Intellectual property refers to intangible property rights. Examples of intellectual property include things like:
- Inventions
- Patents
- Copyrights
- Trademarks
- Original ideas, creations, products, or works of authorship
Intellectual property can be an exceptionally large portion of a company’s value. It may be their most important asset, and they want to protect their rights to it.
Who owns an invention or creation depends on a couple of things: who invented it and the context surrounding its creation. If an invention came about as the result of an employee’s work, the invention may actually be the intellectual property of the employer, not the employee, since it was created in the context of employment. Was it a piece of work product?
What Is Work Product?
In an employment context, the term “work product” refers to anything an employee creates for an employer or at their place of employment for job purposes. Some common examples of work products include clothing designs, food or beverage recipes, graphics or logos, and product formulas. If an employee develops any of the above examples or other work products specifically for an employer or to fulfill their job duties, the final work product will belong to their employer once the project is complete.
Work product clauses are typically included as part of employee-employer agreements. For example, an employment contract might contain a provision that says, “All employment-related work created by the employee during the course of employment will become the property of the employer and/or company.”
What Is a Pre-Invention Assignment of Intellectual Property?
A pre-invention assignment of intellectual property is a contract, or a clause in a contract. A pre-invention clause gives the employer all of the intellectual property rights and complete control over obtaining patents, copyrights, and licenses of everything the employee creates before the employee creates them.
The employer essentially will have the absolute right to use the employee’s invention as it sees fit. The employee will have no rights to the invention since it becomes the employer’s property.
There isn’t really a standard form for pre-invention assignments, so if you have one in your employment agreement, it is important to read yours carefully. If you don’t understand the provisions in the agreement, you may want to consult an intellectual property attorney who can explain exactly how the agreement is structured and what rights you have under the agreement.
Many basic pre-invention assignments will have at least three parts:
- An assignment of rights to inventions,
- Disclosure of the existence of inventions, and
- A power of attorney
Depending on the company you work for and the nature of their pre-invention agreements with employees, there may also be other provisions.
While the basic idea of the three portions of the assignment may be the same in all company contracts, their effects will vary depending on how they are written.
While an employer can’t force anyone to sign a pre-invention assignment agreement, they can refuse to hire someone who won’t sign it.
What Is an Assignment Provision?
The assignment portion of the agreement requires the employee to legally transfer (or assign) all of the rights to their inventions to the employer. This clause is the most important one in a pre-invention contract because it is the one that gives all of the employee’s inventions to the employer. Assignment provisions can vary depending on how they are written, so you’ll want to carefully read this portion of your employment contract.
What Is a Disclosure Provision?
The disclosure clause of the agreement is important because this is how the employer will know what it owns. The employee will be required to disclose every invention they make and inform the employer of its existence.
Depending on how the agreement is drafted, the disclosure provision may be limited to work related to the employer’s actual or prospective business or any work using the employer’s resources. Some provisions may be much broader, covering anything that the employee creates during their employment, whether it is related to the company’s business or not regardless of who paid for the resources needed to craft the invention.
What Is a Power Of Attorney Provision?
A power of attorney is a signed document that gives the employer the legal authority to act in place of, or on behalf of, the employee. The power of attorney provision in the pre-invention agreement allows the employer to register ownership rights without the employee’s help.
Even if the employee can help the company register the invention and apply for the patent, the power of attorney allows the employer to exercise ownership rights on its own.
What Is a Holdover Clause?
Some pre-invention assignment agreements include something called a “holdover clause.” This extends the assignment provision for a period of time after employment ends.
Employers include this clause in employment contracts because they’re concerned an employee may leave the job without telling them about one or more inventions they created during their employment. Holdover clauses can be problematic. In order to be enforceable, a holdover clause must be for a specifically stated, limited period of time, and it can only apply to inventions created as a result of work done directly for the former employer.
Depending on what state’s law is involved, a holdover clause may be enforceable only if it applies to inventions created using the former employer’s trade secrets, which is an even more restrictive interpretation.
Does My Employer Have Rights to What I Invent Outside of Work?
Typically, no. Usually, any projects that are pursued outside of work are the intellectual property of the individual employee. However, potential employees should take care to read the pre-invention assignment provision carefully before they sign. They may be willing to assign to the employer anything they create during work hours but be unwilling to assign inventions that are created on their own time.
What If There Isn’t a Written Employment Contract?
If there is no written agreement, the employer could still attempt to argue that the parties agreed to assign intellectual property rights to the employer because there was an oral agreement in place. The employer may have a claim to the inventions, but this claim will be harder for them to prove if there is no written agreement. The employer would have to prove that the employee knew about this requirement before they took the job.
Do I Need a Lawyer for a Dispute Over an Employee Invention?
Whether you are an employer or an employee, it is a good idea to talk to an experienced contract lawyer who can explain how the laws in your state may affect intellectual property rights and employee ownership rules. A lawyer can review the employment agreement and help you understand the best way to protect your intellectual property.
You may also consider consulting an intellectual property lawyer to help you understand the best way to protect your intellectual property and any inventions not covered under the pre-invention agreement.
