Patent Ownership/Shop Rights

Who owns “your invention” if you created it at your employer’s workplace?

A common law right called “shop rights” may govern and whether the employee or the employer owns the invention depends on the facts and circumstances of each case. Rights are not universal and vary from state-to-state.

Factors include:

* Employment contracts (an employee may assign all rights to inventions to an employer)

* The intentions of the parties-Was the employee “hired to invent?”

* The nature of the business

* The nature of the invention

* The circumstances involving the creation of the invention-Is the invention related to the employee’s job function, was it made using the employer’s tools, or other resources?


One example of a state statute is the Minnesota Statute found at: https://www.revisor.mn.gov/statutes/?id=181.78

Section 181.78 Agreements; Terms Relating to Inventions

181.78 AGREEMENTS; TERMS RELATING TO INVENTIONS. Subdivision 1. Inventions not related to employment.


Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of the employee's rights in an invention to the employer shall not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee's own time, and (1) which does not relate (a) directly to the business of the employer or (b) to the employer's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for the employer. Any provision which purports to apply to such an invention is to that extent against the public policy of this state and is to that extent void and unenforceable.

Subd. 2.Effect of subdivision 1.


No employer shall require a provision made void and unenforceable by subdivision 1 as a condition of employment or continuing employment.

Subd. 3.Notice to employee.


If an employment agreement entered into after August 1, 1977 contains a provision requiring the employee to assign or offer to assign any of the employee's rights in any invention to an employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee's own time, and (1) which does not relate (a) directly to the business of the employer or (b) to the employer's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for the employer.





Another example of a state statute is the California statute found at: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=02001-03000&file=2870-2872


LABOR CODE SECTION 2870-2872

 2870.  (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:    (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or    (2) Result from any work performed by the employee for the employer.    (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

 

2871.  No employer shall require a provision made void and unenforceable by Section 2870 as a condition of employment or continued employment. Nothing in this article shall be construed to forbid or restrict the right of an employer to provide in contracts of employment for disclosure, provided that any such disclosures be received in confidence, of all of the employee's inventions made solely or jointly with others during the term of his or her employment, a review process by the employer to determine such issues as may arise, and for full title to certain patents and inventions to be in the United States, as required by contracts between the employer and the United States or any of its agencies.

 

2872.  If an employment agreement entered into after January 1, 1980, contains a provision requiring the employee to assign or offer to assign any of his or her rights in any invention to his or her employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention which qualifies fully under the provisions of Section 2870. In any suit or action arising thereunder, the burden of proof shall be on the employee claiming the benefits of its provisions.

 

More Information:

Teets v. Chromalloy Gas Turbine Corp., 83 F.3d 403, 407 (Fed. Cir. 1996)(finding implied-in-fact contract when no written agreement existed between project leader and employer). http://bulk.resource.org/courts.gov/c/F3/83/83.F3d.403.95-1389.95-1379.html for the full case text.


Some states have passed laws to limiting employer’s ownership claims over employee inventions. Examples of statutes that protect inventions created by the employee include:

California,

Delaware,

Illinois,

Kansas,

Minnesota,

North Carolina,

Utah,

Washington.


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