Who Owns the Invention – the Employee and Employer Conundrum

As India’s participation in global trade, including with countries with strict patent regimes, increases, the need of aligning patent policies and practices in India with global standards is being felt.

If we look globally, and particularly at the competitive needs of global groupings (ASEAN, TPP etc) and countries with strict patent laws like US, Germany, UK etc, there is a call for a relook at the ownership rights of employees and employer. The stress of ‘Make in India’ on IPR further shows its future prospects, and thereby, need of policies more in line with the international standard.

 As per WIPO website for most countries,’ if an employee has developed an invention in execution of his/her employment contract – i.e. usually during his/her working time within the enterprise – the invention (and the related patent rights) will belong to the enterprise’.

For Patents

What the WIPO website means, in essence, is that in the absence of an assignment of invention agreement, employees will have rights over their inventions (and any related patents) unless  they were hired to work on or solve a particular problem and  the invention relates to that  problem. Further, independent contractors own anything they invent unless they enter into an agreement to assign their rights to the company for which they are working. So, simply put, if a employee invents something, while working in employer’s factory, but which is unrelated to his job responsibilities per se, then the employee owns the patent.

The U.S. Supreme Court partially comes to the rescue of the employer since, per them, “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”.[1] For patents, this rule is known as the “shopright doctrine”, giving a nonexclusive license to the employer for using the invention without paying royalties to the employee, although the employee owns the invention. The employee also has the right to exploit it commercially, such as by selling or licensing it to other users. Even where the employee works on the invention on his own time, if the employer’s resources are used to any significant extent, this rule usually applies.

For copyrights

Under the Copyright Act, for major economies with minor modifications, “work made for hire” is the work done by an employee within the scope of employment and the employer has right over it. In case of an independent contractor, the employer will not have any rights over the work. So, it is better for the employer to enter into an agreement to have claims over the intellectual property rights.

The “scope of employment” limitation means that the employer is only entitled to rights over the works that the employee produces under the scope of the employer. For example, if you are a fashion designer by day and a song writer by night, your employer is entitled to rights of your designs but not your songs.

Unless there is a written agreement with independent contractors, hired to produce written content, designs, logos, etc to addresses the issue in their case, contractors will own their creations even if a company paid the contractor to produce the copyrighted work.

Here’s a list of the nine types of work done by independent contractors that can be considered work-for-hire:

  1. a contribution to a collective work;
  2. a part of a motion picture or other audiovisual work;
  3. a translation;
  4. a supplementary work;
  5. a compilation;
  6. an instructional text;
  7. a test;
  8. answer material for a test; or
  9. an atlas

For work not falling into one of the nine work-for-hire categories mentioned above, some or all of the rights must be explicitly assigned by a copyright to the company through an agreement. And for these nine work-for-hire categories the contractors own their creations as mentioned before.

Conclusion

  • Ideally the employers should execute an employment contract or better sign an assignment of invention agreement with the employees to secure rights over intellectual property developed by the employee. In any scenario, the employee will always retain the right to be named as the inventor, unless expressly renounced by him/her.
  • The employer should enter into a written transfer and confidentiality agreement with the employee, to secure the internally developed software, reports, or important materials before the employee goes to another job. The agreement should contain the details of any work created during employee’s tenure with the company or utilizing company’s resources, which now belongs to the employer. In case of an independent contractor, the employer should execute a confidentiality agreement with the individual and the company he or she is employed by, regarding the newly developed work.

References:

  1. http://smallbusiness.findlaw.com/intellectual-property/law-regarding-the-rights-to-inventions-made-by-employees.html
  2. http://www.wipo.int/patents/en/faq_patents.html

About the Author: Harsh, Junior Patent Associate at IIPRD and can be reached at: harsh@iiprd.com.

Leave a Reply

Categories

Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • September 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010