## Facts

- Gilbert W. Francklyn worked for Guilford Packing Company harvesting clams on beds leased by Guilford, was paid on a piecework basis, and was required to deliver his catch to Guilford.
- Guilford owned the clam boat and harvesting equipment Francklyn used; Francklyn was expected to harvest when conditions permitted and to maintain the equipment between harvesting periods.
- The employment arrangement contemplated that Francklyn would modify the harvester to improve performance, and Guilford agreed to reimburse modification expenses.
- While employed and using Guilford’s resources over roughly two years, Francklyn developed an improved clam harvester and obtained a patent (issued in 1969).
- Francklyn permitted Guilford to use the patented harvester on Guilford’s boat (the LITTLE JERK) without demanding royalties and accepted expense reimbursement.
- Guilford later used or constructed another harvester incorporating the patented design for use on a second boat (the SIDEWINDER), which Francklyn later claimed infringed.
- John B. Lowman manufactured and used a harvester incorporating the patented design and entered a sale-and-leaseback arrangement with Guilford in which Lowman sold the harvester to Guilford and Guilford leased it back to Lowman.
- Francklyn sued for patent infringement against Guilford and Lowman (and associated parties), challenging Guilford’s additional copies and Lowman’s manufacture and use.

## Issues

1. Whether Guilford acquired a shop right permitting it to make and use copies of Francklyn’s patented invention without paying royalties.
2. Whether Guilford’s shop right, if any, could be transferred to Lowman through a sale-and-leaseback transaction so as to relieve Lowman of royalty obligations or infringement liability.

## Decision

- The Ninth Circuit affirmed that Guilford had a shop right: an implied, nonexclusive, royalty-free license to make and use the patented harvester for its own operations.
- The court held that a shop right is personal to the employer and could not be transferred to Lowman through the sale-and-leaseback arrangement.
- The court concluded that Lowman could not rely on Guilford’s shop right to avoid paying appropriate royalties for Lowman’s manufacture and use of a copy of the invention.

## Legal Principles

- A shop right arises when an employee develops or perfects an invention during employment using the employer’s time, tools, materials, or facilities, and the employee permits the employer to use the invention without demanding compensation.
- A shop right is an irrevocable, nonexclusive, royalty-free license allowing the employer to practice the invention, including making copies for the employer’s use.
- A shop right is a personal privilege of the employer and is generally nonassignable; it cannot be conveyed to third parties by private contractual arrangements.
- A third party’s independent duty to respect patent rights is not eliminated by the employer’s shop right.

## Conclusion

The court held that Guilford obtained a royalty-free shop right because the invention was developed with Guilford’s resources under an employment relationship that contemplated modifications and because Francklyn acquiesced in Guilford’s use, but it also held that this shop right could not be transferred to Lowman, leaving Lowman responsible for royalties arising from his own manufacture and use.


Francklyn v. Guilford Packing Co., 695 F.2d 1158 (9th Cir. 1983)