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Your Employee’s Invention: Who Owns
It?
May 2004
By Dirk A. Bartram
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here to download article as a PDF
If your former employee goes to work for another
company, can he take his inventions with him? Can he
keep you from using them?
In Waterjet Technology v. Flow International
Corp, a case decided by the Washington Supreme
Court, a Waterjet employee quit and went to work
for Flow. While at Waterjet, the employee had helped
create a device for milling using high pressure waterjets
containing abrasives. The invention was eventually
patented, but the employee hadn’t assigned
his rights in the patents to Waterjet before he went
to Flow. Concerned that Flow would exploit the patent,
Waterjet sued Flow for infringement. Waterjet also
asked the court to compel its former employee to
transfer his patent rights to Waterjet.
Luckily for Waterjet, the employee had signed an
employment agreement. In it, he agreed that Waterjet
would own all inventions that he conceived during employment
if related to Waterjet’s business. The patented
invention was definitely covered by the agreement,
so the only question for the court was whether the
agreement was enforceable. The court held that it was,
and gave Waterjet ownership of the invention.
Waterjet won because the employee signed an enforceable
invention agreement, but who owns the invention if
the employee fails to sign?
If the invention consists of a copyrightable work
like software, then the copyright belongs to the employer
as long as the invention was created by the employee
within the scope of his or her employment. The employee
is not entitled to use the invention without the employer’s
consent.
But what if the invention is not copyrightable? Most
non-software inventions, such as equipment, parts,
machines and processes, fall into this category. In
these cases, the employer’s ownership may be
uncertain. Employees who are hired to invent a defined
product or process (e.g., scientists or engineers)
generally have a duty to assign their invention rights
to their employer, even absent an agreement. This duty
applies to inventions that are conceived during their
employment and that relate to the employer’s
business.
The problem arises when the employee isn’t
hired to invent or when the inventor is an independent
contractor. These inventors are free to market the
invention and to seek patents for it absent an agreement
otherwise. In the case of the employee not hired to
invent, the employer may acquire a limited non-exclusive
right to use the invention, known as a “shop
right.” However, this is little solace given
that the invention can be licensed or sold by the employee-inventor
for a competitor’s use.
The obvious way to avoid these predicaments is to
have every prospective inventor sign an invention agreement,
whether or not he’s hired to invent. The agreement
should require the employee or contractor to disclose
and assign all inventions that are conceived during
employment or engagement and that relate to the employer’s
business or research. Washington statutes place some
restrictions on such agreements with employees, so
they must be drafted with care. Also, to be sure they’re
enforceable, they should be signed at the time of hiring
or in connection with a signing bonus, pay raise or
other benefit.
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here to download article as a PDF
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are intended for general information purposes only and
should not be construed as legal advice or legal opinions
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