Employee Inventions — Ownership

Generally, any person who invents something or comes up with an idea is entitled to ownership of that invention or idea (and any trademarks, patents, and copyrights that arise from it). Exceptions to this rule, however, exist when the individual created or invented something in the course of employment by another individual, organization, or company. When this is the case, there are a number of factors to be considered and a number of possible outcomes regarding ownership rights.

Hired to Invent

In many cases, an individual is hired by a company for the specific purpose of solving a problem or creating a new product. The company pays the individual a salary and provides the facilities, materials, and other things necessary for the invention or idea to be created. Here, the act of inventing is within the scope of the individual’s employment. As such, the company owns the invention as well as all of the rights associated with it.

The company in such a situation owns the invention whether or not the idea was formulated during the course of a workday. The employee is paid to think and to create thoughts that take place “on the clock” are not sepaable from thoughts at other times. However, it is important to keep in mind that an individual is hired for a particular type of work. Any idea or invention created outside the scope of employment and completely unrelated to the actual job responsibilities does belong to the employee.

Employee Rights

Some employees are not working in a “hired to invent” type of position. An employee may, for example, be a salesman who, over time, comes up with a way of improving the product he sells or a way of improving how the product is made. If he does this on his own time and does not make use of his employer’s facilities to do so, he is entitled to full ownership over his innovation.

The employer may argue that it was only by way of his employment that the individual was able to come up with the idea in the first place. That is, it was through constant exposure to the product or with expertise gained during employment that the idea was formed. However, courts have ruled that this fact of employment alone does not give the employer any rights over the innovation.

Shop Rights

If an employee remains at work after hours and use his employer’s facilities to work on a non-employer project, he is working on his own time and a resulting invention is not related to his job requirements. However, he is making use of his employer’s space and materials, and the employer becomes eligible for what are known as “shop rights.”

Shop rights refer to an employer’s right to non-exclusive, royalty-free use of an idea or invention. This means that the inventor retains ownership and may sell the product or idea elsewhere but his employer will also retain the right to use it free of any financial obligation.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.