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The classic shop rights doctrine ordains that when an employee makes and reduces to practice an invention on his employer's time, using his employer's tools and the services of other employees, the employer is the recipient of an implied nonexclusive, royalty-free license.
Plaintiff Malcolm Wommack, a former employee of Defendant Durham Pecan Company, Inc., brought a patent infringement action against defendant requesting royalties for defendant's use in its pecan processing plant of a process invented and patented by plaintiff. The district court dismissed plaintiff's action, holding that defendant had acquired a shop right or implied license to use plaintiff's process. Plaintiff appealed.
Under the circumstances, could the defendant be held liable for patent infringement for using a process invented and patented by plaintiff, notwithstanding the fact that the invention was developed by plaintiff while he was the defendant’s employee?
The court on review held that defendant had acquired a shop right to use plaintiff's process as the result of the parties' cooperation on the development of the invention and plaintiff's consent to defendant's use of the process. According to the court, a shop right will be found where the employer showed that the invention was developed by his employee during the employer's time or with the assistance of the employer's property or labor. The court found that it was not necessary for defendant to assist plaintiff in reducing his idea to practice in order to obtain a shop right. Because the shop right was a complete defense to the infringement action, defendant owed plaintiff nothing for its use of the process.