MightyRecruiterThe issue of ownership can become tricky when it refers to ideas. Because who “invented” something is far less tangible than typical ownership of physical objects, disagreements can arise. A common problem is when an employee invents or improves a product. Does the employee retain the rights to the invention, or does the employer assume the rights? Whether you are an employer with creative employees or an aspiring business owner and inventor who happens to have a part-time job on the side, you should know what the law has to say about the issue of ownership in this kind of situation.
The Problematic Situations
The situation described is very fluid; that is, there are many variables that change, essentially changing the legality of it. To better understand the circumstances, consider many different arrangements. Obviously an employer cannot assume ownership of any invention or idea his or her employee develops regardless of the situation just because the employee works for her or him.
Typically, problems only arise if the employees, without being tasked to, find a way to improve products, or the process to create products, that already exist and are sold and owned by the employer. In this case, the employer does have ownership, but the employee may feel the changes made entitle him or her to own the new product. Another situation that can lead to disagreement is when an employee creates an entirely new invention but uses the employer’s resources to do so. Even if the resulting product bears no resemblance to anything the employer owns, he or she may still feel the usage of resources entitles him or her to ownership.
Finally, sometimes disagreements arise if employees receive no credit for a product they were hired to create. In these situations, courts have consistently ruled in favor of the employer because the employee was simply doing the job she or he was hired for. In the other situations, however, the resolution is a little more complicated.
Ownership Laws
Each situation is unique and therefore treated differently, but the general rule is that the employer gains a nonexclusive license to use and sell the new product while employees retains ownership, giving them the right to sell and license the resulting products. Officially, the U.S. Supreme Court ruling states, “where an [employee] during his hours of employment, working with his [employer’s] materials and appliances, conceives and perfects an invention for which he obtains a patent, he must accord his master a nonexclusive right to practice the invention.” This means the employer does not have to pay royalties to the employee either.
Again, this is just a general rule. The specific details of each situation may lead to different rulings. For the most part, this typical ruling only applies when the employee uses the employer’s resources to a significant extent or the employer’s product as a starting point. If the employee was hired to improve the product or develop new products in general, the employer is usually given total ownership and commercial rights. On the other hand, if the employee develops the invention on his own, without using existing employer resources or products, he will retain ownership.
Finally, any existing agreement between the employer and employee that predates the invention or improvement may make these rulings invalid.
Other Ownership Disputes
Disagreements between employers and employees over ownership are not limited to patentable physical products. These rules also apply to intangible ideas or intellectual property. For example, an employee developing a new process to create a product that reduces the resources used or saves time can also be a cause for dispute. Just like with a physical product, the ownership of a process, idea, design, or other intellectual property must be determined when disagreement arises between an employer and employee. If possible, it is beneficial for a clear agreement to be established in advance.
Legal Disclaimer
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.