Where Do Patent Rights End Up?

Generally, patent rights initially vest with the person who conceives of the invention or contributes the inventive step.   Since an employer who hires someone else to do the work cannot provide the inventive step, the employer cannot be the inventor.  For example, if a company hires an independent contractors, patent rights initially vest with the independent contractor and the company cannot be named as an inventor.  If the company wants to license or otherwise exploit the invention, then the company must acquire the patent rights from the independent contractor through an assignment.

Companies should negotiate with the independent contractor an assignment before hiring the independent contractor.  On the other hand, the independent contractor should realize that by signing away rights to any inventions, he or she may be foregoing significant economic benefit.  Problems arise when the company does not have an agreement by the independent contractor to assign inventions to the company.  In this situation, the independent contractor owns the invention even though the company hired the independent contractor.  The company may have a license or the right to use the invention due to the nature of the relationship between the independent contractor and the company, but this right to use may not extend to the ability to license the invention to other parties.

 

Employees and Independent Contractors Generally Retains Rights to Inventions and Patents.

There is great value associated with intellectual property developed by their employees and contractors, so that disputes often arise as to who owns what.  The scope of intellectual property rights flowing to either the employer or principal and those going to the contractor or independent inventor must specified through negotiations and contracts.

For example, copyrightable works, such as software/computer programs and website designs and formats, belong to an employer when these copyrightable works are created by an employee in the scope of his or her work.  However, when an independent contractor or freelance software programmer or independent website designer creates the same product, the copyright on these works belongs with the independent contractor, unless the parties agree otherwise in writing.

Similarly, patent rights will generally remain with either the employee or independent contractor unless the parties reach some other agreement. The ownership of copyrights and patents in these differing situations is discussed in more detail below.

When the “Work Made For Hire” doctrine applies, e.g. under the United States Copyright Act an employer may be the owner of “a work prepared by an employee within the scope of his or her employment.”  However, the “Work Made For Hire” doctrine does not apply to independent contractors or others falling outside the status of an employee.  When an employer or company hires a software programmer to design a computer program for the company, the copyright associated with the work product of that contractor remains with the contractor.  The same principle applies to the hiring of a photographer or website designer as an independent contractor.  The copyrights associated with the work product do not automatically belong to the hiring company.

The general rule with patents is that an employee or independent contractor retains the rights to inventions made while employed, even to those within the scope of his or her employment or contracted work.  This rule does not apply if there is an express agreement providing otherwise, e.g. if the employee/independent contractor was specifically hired to invent the patentable subject matter and the employment agreement provided for an assignment of patent rights.

2133 35 U.S.C. 102(b) — One Year Time Bar After Public Disclosure.

35 U.S.C. 102 Conditions for patentability; novelty and loss of right to patent.

A person shall be entitled to a patent unless -

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(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of application for patent in the United States.

 

If the last day falls on a holiday or weekend, you have until the next business day.

Rights of Employee vs. Employer to Patents

When an employee creates an invention and then patents it, there then arise issues as to who owns the patent.  Sometimes its the employee, other times its the employer.

The general rule is that an individual owns the patent rights to an invention if he or she is an inventor, even though the invention was conceived and/or reduced to practice during the course of his or her employment.  But there are two exceptions to this general rule:

First, where an employee has entered into an express contract which assigns the employee’s inventions to his or her employer, then the employer owns whatever rights it has under the contract.

Second, where an employee is hired to invent something or to solve a particular problem, then the employer owns the patent rights to inventions made within that scope.

Nonetheless, simply because an individual is employed does not necessarily mean that the employer owns all rights to a patentable invention developed by an employee.  If an employee’s employment is “general”, then ownership of the patent will belong to him/her.  On the other hand, if an employee is an officer of the employer, then typically any inventions created by him or her will be owned by the employer.  This is true, even if the employee creates the invention at home and on his/her own time.  But this result is due more to the status of the employees as an officer of a corporation who has a fiduciary duty to the corporation, e.g. to assign all inventions created by him/her to the corporation.

In contrast, if an employee is hired for general services and the employee invents something at home and on his own time, the invention is owned by the employee.