Employee A works for the Great Widget Company. Employee A invents a great new widget. Who owns the patent? Employee A? The Great Widget Company? Both? You may wonder whether the circumstances of Employee A’s employment matters:
- What if Employee A invented the widget on company time?
- What if Employee A used company resources?
- What if Employee A signed an employment agreement that addressed inventions?
- What if Employee A never signed an employment agreement but signed a separate contract to give the company ownership of their inventions in the past?
- What if Employee A is the vice president of the company?
Short Answer: It depends. (When it comes to the law, the answer almost always starts with “It depends.”)
Longer Answer: Believe it or not, these types of scenarios have been litigated for centuries. Fortunately for us, we benefit from all this litigation because some clear rules have emerged to help us unravel many of these scenarios. Still, while the rules are clear, applying them to a specific set of facts is not always easy.
Before we look at the relevant rules, let’s review the difference between inventorship and ownership. Lay people often confuse these terms or collapse them into one. Only someone who contributed to creating the invention can be a patent inventor. Inventorship cannot be granted to a non-inventor. Conversely, anyone can be a patent owner.
Who Owns a Patent
These are the rules for patent ownership:
1. Inventorship is always the starting point. Inventorship determines ownership unless the inventor has a legal obligation to assign their ownership rights to their employer. This is true even if the invention was conceived or used to create a working prototype or otherwise tested (aka “reduced to practice”) on company time or using company resources.
2. If the inventor agreed in writing to assign their ownership rights in the invention to the company, that agreement will likely control the outcome.
3. Absent a controlling written agreement, there are three ways in which the company may own the patent:
- If the employee was “hired to invent”;
- If facts support an “implied in fact” contract to assign; or
- If the employee owes fiduciary duties to the company (e.g., is an officer or director).
4. Finally, when fairness requires, the company may own a nonexclusive and nontransferable royalty-free license to practice the invention (referred to as a “shop right”).
As you can imagine, there are many different ways ownership issues arise and there are many different factors that affect the outcome. If you are either an employer or an employee and need more information on patent inventorship or ownership, please send us a message. We have lawyers licensed in Arizona, Connecticut, and New York, and we can handle federal intellectual property matters in any U.S. state and assist with international matters. For even more information, sure to connect with us on Facebook.