Everybody’s Goin’ Surfin’: California Statute Voids Assignment Provision After Employment Ends

In Whitewater West Industries, Ltd. v. Richard Alleshouse, No. 2019-1852 (Fed. Cir. Nov. 19, 2020), the Federal Circuit reversed a judgment of breach of an employment agreement because it contained an assignment provision that the Federal Circuit found to be void under California law.

Mr. Alleshouse worked for Whitewater before leaving Whitewater in July 2012 to pursue a new business. After leaving, Mr. Alleshouse and his business partner, Mr. Yeh, filed a provisional application on October 2012 related to water attractions. Three patents issued from that provisional application.

Whitewater sued to enforce assignment of the patents due to Mr. Alleshouse’s prior employment agreement and to remove Mr. Yeh as an improper inventor. The district court granted Whitewater relief, resulting in a judgment assigning the patents to Whitewater. Mr. Alleshouse appealed, arguing that the assignment provision of the employment agreement was void.

The Federal Circuit reversed, applying California Code § 16600 that voids every contract that restrains anyone from engaging in a lawful business. The Federal Circuit found the assignment provision of Mr. Alleshouse’s employment agreement to be void because it went “beyond protection of proprietary information and ensnare[d] post-employment inventions.” The Federal Circuit also reversed Whitewater’s claim of improper inventorship.