Who Owns The Rights To Employee Inventions? | JD Supra

Who Owns The Rights To Employee Inventions? | JD Supra

One question we commonly hear from inventors is whether they have ownership rights to a patentable idea they conceived while working for a company. The answer can be quite tricky.

“The general rule is that an individual owns the patent rights to the subject matter of which he is an inventor, even though he conceived it or reduced it to practice in the course of his employment.” Banks v. Unisys Corp., 228 F.3d 1357, 1359 (Fed. Cir. 2000). But there is an exception for express or implied agreements to assign the patent rights.[1] Id. If an employment contract expressly specifies the intellectual property rights of inventions conceived by an employee, it is straightforward that the provision will likely control.

The more difficult situation arises when an employment contract is silent as to intellectual property rights. Under the “hired-to-invent” doctrine,[2] if “an employee is hired to invent something or solve a particular problem, the property of the invention related to this effort may belong to the employer.” Id.

In contrast, an employment contract will not be construed to require an assignment of patent rights if one’s employment is general to a field of labor and the invention was conceived of in the performance of the work within this field. United States v. Dubilier Condenser Corp., 289 U.S. 178, 187–88 (1933). However, “[e]ven if hired for a general purpose, an employee with the specific task of developing a device or process may cede ownership of the invention from that task to the employer.” Teets v. Chromalloy Gas Turbine Corp., 83 F.3d 403, 408 (Fed. Cir. 1996).

For example, in Teets, the Federal Circuit held that an employer owned the rights to an employee’s invention based on an implied-in-fact contract even though the employee had no written agreement as to the assignment of intellectual property rights. 83 F.3d 403, 405, 409 (Fed. Cir. 1996).

The Supreme Court reached an opposite result in Dubilier Condenser, holding that the federal government did not own the rights to patents conceived by two employees during their period of employment in the radio laboratories of the Bureau of Standards. 289 U.S. 178 at 182, 193. The patents concerned the use of alternating current in broadcast receiving sets, while the inventors were employed to research the use of radio in airplanes. Id. at 182. The Supreme Court ruled that it was not enough that the inventions were in the general field of the inventors’ research. Id. at 193. Instead, the Supreme Court held that the government merely had shop rights to the inventions (i.e., a non-exclusive license to use the technology). Id.

An employment contract may also not be construed to require an assignment of patent rights under the hired-to-invent doctrine if facts exist that negate an implied assignment. In Banks, the Federal Circuit reversed a district court’s grant of summary judgment that an employee assigned patent rights to his employer under the hired-to-invent doctrine. Banks, 228 F.3d at 1360. The employee invented various camera optics technologies that the employer patented. Id. at 1358. Critically, the employee never signed the employer’s intellectual property agreements and the employer failed to pursue the issue. Id. at 1360. The court interpreted the employer’s conduct as acquiescing to the employee’s refusal to sign the agreements. Id.

The hired-to-invent analysis may also vary from state to state. Compare Speck v. N.C. Dairy Found., Inc., 311 N.C. 679, 686 (1984) (“The fruit of the labor of one who is hired to invent, accomplish a prescribed result, or aid in the development of products belongs to the employer absent a written contract to assign.”), with Teets, 83 F.3d at 407 (“[A] Florida employer can not claim ownership of an employee’s invention ‘unless the contract of employment by express terms or unequivocal inference shows that the employee was hired for the express purpose of producing the thing patented.’”).

The best course is always to clearly specify ownership of intellectual property rights in an employment relationship before any intellectual property is developed. Otherwise, the question of who owns the rights to employee inventions can get very complicated.

[1] Trade secret rights can also be contractually assigned. E.g., Pullman Grp., LLC. v. Prudential Ins. Co., 733 N.Y.S.2d 1, 2 (App. Div. 1st Dept. 2001).

[2] The “hired-to-invent” doctrine is also sometimes referred to as the “employed-to-invent” doctrine.

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