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Who owns what invention in the workplace?

The model is that the ownership of a patent right initially goes to the inventor. But who owns the rights to inventions made in the workplace? The company? The inventing employee? It depends on the circumstances.

A first question to be asked: Is there an employment agreement signed by the employee that includes the obligation to assign all inventions developed in the workplace to the company?

No? Then you must ask: Was the employee hired to invent or to solve a certain problem? If yes—and the invention is within the scope of that job description—then under those circumstances where you can establish an implied-in-fact assignment, the employee is ordinarily obligated to assign the invention and all patent rights to the company.

If no—and the invention is outside the scope of their job description—what rights, if any, does the company have in that invention?

An employee owns any invention made on his or her own time without the use of company resources. However, if they developed the invention on company time and/or used the company's facility and/or resources, the company may be entitled to "shop rights" in the invention—regardless of whether the invention is related to the company business or within the employee's job responsibilities.
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In such instances, under its shop rights, a company obtains a royalty-free and non-exclusive right to use any invention in its business developed by an employee during compensated work hours or using the company's resources without having to compensate the employee. The company cannot transfer its shop rights to another entity and cannot prevent others from using the invention. And the employee-inventor owns the patent rights and the right to license the patent to others.

The bottom line? A company's rights to inventions can impact mergers, the sale of the company, or the ability to attract investors. To protect your business and secure exclusive rights to your technology, a company should require all employees to sign an employment agreement that includes a description of duties and the obligation to assign all inventions developed in the workplace to the company. This will help avoid battles over ownership of inventions with your employee-inventors.

Kristine Strodthoff is a shareholder at Whyte Hirschboeck Dudek S.C. in Milwaukee and practices in Intellectual Property and IP Litigation. You can reach Kristine directly by calling 414-978-5531 or emailing kstrodthoff@whdlaw.com.

Comments

Scott Hoaby responded 7 years ago: #1

Not covered in this article is university-student relations. No one, it seems, is challenging universities in, well, to put it acerbically, patent-grabbing from students. Some of this is emboldened by the Bayh-Dole Act, some of it merely by 'trying to get away with what they can,' knowing that students generally don't have the money to mount a legal challenge.

Students are not employees. They are paying for their education and often pay extra for using labs. In the non-education world, if you are paying for a service and 'renting space' the service provider and the landlord don't normally have rights to intellectual property of the service user and the renter. The 'shop right' notion, it seems to me, would not apply when students are paying for the use of resources such as a lab fee. Yet I have heard several universities say outright or suggestively that students inventions are the property of universities - or that the university has first rights. This does not strike me as ethically right, and I don't believe it is legally correct either. Thoughts?

Kay responded 6 years ago: #2

My husband developed an invention which is now used in the business of my partner and myself. The company paid for half of the application fee but gave him no compensation. Nothing was signed by him relinquishing his rights.
His name is on the patent application. Does the company hold any ownership rights in his patent? Or would it if he reimburses the company for their half of the patent application fee?

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