Friday, November 16, 2012

Employee Ownership of Intellectual Property

Absent a formal agreement between a company and an employee, patent rights typically default to the inventor. Many employers require that employees sign a specific invention or intellectual property agreement that transfers the rights to anything created as part of the employee's job to the employer.

But what does it take to validate such a contract? Specifically, does an employer have to provide something other than continuing employment in exchange for the waiver of employee rights to make a valid contract?

A recent case out of the Federal Circuit (in the District of Columbia) answers this question in the negative. Specifically, where there is an agreement assigning all of an employee's job-related intellectual property rights to the company for inventions or other IP created on the employer's time, continued employment is sufficient consideration to validate the contract. The opinion is important in a couple of aspects: it establishes a valid precedent (at least under the state law in question, in this case Wyoming) that continued employment can serve as adequate consideration to support an employment agreement entered into at the start of employment; more importantly, even when the employee had conceived of an invention prior to joining an employer, failure to reduce to practice the invention (that is, manufacture or assemble it in any tangible way) kept the employee from acquiring rights to the concept. This was so because the agreement specifically required all previously existing IP to be reduced to practice in order to be excluded from coverage.

The lesson for an employer with respect to intellectual property rights? Get an agreement and make it a condition of an employment that requires the employee to assign all non-reduced IP rights to the employer. While this case does not close all the doors available to an employee to assert IP rights, its analysis is persuasive and should carry some weight for any federal court that considers it.

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