony at trial as to when he first arrived at the
idea, saying at one point he invented it in 2001 in the six
weeks before he joined Marathon and, at another point,
that he may have invented it one to two years before
joining Marathon. There is no dispute, however, that he
never “made” the invention (i.e., physically constructed it)
before joining Marathon. Preston claims to have drawn a
“handful” of hand-drawn sketches of his invention before
joining Marathon, but says he lost or misplaced them in
2005 or 2006. Preston also prepared some conceptual
sketches during his employment with Marathon that he
PRESTON v. MARATHON OIL CO 10
showed to his co-employees. Preston, however, never
discussed a “resonating manifold” with anyone at Mara-
thon or mentioned that the baffle plates he had drawn
were part of a “resonating manifold.” The only sketch of
Preston’s invention in evidence was one Preston drew
during a break at his deposition in August 2008. He
claims that it is identical to the one he drew before joining
Marathon, but, as discussed below, the district court
found that his testimony on this point was not credible.
5. The ’764 and ’385 Patents
Soon after installation of Preston’s baffle system be-
gan, and while Preston still was employed at Marathon,
Smith initiated Marathon’s internal patenting process.
On February 3, 2003, he emailed a colleague at Marathon
to begin the process, explaining that Preston “has de-
signed and installed a prototype downhole gas separator
baffle assembly that appears to be patentable and could
be a significant new technology breakthrough in the
Powder River Basin for coalbed [n]atural gas production.”
Findings of Fact and Conclusions of Law at 10-11. The
district court found that Preston knew that the invention
was going through Marathon’s patenting process, and “at
no time did Preston object to Smith being a co-inventor
during Marathon’s patenting process.” Id.
About two months after his employment at Marathon
ended, on June 5, 2003, Preston filed his own patent
application covering his baffle system. That application
ultimately issued on November 1, 2005, as the ’764 pat-
ent. Preston is listed as the sole inventor on the ’764
patent.
On June 14, 2004, Marathon filed a patent application
that ultimately issued on April 24, 2007, as the ’385
11 PRESTON v. MARATHON OIL CO
patent. The ’385 patent names both Smith and Preston
as co-inventors. The ’385 patent initially was rejected for
obviousness and double-patenting over the ’764 patent.
That rejection was withdrawn, however, when Marathon
amended the patent to clearly define “the annulus be-
tween the casing and a tubular, which are neither dis-
closed or [sic] suggested in the prior art of record.” The
examiner noted that “the ’764 patent does not claims [sic]
the baffles being positioned in the annulus between the
casing and the tubular,” i.e., does not claim surface baf-
fles.
6. Procedural History
In March 2007, Marathon filed a lawsuit in Texas
state court alleging that Preston breached his employee
agreement by refusing to assign his ’764 patent to Mara-
thon. The lawsuit was dismissed for lack of personal
jurisdiction. Marathon then filed suit in Wyoming state
court alleging the same claim for breach. Preston
counterclaimed for patent infringement and conversion.
In November 2008, Preston filed a complaint in the
U.S. District Court for the District of Wyoming, 5 asserting
counts for (1) patent infringement; (2) a declaration that
Preston is the sole inventor of the ’385 patent; (3) unjust
enrichment (based on Marathon’s use of his invention); (4)
conversion (same); (5) breach of implied contract (based
on an alleged implied contract that Marathon would
compensate Preston for his invention); and (6) misappro-
priation of trade secrets. Marathon raised several af-
firmative defenses and counterclaimed for a declaration
that Preston has agreed to assign his rights in the ’764
5 The Wyoming state court action has been stayed
pending the outcome of this case.
PRESTON v. MARATHON OIL CO 12
patent to Marathon. Smith also counterclaimed, seeking
a declaration that he is the co-inventor of the ’764 patent.
Following five summary judgment motions, the dis-
trict court issued an order on December 28, 2009, making
the following rulings: (1) Marathon acquired a shop right
to Preston’s baffle system invention and, therefore, is
entitled to summary judgment on Preston’s patent in-
fringement claim; (2) Preston’s claims for unjust enrich-
ment, conversion, and trade secret misappropriation are
barred by the shop right doctrine or because they are
untimely; (3) issues of fact preclude judgment on Pre-
ston’s claim that he is the sole inventor of the ’385 patent;
(4) issues of fact preclude judgment for defendants on
Preston’s claim for breach of implied contract; and (5)
summary judgment as to whether Preston’s employment
agreement is valid is inappropriate.
Following a bench trial on the remaining issues, the
district court found that Preston was the sole inventor of
the ’385 patent but that Preston was required to assign
his interest in the ’764 and ’385 patents to Marathon
pursuant to his employment agreement. It also found
that Preston was in breach of that agreement for not
doing so.
On appeal, Preston challenges the district court’s
summary judgment ruling as to Marathon’s shop right
and the judgment as to ownership. Marathon filed a
“protective” cross-appeal as to inventorship of the ’385
patent, which it advises we need not address if the dis-
trict court’s judgment as to ownership of the patents is
affirmed.
After oral argument, we certified a question to the
Wyoming Supreme Court, inquiring whether, under
13 PRESTON v. MARATHON OIL CO
Wyoming law, continuing the employment of an existing
at-will employee constitutes adequate consideration to
support an agreement containing an intellectual property-
assignment provision. On May 10, 2012, the Wyoming
Supreme Court answered “yes,” continuation of at-will
employment is sufficient consideration for an agreement
requiring assignment of intellectual property. Preston v.
Marathon Oil Co., 277 P.3d 81, 82 (Wyo. 2012).
We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(1).
DISCUSSION
Preston primarily argues on appeal that he did not
assign his rights in the ’764 or ’385 patents to Marathon
because (1) the April 5, 2001 Employee Agreement is
invalid for lack of consideration, and (2) even if enforce-
able, did not function to assign rights in his invention to
Marathon. Because both of these arguments fail, we do
not reach Preston’s argument that the district court erred
in finding that Marathon owns a shop right to use his
invention. Likewise, because Marathon owns the inven-
tions at issue pursuant to the April Employee Agreement,
we need not address Marathon’s “protective” cross-appeal
challenging the district court’s finding that Smith was
misjoined as an inventor of the ’385 patent. Answer Brief
of Defendants/Cross-Appellants at 3 (“Marathon has filed
a protective cross-appeal as to inventorship of the ’385
patent, an issue that this court need not reach if it affirms
the district court’s findings as to ownership.”).
PRESTON v. MARATHON OIL CO 14
1. Preston’s Employment Agreement is Valid
and Enforceable
Preston first argues that he did not assign his rights
in his baffle system to Marathon because the April Em-
ployee Agreement, which contains the intellectual prop-
erty assignment provision on which Marathon relies, is
unenforceable for lack of consideration. According to
Preston, Pennaco’s offer letter of February 22, 2001,
which Preston signed on February 27, 2001, constituted
an express, written employment agreement that embod-
ied the terms of his employment. He contends that, under
Wyoming law, the April Employee Agreement was not a
valid, enforceable modification of those terms absent
additional consideration beyond continued employment.
The district court rejected Preston’s argument below,
finding that the April Employee Agreement was a valid,
binding, condition of Preston’s unilateral employment
with Marathon. In its summary judgment ruling, the
district court found that, under Wyoming law, considera-
tion is not required to modify the terms of an at-will
employment agreement. Preston subsequently requested
that the district court certify the question raised under
Wyoming law to the Wyoming Supreme Court, contending
that the district court failed to consider Hopper v. All Pet
Animal Clinic, Inc., 861 P.2d 531 (Wyo. 1993). In Hopper,
the Wyoming Supreme Court found that additional con-
sideration was required, even in at-will employment
relationships, to support a non-competition provision
added during the term of employment. Id. at 541. The
district court denied Preston’s request, distinguishing
Hopper on grounds that it involved a non-compete provi-
sion, which the court found was disfavored under Wyo-
ming law and entailed different considerations than an
intellectual property assignment provision.
15 PRESTON v. MARATHON OIL CO
After oral argument, we certified the question to the
Wyoming Supreme Court and on May 10, 2012, the Wyo-
ming Supreme Court explained that additional considera-
tion beyond continued employment is not necessary to
support an intellectual property assignment agreement.
Preston, 277 P.3d at 82. Describing its ruling in Hopper,
the Wyoming Supreme Court stated that “public policy
favored separate consideration and continued at-will
employment was not sufficient consideration to support [a
non-compete] agreement . . . based, in part, on the sanc-
tity of the right to earn a living.” Id. at 86. The court
acknowledged, however, “that there is a fundamental
difference between non-competition agreements and
intellectual property assignment agreements.” Id. at 87.
The court therefore determined that:
[T]he stability of the business community is best
served by ruling, consistent with our at-will em-
ployment jurisprudence, that no additional con-
sideration is required to support an employee’s
post-employment execution of an agreement to as-
sign intellectual property to his employer. If the
employee does not agree to that modification of
the terms of his employment, he can terminate
the relationship without any penalties.
Id. at 88.
From this ruling, it is clear that the April Employee
Agreement is valid and enforceable with only continued
employment as consideration and that the district court
was correct to predict that the Wyoming state courts
would so hold.
PRESTON v. MARATHON OIL CO 16
2. Preston Assigned His Rights in the ’764
Patent and ’385 Patent to Marathon
We therefore turn to the question of whether the April
Employee Agreement functioned to assign rights to Mara-
thon in Preston’s invention. Preston primarily contends
that his invention is not “Intellectual Property” as defined
in Paragraph 1(d) of the April Employee Agreement under
the plain language of the agreement because he conceived
of it before working at Marathon. According to Preston,
“[i]f any element was conceived prior to or after Preston’s
term of employment with Marathon, then Marathon is not
entitled to an assignment of the ’764 patent or ’385 pat-
ent.” Appellant’s Opening Brief at 43. Preston alterna-
tively asserts—assuming his invention is considered
“Intellectual Property” under Paragraph 1(d)—that he
expressly excluded his invention from the subject of the
assignment clause by writing “CH4 Resonating Manifold”
in the line under Paragraph 4 for “Previous Inventions
and Writing.” Id. at 43-44.
Preston’s argument with respect to Paragraph 1(d)—
that the ’764 and ’385 patents are not “Intellectual Prop-
erty” under the April Employee Agreement—is inconsis-
tent with a plain reading of the agreement. Both Preston
and Marathon agree that the April Employee Agreement
must be construed according to state law. See Euclid
Chem. Co. v. Vector Corrosion Techs., Inc., 561 F.3d 1340,
1343 (Fed. Cir. 2009) (“Construction of patent assignment
agreements is a matter of state contract law.”) (quoting
Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1370
(Fed. Cir. 2008)). Under Wyoming law, “[i]f an agreement
is in writing and the language is clear and unambiguous,
the intention is to be secured from the words of the
agreement.” True Oil Co. v. Sinclair Oil Corp., 771 P.2d
781, 790 (Wyo. 1989) (quoting Nelson v. Nelson, 740 P.2d
17 PRESTON v. MARATHON OIL CO
939, 940 (Wyo. 1987)). In such cases, “the writing as a
whole should be considered, taking into account relation-
ships between various parts.” Id.The district court determined that “invention,” as re-
cited in the April Employee Agreement, requires both
conception and reduction to practice. Findings of Fact
and Conclusions of Law at 17-18. Based on its finding
that Preston “had little more than a vague idea before his
employment with Marathon began,” the court concluded,
“as a matter of law, that Mr. Preston did not ‘invent’ the
CH4 resonating manifold, or any component thereof, until
after his employment with Marathon began.” Id. at 18.
The district court then determined that Preston “‘in-
vented’ the baffle system during his employment with
Marathon,” and, as a result, “is required by the employee
agreement to assign all interest in the ’764 and ’385
patents to Marathon.” Id. While the district court prem-
ised this finding, in part, on an incorrect interpretation of
patent law as requiring both conception and reduction to
practice for “invention,” the ultimate conclusion regarding
the coverage of Paragraph 1(d) is correct. The plain
language of Paragraph 1(d) of the agreement indicates
that any “invention” that is “made or conceived” by an
employee while employed at Marathon constitutes “Intel-
lectual Property” and is therefore automatically is as-
signed to Marathon under Paragraph 3. (emphasis
added). Thus, if Preston’s invention was not both made
and conceived prior to his employment, it constitutes
“Intellectual Property” under Paragraph 1 of the April
Employee Agreement. Preston argues only that he con-
ceived of his baffle system prior to employment at Mara-
thon.
As discussed above, all evidence supports the conclu-
sion that no physical manifestations or detailed drawings
PRESTON v. MARATHON OIL CO 18
of the patented baffle system existed prior to Preston’s
employment at Marathon. Preston created two-
dimensional drawings of the baffle system, ordered the
baffle plates and personally participated in the first
installation of those baffles in Marathon wells after his
employment with Marathon began. As the district court
found, the invention was not reduced to practice (i.e., not
made) until—at the earliest—late summer 2002 and was
not installed until January 2003, well after Preston’s 2001
start date with Marathon. Findings of Fact and Conclu-
sions of Law at 9-10. Because there is no dispute that
Preston did not make his invention prior to his employ-
ment with Marathon, the ’764 patent and ’385 patent are
properly included as “Intellectual Property” under the
plain language of Paragraph 1(d).
Preston next argues that, even if the invention em-
bodied in the ’385 and ’764 patents is “Intellectual Prop-
erty” under Paragraph 1(d), he had the right to and did
exclude that invention from the April Employee Agree-
ment under Paragraph 4. He contends that Paragraph 4
removes from the scope of Paragraph 1(d) certain intellec-
tual property that might otherwise be covered thereby—
i.e., any “invention” listed therein, regardless of when
“made.” Because Preston listed “CH4 Resonating Mani-
fold” in Paragraph 4, he contends it is an “invention” that
is not subject to assignment under the agreement.
Here, the parties dispute a number of points. First,
Marathon contends that the invention covered by the
patents is not a “CH4 Resonating Manifold.” Second,
Marathon contends that, before something can be consid-
ered an “invention” under Paragraph 4, it must have been
conceived and reduced to practice before employment so
as to avoid an inconsistency with the scope of Paragraph
1. Next, Marathon contends that, even if all that were
19 PRESTON v. MARATHON OIL CO
required under the agreement is “conception” pre-
employment, the level of conception must be sufficient to
satisfy our case law—i.e., the idea must be “definite and
permanent enough that one skilled in the art could un-
derstand the invention. . . .” Univ. of Pittsburgh v. Hed-
rick, 573 F.3d 1290, 1298 (Fed. Cir. 2009). On this point,
moreover, Marathon urges us to demand that the inven-
tor “prove his conception by corroborating evidence,
preferably by showing contemporaneous disclosures.” Id. 6
Preston disagrees on all fronts.
Preston asserts that the “CH4 Resonating Manifold”
is, in fact, the moniker he chose for his baffle system. He
next asserts that it is not unreasonable to assume that
the exclusion in Paragraph 4 is broad enough to cover
items which were conceived and not made—i.e., that, like
Paragraph 1(d), the exclusion of Paragraph 4 should be
read in the disjunctive. Finally, Preston asserts that our
case law regarding conception should not govern interpre-
tation of the meaning of “invention” as used in an em-
ployee agreement governed by state law; he asserts,
rather, that “invention” and “conception” should be inter-
preted broadly to include more than just the meaning of
those terms as used in patent law. In support of this
argument, Preston contends that “inventions” should be
read alongside “less tangible intellectual property, i.e.
discoveries, developments, writings, designs, and ideas,”
and that it is clear from the context of the agreement
“that ‘inventions’ is not limited to patentable inven-
6 Conception for patent law purposes is “the forma-
tion in the mind of the inventor, of a definite and perma-
nent idea of the complete and operative invention, as it is
hereafter to be applied in practice.” Burroughs Wellcome
Co. v. Barr Labs., Inc., 40 F.3d 1223, 1228 (Fed. Cir. 1994)
(quoting Hybritech Inc. v. Monoclonal Antibodies, Inc.,
802 F.2d 1367, 1376 (Fed. Cir. 1986)).
PRESTON v. MARATHON OIL CO 20
tions[.]” Appellant’s Opening Brief at 41. Preston also
cites to our decision in AT&T Co. v. Integrated Network
Corp., 972 F.2d 1321, 1325 (Fed. Cir. 1992), in which we
held that the term “conceived” in a patent assignment
agreement did not mean that that the plaintiff’s breach of
contract claim arose under the patent laws, such that we
would have jurisdiction over the appeal. From this,
Preston asserts that a “plain and ordinary” meaning of “to
form in the mind (as a concept or idea)” is appropriate for
the term “conceive.”
We need not resolve these disputes to conclude that
the district court’s judgment in favor of Marathon regard-
ing the assignment provision in the April Employee
Agreement should be affirmed. Even if we assume state
law governs the issue and that state law would take a
broader view of conception than would be applied nor-
mally in the patent context, we still find that an invention
necessarily requires at least some definite understanding
of what has been invented. The evidence here does not
satisfy even that loose standard and the record supports
the conclusion that Preston was not in possession of an
excludable invention before he began employment at
Marathon.
Indeed, the district court’s factual finding that “Mr.
Preston’s testimony regarding the level of development of
the CH4 resonating manifold is not credible, and that he
had, at most, little more than a vague idea before his
employment with Marathon began” disposes of this ques-
tion. 7 On appeal from a bench trial, we review a district
court’s findings of fact for clear error. Golden Blount,
7 We recognize that this statement appears in the
district court’s “Conclusions of Law,” but the context
makes clear that this is a factual finding.
21 PRESTON v. MARATHON OIL CO
Inc. v. Robert H. Peterson Co., 365 F.3d 1054, 1058 (Fed.
Cir. 2004). A factual finding is clearly erroneous if,
despite some supporting evidence, we are left with the
definite and firm conviction that a mistake has been
made. United States v. U. S. Gypsum Co., 333 U.S. 364,
395 (1948). No such mistake was made here, and we see
no reason to disturb the district court’s factual findings,
especially when they are well supported in the record. As
the district court found, Preston provided no evidence—
other than his own testimony—that corroborated his
claim of invention prior to employment with Marathon.
In contrast, substantial testimony was presented that
contrasted the “crude” drawings shown to his co-workers
at Marathon years after the invention was purportedly
completed and the drawing done by Preston at his deposi-
tion. Preston admits, moreover, that he never discussed a
“resonating manifold” with his co-employees or mentioned
that the baffle plates he had drawn were part of a “reso-
nating manifold,” and made no prototype prior to his
arrival at Marathon.
Based on the district court’s findings of fact, we agree
that Preston could not demonstrate invention prior to
employment at Marathon. And we find this to be so even
under Preston’s broad reading of the term “conceive.”
Simply, Preston’s uncorroborated, “little more than a
vague idea” does not meet even this standard. If we were
to accept Preston’s argument that “conceive” can include
having “little more than a vague idea” and that an em-
ployee need offer no proof of exactly what that idea was,
Paragraph 1 of the April Employee Agreement would be
rendered meaningless. This produces an absurd result
that is contrary to the principles of contract interpretation
under Wyoming law. Schaffer v. Standard Timber Co.,
331 P.2d 611, 616 (Wyo. 1958) (contract will not be pre-
sumed to have imposed an absurd condition). Thus,
PRESTON v. MARATHON OIL CO 22
Preston’s notation in Paragraph 4 did not remove any-
thing from the scope of the “Intellectual Property” covered
in Paragraph 1(d).
We therefore hold that the district court properly in-
cluded the ’764 patent and ’385 patent in the scope of
“Intellectual Property” under Paragraph 1(d) and did not
exclude the same under Paragraph 4. Because the as-
signment clause in the April Employee Agreement states
that the employee agrees to “hereby assign” all “Intellec-
tual Property,” it is an express assignment of rights in
future inventions that automatically assigned rights to
Marathon without the need for any additional act. See
DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517
F.3d 1284, 1290 (Fed. Cir. 2008) (if the contract expressly
grants rights in future inventions, no further act is re-
quired once an invention comes into being, and the trans-
fer of title occurs by operation of law). Accordingly, we
find that Marathon owns the rights to the ’385 patent and
’764 patent.
Additionally, although neither party raises this point,
the district court’s judgment that Preston breached his
employment agreement by not assigning his patent rights
to Marathon is inconsistent with the automatic assign-
ment of the ’385 patent and ’764 patent to Marathon that
occurred under the April Employee Agreement. We
therefore vacate the district court’s finding that Preston
breached his agreement by failing “to execute an assign-
ment of his rights” because such an execution is not
required here.
CONCLUSION
For the reasons stated above, we affirm the district
court’s judgment that Preston assigned his rights in the
23 PRESTON v. MARATHON OIL CO
’385 and ’764 inventions to Marathon pursuant to the
April Employee Agreement. Because that assignment
was automatic, we vacate the district court’s judgment
that Preston is in continued breach of the agreement for
failure to assign his rights. In light of these rulings, and
the representations made by the parties, there is no
reason for this court to reach the questions of inventor-
ship or Marathon’s shop rights.
AFFIRMED IN PART, VACATED IN PART.