The One Year Rule
The one-year rule is a common law doctrine that states that an oral contract for the sale of real property must be in writing to be enforceable. It is a general principle of contract law, which has been adopted by statute in many jurisdictions, including California.
Under this rule, contracts for land sale are generally unenforceable unless they are memorialized in a written instrument signed by both parties. This means that if you want to sell your patent rights or any other interest in intellectual property, you must have a written agreement with the buyer before you can legally transfer ownership. Otherwise, you could find yourself at risk of losing valuable rights to your invention.
Why is the One-Year Rule Important?
As a patent inventor, if you do not have a written agreement for the sale of real estate, then there is no way to prove that you sold anything. If someone tries to sue you for breach of contract, you will need to produce a copy of the written agreement as evidence. The court may not believe that you owned the property without such proof when you agreed. In addition, without a written agreement, you cannot collect on the contract. You might even lose the right to keep the money from the sale.
What Does the One-Year Rule Apply To?
This rule applies to all types of real estate transactions, including:
- Real Property (land)
- Personal Property
- Intellectual Property
A contract for sale must be in writing to be enforceable under the statute of frauds, and it must be signed by the party against whom enforcement is sought. A contract that does not satisfy the law of fraud’s requirements is unenforceable.
If an oral agreement fails to meet the statute’s requirements, then the court will refuse to enforce it. To avoid this result, courts have applied what is known as the “one-year” rule.
This rule provides that if an alleged oral contract falls within the fraud statute. Still, there was no written memorandum executed at or near the time of the making of the contract; the contract may still be enforced after one year has passed from the date of its execution if the parties intended to memorialize their agreement in writing before the expiration of the statutory period.
If the investors did so intend, they could rely on the statute of frauds defense even though the document was not executed until after the passage of the statutory period.
In determining whether a contract satisfies the statute of frauds because it is too indefinite to be performed within one year, the court looks to see if the terms are sufficiently definite to enable the court to determine the rights and liabilities of the parties. If the term’s words are substantial, the contract is not void for indefiniteness.
In addition, the court will look at the surrounding circumstances to determine whether the patent inventor or investors, as well as the complaining party, intended to make aka binding agreement. For example, if the parties had been negotiating for several years, and the plaintiff had made repeated offers to purchase the defendant’s business, the court would conclude that the parties had agreed to enter a binding contract.
What Is a Patent?
A patent is an intellectual property that gives the inventor and investors exclusive rights to use a particular invention for a limited period. The term of a patent is usually 20 years, although some patents last longer than others. Once the time expires, anyone who owns the patent can license others to manufacture and sell products using the patented technology.
The United States Patent Office issues patents. They are granted only to inventors who submit applications to the office. An inventor is any person who invents or discovers something new and valuable.
Patent law protects inventions that are novel, nonobvious, and industrially applicable. Novel means different from anything else already invented; nonobvious means that someone skilled in the art could not produce the idea without having seen the invention. Industrially applicable means that the design works well enough to be used in the industry.
There are two types of patents available to investors: utility patents and design patents. Utility patents protect valuable inventions. Design patents cover aesthetically pleasing stories.
To obtain a patent as a patent inventor, you must apply with the U.S. Patent Office. You must also pay a fee to apply for a patent. A patent application includes drawings showing how the invention works. These drawings are called “specifications.” In addition, you must consist of all prior art references known to you when filing your patent application. Prior art refers to publicly available things before you file your application.
You cannot get a patent unless you have invented something new. If you want to know what constitutes novelty, read our article on originality.
Starbucks Patenting of the Coffee Cup Sleeve
In recent years, the one-year rule has played a significant role in the case of Starbucks Vs. Mr. Sorenson with regards to the coffee cup sleeve. It was argued that Starbucks did not own the coffee cup sleeve because they did not file their patent application until after Mr. Sorenson began selling his coffee cups.
However, the court ruled that the coffee cup sleeve was not protected under copyright law. This meant that Starbucks could not sue Mr. Sorenson over this issue.
How the One Year Rule Applied in the Starbuck’s Vs. Mr. Sorenson Case
The court applied the one-year rule in the case of Starbucks vs. Mr. Sorensen. It said that the coffee cup sleeve did not fall under the protection of copyright law. Therefore, the company could not sue Mr. Sorenson for infringement.
It is important to note that the one-year rule applies to both copyrights and patents. However, it does not apply to trademarks. Trademarks are considered unique goods that identify a specific product or service. For example, if I make my beer, I will need to register a trademark to recognize me as the brewer of my beer.
You do not need to worry about the one-year rule if you own a trademark as an investor. Your brand will remain valid even after the expiration date.
How Do Patents Work?
If you think about it, patents work like a combination of copyrights and trademarks. Copyrights protect original works of authorship by patent inventors such as books, movies, songs, etc. Trademarks protect words, symbols, designs, logos, etc., identifying goods and services. Both copyrights and trademarks allow owners to prevent unauthorized copying of their creations.
Patents do the same thing. However, unlike copyrights and trademarks, patents give owners the right to exclude others from making, using, offering for sale, or importing certain products. For example, if you make a product and want to keep other people from making copies of it, you can either file for a copyright or trademark. Or you can file for a patent.
A patent gives the owner the right to exclude others for a specific period. After the patent expires, anyone who wants to copy the patented item may do so freely.
A patent is granted by the United States Patent and Trademark Office (USPTO) upon the applicant’s payment of a $1,000 filing fee. The USPTO then sends out a request for information (RFI). The RFI asks investors to provide details regarding their invention. Once the USPTO receives the requested information, it will send out another request for more information. This process continues until the USPTO decides whether to grant the patent.