Waterjet Technology, Inc. v. Flow International Corp.

Waterjet Technology, Inc. (Waterjet) (plaintiff) was engaged in research and development of certain waterjet technology and owned an extensive portfolio of patents in the field. Waterjet employees were always required to assign patented inventions developed for Waterjet to Waterjet. In 1983, Waterjet hired Steven Craigen (defendant), who signed an employment agreement. One paragraph of Craigen’s agreement required him to promptly disclose all inventions that he developed during his employment with Waterjet and that were related to Waterjet’s business. The same paragraph provided that the disclosed inventions belonged to Waterjet and that Craigen was obligated to assign or was assigning his right, title, and interest in any such inventions to Waterjet. Craigen made several inventions and assignments during his employment at Waterjet. In 1992, Craigen and others disclosed an invention, conceived and developed while all of them were employees, at Waterjet’s facilities and expense. A patent (the ’824 patent) was issued on the 1992 invention. All the inventors except for Craigen assigned their interests in the ’824 patent to Waterjet. In 1997, Craigen left Waterjet to work for Flow International Corp. (defendant), a competitor. In 1998, Waterjet sued Flow International and Craigen in federal court. Waterjet alleged Flow International’s infringement of the ’824 patent and sought to compel Craigen’s assignment of rights. The federal district court certified a question of state law to the Washington Supreme Court regarding whether Craigen’s employment agreement had provided adequate notice to him of a state statute. The specified statute (the assignment-restriction statute) stated that if a provision of an employment agreement required an employee to assign his or her rights to an invention, the provision did not apply to certain non-employer inventions—i.e., ones developed on the employee’s own time and without use of employer resources—unless the invention related directly to the business of the employer or the employer’s research. The assignment-restriction statute required “written notification” to employees if they were required to sign assignments of inventions.