When Tiete Wolda worked for Techform Products Limited, first as an employee and later as an independent contractor, he invented a number of products. Ownership of his first two inventions was never an issue. Ownership of the third and fourth inventions was the subject of litigation.
Subsequent to the second invention, when Mr. Wolda was working for the company as an independent contractor, Techform prepared an employee technology agreement (ETA) for Mr. Wolda to sign. The purpose of the agreement was for Techform to put “a more formal method in place to safeguard the confidentiality of new projects for Techform.”
The agreement provided that Mr. Wolda would inform the company of all inventions that he conceived or completed while employed by the company and that related to the work of the company. The agreement further provided that Mr. Wolda assigned his ownership rights to such inventions to the company.
Mr. Wolda signed the agreement in 1993 but took the position that it was a useless piece of paper because he did not agree with it and because he was not an employee. However, because he feared losing his job, he signed the agreement.
In 1996 Mr. Wolda invented the “3D Hinge.” He raised with Techform the issue of the compensation he would receive in return for assigning the rights to this invention to the company. He sought an increase in his hourly rate and an agreement that for every hinge sold, $0.02 would be paid to a particular charity.
The company was outraged by these demands and would not agree. Mr. Wolda had already billed Techform for approximately 1,000 hours of work related to the 3D Hinge, he received assistance from Techform employees in refining the design, and the patent application in the United States was prepared at the company’s expense.
In November 1997 Techform wrote to Mr. Wolda informing him that his contract was terminated for breach of his obligations to Techform. Techform brought an action against Mr. Wolda, seeking a declaration that Techform was the owner of the 3D Hinge and of the U.S. and Canadian patent application filed by it and Wolda. It sought an order vesting in it all right, title and interest in the hinge.
Techform also sought a declaration that it was the owner of the Tailgate Hinge Mechanism, another of Mr. Wolda’s inventions, and an order vesting in it all right, title and interest in the Tailgate Hinge Mechanism.
Mr. Wolda defended the action and counterclaimed against Techform for damages and a declaration that he remained owner of all rights in and to the 3D Hinge invention including all patent applications.
In her decision, the trial judge noted that the mere existence of an employment relationship does not disqualify employees from patenting inventions made during the course of their employment.
There are two exceptions to this presumption: where there is an expressed contract to the contrary; or where the person was expressly employed for the purpose of inventing or innovating. An independent contractor who makes an invention owns the invention unless there is an agreement, express or implied, to the contrary.
The trial judge found that it could be implied in the consultancy agreement between Mr. Wolda and Techform that when Techform specifically assigned to Mr. Wolda the task of inventing a product, it was entitled to claim ownership of that product. With respect to the Tailgate Hinge Mechanism, this task had been specifically assigned to Mr. Wolda so it fell within the implied term. Therefore, Techform’s claim for ownership of the Tailgate Hinge Mechanism succeeded.
With respect to the 3D Hinge, this task had not been specifically assigned to Mr. Wolda. In such a case, the terms of the ETA applied. However the Court held that the ETA was not binding on Mr. Wolda because there was no consideration flowing to Mr. Wolda for signing the agreement and because the ETA was signed under duress. The trial judge dismissed Techform’s claim for ownership of the 3D Hinge.
Techform appealed the finding with respect to the 3D Hinge.
The Court of Appeal did not agree with the trial judge’s holding that there was no consideration for the ETA. The Court found that Mr. Wolda’s continuing employment with Techform was sufficient consideration. In order for continuing employment to constitute consideration, there must be clear evidence that the employer had a prior intention to terminate before the employee signed the agreement.
It is not enough that the employer had the right all along to give notice of termination and that not having done so provided consideration. The Court of Appeal held that Techform had the prior intention to terminate. In such a case his continued employment was sufficient consideration for signing the agreement.
The trial judge had also held that the agreement was not valid because it was signed under duress. The Court of Appeal did not agree with this finding because of the fact that Mr. Wolda was given the opportunity to take the document away for further consideration and to seek legal advice. He chose not to do so, therefore the document was not signed under duress.
Having found that the ETA was enforceable, the Court of Appeal held that the 3D Hinge invention fell within the terms of the agreement. As it was invented while Mr. Wolda was working as an independent contractor for Techform the terms of the ETA provided that ownership went to Techform.
The appeal was allowed and Techform was declared the owner of all right, title and interest in the 3D Hinge.
For more information:
• Techform Products Ltd. v. Wolda, Ontario Court of Appeal, Docket No. CA C33757, Oct. 1/01.
Subsequent to the second invention, when Mr. Wolda was working for the company as an independent contractor, Techform prepared an employee technology agreement (ETA) for Mr. Wolda to sign. The purpose of the agreement was for Techform to put “a more formal method in place to safeguard the confidentiality of new projects for Techform.”
The agreement provided that Mr. Wolda would inform the company of all inventions that he conceived or completed while employed by the company and that related to the work of the company. The agreement further provided that Mr. Wolda assigned his ownership rights to such inventions to the company.
Mr. Wolda signed the agreement in 1993 but took the position that it was a useless piece of paper because he did not agree with it and because he was not an employee. However, because he feared losing his job, he signed the agreement.
In 1996 Mr. Wolda invented the “3D Hinge.” He raised with Techform the issue of the compensation he would receive in return for assigning the rights to this invention to the company. He sought an increase in his hourly rate and an agreement that for every hinge sold, $0.02 would be paid to a particular charity.
The company was outraged by these demands and would not agree. Mr. Wolda had already billed Techform for approximately 1,000 hours of work related to the 3D Hinge, he received assistance from Techform employees in refining the design, and the patent application in the United States was prepared at the company’s expense.
In November 1997 Techform wrote to Mr. Wolda informing him that his contract was terminated for breach of his obligations to Techform. Techform brought an action against Mr. Wolda, seeking a declaration that Techform was the owner of the 3D Hinge and of the U.S. and Canadian patent application filed by it and Wolda. It sought an order vesting in it all right, title and interest in the hinge.
Techform also sought a declaration that it was the owner of the Tailgate Hinge Mechanism, another of Mr. Wolda’s inventions, and an order vesting in it all right, title and interest in the Tailgate Hinge Mechanism.
Mr. Wolda defended the action and counterclaimed against Techform for damages and a declaration that he remained owner of all rights in and to the 3D Hinge invention including all patent applications.
In her decision, the trial judge noted that the mere existence of an employment relationship does not disqualify employees from patenting inventions made during the course of their employment.
There are two exceptions to this presumption: where there is an expressed contract to the contrary; or where the person was expressly employed for the purpose of inventing or innovating. An independent contractor who makes an invention owns the invention unless there is an agreement, express or implied, to the contrary.
The trial judge found that it could be implied in the consultancy agreement between Mr. Wolda and Techform that when Techform specifically assigned to Mr. Wolda the task of inventing a product, it was entitled to claim ownership of that product. With respect to the Tailgate Hinge Mechanism, this task had been specifically assigned to Mr. Wolda so it fell within the implied term. Therefore, Techform’s claim for ownership of the Tailgate Hinge Mechanism succeeded.
With respect to the 3D Hinge, this task had not been specifically assigned to Mr. Wolda. In such a case, the terms of the ETA applied. However the Court held that the ETA was not binding on Mr. Wolda because there was no consideration flowing to Mr. Wolda for signing the agreement and because the ETA was signed under duress. The trial judge dismissed Techform’s claim for ownership of the 3D Hinge.
Techform appealed the finding with respect to the 3D Hinge.
The Court of Appeal did not agree with the trial judge’s holding that there was no consideration for the ETA. The Court found that Mr. Wolda’s continuing employment with Techform was sufficient consideration. In order for continuing employment to constitute consideration, there must be clear evidence that the employer had a prior intention to terminate before the employee signed the agreement.
It is not enough that the employer had the right all along to give notice of termination and that not having done so provided consideration. The Court of Appeal held that Techform had the prior intention to terminate. In such a case his continued employment was sufficient consideration for signing the agreement.
The trial judge had also held that the agreement was not valid because it was signed under duress. The Court of Appeal did not agree with this finding because of the fact that Mr. Wolda was given the opportunity to take the document away for further consideration and to seek legal advice. He chose not to do so, therefore the document was not signed under duress.
Having found that the ETA was enforceable, the Court of Appeal held that the 3D Hinge invention fell within the terms of the agreement. As it was invented while Mr. Wolda was working as an independent contractor for Techform the terms of the ETA provided that ownership went to Techform.
The appeal was allowed and Techform was declared the owner of all right, title and interest in the 3D Hinge.
For more information:
• Techform Products Ltd. v. Wolda, Ontario Court of Appeal, Docket No. CA C33757, Oct. 1/01.
