A great many of your bigger companies require new hires to sign contracts that convey to the employers any "Intellectual Property" that the workers "make or conceive" during the term of employment. Courts treat such assignments as valid in spite of the at-will nature of the relationship.

But what happens if a worker conceives an invention before starting the new job and inking the contract but doesn't make it until later? Does the invention belong to her or to the employer?

The Federal Circuit ruled in Preston v. Marathon Oil Co., No. 11-1013 (Fed. Cir. July 10, 2012), that the company wins in that situation. It concluded that Yale Preston lost his ownership of a patentable invention, which improved the flow of methane gas from wells that tapped wet coal seam beds, when he executed "the April Employee Agreement". In paragraph 1(b) of that writing, Preston "hereby assign[ed] to MARATHON all Intellectual Property" that he "made or conceived . . . 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 equipment, supplies, or facilities of the MARATHON GROUP."

Even if Preston had "conceived" the invention before he began work for Marathon, the court noted, he had not "made" it (or, as the patent jocks say, "reduced it to practice") until after he joined the Marathon team. Id. at 17. That made all the difference:

The plain language of [the contract] indicates that any "invention" that is "made or conceived" by an employee while employed at Marathon constitutes "Intellectual Property" and is therefore automatically is [sic] assigned 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 Employeet Agreement.

Id. (emphasis in original).

But Preston still might have an out, the panel said. In the contract, he had listed "CH4 Resonating Manifold" as one of his "unpatented inventions", which Marathon agreed "are NOT Intellectual Property and are NOT the property of MARATHON hereunder."

That didn't work either. The district court found, after a bench trial, that "Preston 'had little more than a vague idea [of the invention] before his employment with Marathon began". Id. That, the court held, did not count as "conception" of the invention because "an invention necessarily requires at least some definite understanding of what was invented." Id. at 20.

So there you have it. Before you sign that innocent-looking, standard-form, two-page employment agreement, think about whether you do have an "unpatented invention" rattling around in your brain, make sure you list it, and take steps to get it to the point at which it satisfies the Federal Circuit's test for conception of an "invention" — "at least some definite understanding" of what you invented.