Standard Parts Co. v. Peck

Background

An inventor, William J. Peck, obtained a patent for machinery and sued a manufacturing company for infringing that patent. Peck had previously been hired by the Hess-Pontiac Spring and Axle Company under an August 23, 1915 contract to develop a process and machinery for a front spring used on Ford products. He was paid $300 per month and bonuses tied to labor savings. The Standard Parts Company later acquired the Axle Company’s assets and used the devices; it claimed the invention belonged to the employer and asked for assignment of the patent rights.

Reasoning

The central question was who owned inventions made under the paid contract: the inventor or the company that hired and paid him. The Court examined the contract language, which required Peck to devote his time to developing the process and machinery and provided specific payment and bonus terms. The Court concluded that the product of those paid services was the hiring company’s property, since the company engaged and paid for a lasting business asset. The Court rejected Peck’s claim that he retained only a limited shop right and agreed with the District Court that the employer (and its successor) owned the patentable invention. The Circuit Court of Appeals’ contrary holding was reversed.

Real world impact

The ruling means that when a person is hired and paid under a clear contract to develop specific processes or machinery, the hiring company can claim ownership of resulting inventions. Buyers of a business step into the seller’s rights, including inventions developed under such contracts. This decision resolves the dispute in favor of the company that engaged and paid for the work.