Employer Rights To Employees' Inventions

Whether you work at a large Fortune 500 company on the East Coast or a small pharmaceutical company in Silicon Valley, if you are an inventor and you've patented an amazing product, you're probably wondering, "Who owns the rights to the patent?" Is it you or your employer? Follow along as FindLaw answers some of the most frequently asked questions to employer rights to employees' inventions.

What rights does an inventor have in a patent?

Inventors own their patent rights until they transfer (assign) them to someone else. However, employers may require employee inventors to assign their patents.

Who owns a patent when there are multiple inventors?

Each inventor is a part owner. Unless the inventors have otherwise agreed, each is free to use the invention without interference from the others. Therefore, each inventor can make, use, sell, license, or assign the invention independently. Therefore, if an employer wants complete control over an invention, the employer should arrange for all employees who have worked on an invention to assign their rights to the employer.

How does an employer gain ownership of employees' inventions?

No law requires an employee to assign an invention to an employer. However, employers can ensure their ownership through several types of agreements. In an invention-assignment agreement, a company requires an employee to sign over all work-related inventions. (Several states prohibit employers from requiring employees to sign over inventions conceived outside of work, however.) These agreements may be part of an initial employment agreement, or can be made contemporaneously or later. If such an agreement is made after an employee is hired, the employer must offer some "consideration," or valuable benefit other than continued employment, to the employee. For example, employees could be offered stock options in exchange for such an agreement.

If an employee was hired to invent for a company, that employee will likely be obligated to assign invention rights to the employer. The fact that the employee was hired to invent should be documented in case a dispute arises. However, a written agreement is the best insurance.

If an employee is asked to solve a problem, called "set to experimenting," he will probably be obligated to assign invention rights to the employer. As with hiring to invent, the directive to the employee should be documented in writing before the employee begins experimenting.

Who owns inventions of outside contractors?

Companies sometimes hire outside contractors to help work on research or development projects. If a contractor invents something, then ownership of the invention may be a complicated question. Under ideal conditions, all inventors concerned will have signed an assignment agreement.

What are "shop rights"?

Shop rights are a company's right to use technology whose development it supported. This is not the same as an assignment; it simply gives an employer who provided funding or work time for the project nonexclusive royalty-free rights to use a technology. Shop rights are personal to the employer, and may not be assigned or transferred. In order to best assure that an employer will have shop rights, an employer should inventory patents granted to its employees and evaluate records to determine what company time and resources were used in their creation.

What happens if different inventors work for different companies?

Companies commonly collaborate on inventions. Each company might end up being a part owner of the patent. Each company would be free to use or license the invention without being accountable to the other companies. Before collaborating with other companies, businesses should execute a written agreement setting forth each company's rights to the invention.

Speak to an Attorney About Your Rights to an Employee's Invention

As an employer, you may feel strongly about any inventions your employees come up with. Whether you are talking about shop rights or an outright assignment, it is best to speak with an experienced business and commercial law attorney who specializes in patent law to learn more.

For more information, visit FindLaw's Intellectual Property section.

Next Steps

Contact a qualified business attorney to help you identify how to best protect your business' intellectual property.

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