Employee Inventions: Why Assignment Language Matters
Introduction : The value of a patent portfolio is directly related to the certainty of title. In India, the most common dispute regarding title relates to the documentation of the assignment of the patent. Unlike the Copyright Act, 1957 which has an automatic work for hire provision under section 17, Indian Patent Law does not allow an employer to file an application as inventor, if they were not involved in invention. They can only file as an assignee. If the assignment clause is vague or unclear, the employer will have to make a claim to ownership. This will often be at the worst time; there may be an approaching deadline to file, or a licensing discussion or acquisition on the horizon. This article looks at the legal provisions relating to assignment clauses, how they have been interpreted by the courts, the separate issues of inventorship and moral rights, why prompt disclosure is required, and provides a practical checklist for invention disclosure.
Legal Provisions
Section - 6 of the Patents Act, 1970 provides that the inventor, assignee of the inventor or legal representative of a deceased person, who is entitled to apply for a patent, may make an application for a patent. A company cannot be the "inventor" it can only be the assignee of the inventor.
Section 7(2) of the Patents Act, 1970 along with Rule 10 of the Patents Rules, 2003 provides that when an assignee makes an application they must give evidence of their right to apply during the stipulated time frame. The formalities of an assignment are laid down in section 68 which states that an assignment of a patent must be in writing and contain all the terms and conditions relating to the rights and duties of the parties. An oral assignment is of no effect. Section 69 provides for registration of assignments. Any assignment not registered cannot be used as a title deed unless the Controller or Court directs otherwise.
Section 28 of the Patents Act, 1970 relates to mentions of the inventor in a patent. The proviso provides that this has no bearing on the rights of the patentee. The Ayyangar Committee Report (1959) which forms the basis of the current legislation recognised that inventors have a moral right to be named.
Legal Analysis: Assignment Language as the Load-Bearing Wall
Lack of Automatic Assignment
Indian patent law does not provide for automatic assignment of employee inventions to the employer. In contrast to copyright which provides for automatic assignment by virtue of Section 17(c) of the Copyright Act, 1957 whereby the employer is deemed to be the initial owner of works produced by him in the course of employment, ownership of inventions is controlled by contract. In Darius Rutton Kavasmaneck v. Gharda Chemicals Ltd., the Bombay High Court held that if a managing director's role does not include inventing, then there is no fiduciary duty to register any patents in the employer's name. The court also noted that there is no principle in Indian law whereby patents filed by employees will automatically be assigned to the employer. Thus, it is important to establish whether there was an obligation to invent.
Nippon Steel
The Delhi High Court provided much needed clarity in Nippon Steel Corporation v Controller of Patents (2025). In this case, the Controller had rejected a patent application on the basis that their employment contract was 'general' and did not contain any specific provision assigning IP relating to the invention. However, the High Court overturned this decision finding that an employment agreement, coupled with the company's IP regulations can amount to valid evidence of right under Section 7(2). The Court took a pragmatic approach to this situation, noting that if an inventor's right to file had already accrued to them during their lifetime, there would be no need for an assignment from a legal representative.
This should not be taken to mean that shoddy drafting should be encouraged. This case was decided based upon documents which provided clear evidence of an intention to assign IP to the company. If you simply have a paragraph stating that the employee agrees to assign all their IP rights then you are at risk. Section 68 requires that all terms and conditions of the parties rights and obligations are included within the assignment. An agreement to assign in the future is not the same as an assignment of an invention.
Inventorship: A Separate Question from Ownership
Ownership and inventorship are separate things. The true and first inventor is a natural person who has genuinely used their skill and judgement in contributing to the formation of the inventive concept. The ownership derived by the employer will have a dependent relationship with the inventor. This can cause problems due to:
Mis-joinder and non-joinder of inventors. There is inconsistency between the four patent offices as to what can be done if an inventor needs to be added/removed after filing. It can be confusing with regards to whether to use a form 8 or 13. It will be much cheaper to get the inventorship correct at the point of disclosure.
The assignment must be signed. If an employee who has contributed to the inventive concept has been left out of the assignment they will be incomplete. Even if there is a wide assignment clause it will still be incomplete. For example in Nippon Steel the issue arose because there was only one inventor who had died. This led to issues as to whether the employment agreement was sufficient to show the company had rights. An assignment would not be required from the legal representative of that inventor.
Moral Rights: What Cannot Be Assigned
The Indian patent system recognises the moral rights of the inventor. This means "the right that confers a psychological satisfaction on the inventor and increases his economic value." (Ayyangar Committee). Section 28 provides the inventor with the right to be named. However, it must also be noted that this is a mere recognition of the inventor’s name and does not provide them with the right of ownership.
This means that an assignment clause will not remove the inventor’s right to be named. Any good assignment clause should therefore recognise the inventor’s right to be named whilst transferring the economic rights of the invention. Trying to remove the inventor's moral rights may not be effective, and a clause that goes too far could create confusion about the validity of the entire assignment. It would be better to transfer only the economic rights and keep the recognition of the inventor’s name.
Case Laws
Darius Rutton Kavasmaneck v Gharda Chemicals Ltd [Bombay High Court] – There is no presumption of ownership by the employer of inventions made by employees and there must be an obligation to invent. The managing director's management rights do not give rise to an obligation to invent.
Nippon Steel Corporation v. Controller of Patents [Delhi High Court, 2025] – Employment agreements can be genuine evidence of rights under section 7(2). It can be reasonable to interpret corporate IP policies and employment contracts in a commercially practical way. This can include where the inventor has died.
The Controller's decision in Nippon Steel was overturned on appeal. Where there is an employment agreement of a general nature without a specific provision for assigning IP then this will not satisfy section 68. Section 68 requires a written assignment with full terms. The Controller took a strict approach but the High Court took a commercially practical approach. This shows that the quality of the drafting will determine which side of the line a clause falls on.
Practical Implications: Prompt Disclosure and the Evidential Gap
However, ownership of inventions will be determined by the employer based on the assignment clause and whether they can demonstrate the invention falls within the scope outlined in the clause. This therefore makes timely disclosure vital.
With employees working remotely or in a hybrid model, the employer will no longer have the inference that inventions created on the company premises and using company equipment will automatically belong to the employer. They will need to have contemporaneous documentation showing when the invention was created, what resources were used and who the contributors were. This is achieved through having an invention disclosure process. The assignment obligation is triggered at the time it is identified and therefore there will be evidence of this.
If the invention has been developed by an Indian subsidiary/GCC, the assignment to the Indian entity will not automatically assign the IP to the foreign parent. There needs to be a secondary assignment/licence put in place which will follow the rules on FEMA and transfer pricing. The assignment clause in the employment agreement will be the initial step in the assignment chain. The assignment chain will only be as strong as its weakest link.
Invention-Disclosure Checklist for Businesses
The following checklist is designed to be used at the point of employee onboarding and again when an invention is disclosed. It converts the assignment clause from a static document into an operating process.
operating process.
Item | Why it matters |
| Inventorship is a question of fact; misjoinder is costly to correct after filing |
| Establishes priority and the timeline for the assignment obligation |
| Supports the “duty to invent” and scope analysis under Darius Kavasmaneck |
| Provides the basis for the specification and for the assignment schedule |
| Informs patentability and reduces the risk of a wasted filing |
| A general clause may not satisfy Section 68; Nippon Steel shows the importance of clarity |
| Separate from the employment contract; ensures Section 68 compliance and clean proof of right |
| Aligns with Section 28 and the moral-rights principle |
| Public disclosure can destroy novelty; the disclosure date is critical |
| Third-party funding may impose ownership or licensing obligations |
| A subsidiary’s ownership does not automatically transfer to the overseas parent |
| Creates an auditable chain of title for diligence and enforcement |
Conclusion
Although drafted efficiently, an assignment clause can easily appear to be pure boilerplate. The clause is relied upon to carry the full weight of the employer’s ownership. There is no default position in the Indian law to help those who have poorly drafted the assignment clause. As Darius Kavasmaneck confirms there is no automatic assignment and also confirmed by Nippon Steel that Employment Agreements can operate – as long as they are seen to be part of a clear documented chain of rights.
The following three areas are relatively simple to achieve. Ensure your assignment clause is very specific, documented properly and complies with Section 68. Treat inventorship as a matter of fact to be decided at disclosure. Moral rights remain with the assignor and so should be considered. An efficient and documented process during the disclosure period will link these three areas together. If the business has a process in place during onboarding, then the assignment clause will have done its job and secured the asset for you without causing any new issues.
Author: Priya Dutt in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney
References
Patents Act, 1970, §§ 6, 7(2), 28, 68, 69.
Patents Rules, 2003, r. 10.
Copyright Act, 1957, § 17(c).
Darius Rutton Kavasmaneck v. Gharda Chemicals Ltd., (2014) SCC OnLine Bom 1851.
Nippon Steel Corporation v. Controller of Patents, C.A.(COMM.IPD-PAT) 10/2025 (Delhi High Court, 24 December 2025).
L. Badri Narayanan & Gopal Machiraju, “The Employee’s Inventions Conundrum”, 2023 SCC OnLine Blog Exp 4.
Khurana & Khurana, “Patent Ownership in Employee Inventions: Drafting Assignment Clauses That Survive Audit and Litigation” (12 August 2026).
S.S. Rana & Co., “Proof of Right in Indian Patent Filings: Delhi High Court Brings Much-Needed Clarity for Employers” (28 January 2026).
Obhan & Associates, “Defining Patent Ownership in India: Employment Contracts as Valid Proof of Right” (2026).
Nasscom Community, “Who Owns the Code? IP Assignment When an India GCC Does the R&D” (19 October 2026).
K&S Partners, “Drafting IP Assignment Clauses in India: Copyright, Patents and Contractor Agreements” (30 October 2026).
Asia IP, “Challenges with adding or removing an inventor in a filed Indian patent application” (30 November 2022).
Justice N. Rajagopala Ayyangar, Report on the Revision of the Patents Law (1959).
WIPO Lex, “Moral Rights of an Inventor”.
NIHSAD, “Check-List for Invention/IP Disclosure (Confidential)” (2018).
Grata Fund, “Rights to Service-Related Works and Inventions in India” (9 August 2026)
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