At a basic level, there is a general presumption that an invention belongs to its creator. This arises from the belief that ownership comes from invention, thus the law generally rewards a creator for contributing to the “progress of science and the useful arts.” However, there are some exceptions to this presumption, one of which may arise in the context of employment. An employee may own the patent rights to an invention he/she created even though it was conceived and/or reduced to practice during employment, but employers may also have an interest in the invention or full ownership in certain circumstances. Among others, there are two (2) specific circumstances that may alter the ownership of an invention that was created in the course of employment: (i) an employer’s “shop right”; and (ii) a contract.
Employer’s “Shop Right”
A “shop right” may provide an employer with an interest in an employee’s invention. This interest may then permit the employer to use the employee’s patented invention without infringement liability, but the employer will likely not be able to take full ownership of the invention. This “right” arises when the circumstances require and is based upon an assessment of the “totality of the circumstances.” Factors a court may assess when reviewing the circumstances surrounding the creation and use of an invention include but are not limited to (i) whether the inventor asserted a right to compensation for the use of the invention at any point; (ii) whether the inventor otherwise consented to the invention’s use; and (iii) use of employer’s money, time, facilities, or materials to develop the invention. Furthermore, the scope of this right may be determined by (i) the nature of the employer’s business; (ii) the character of the invention; (iii) the circumstances that created it; and (iv) the relation, conduct, and intention of the parties. For example, if an employee uses the employer’s resources to create the invention, then the employer, at minimum, may have an interest in the invention.
A contract between the parties may also result in an employer having ownership rights in an employee’s invention. An inventor has the ability to assign rights in a patented invention to another individual and/or entity. Two (2) types of contracts that may give an employer such interest in or right to possess an employee’s invention are (i) an express contract where an employee freely consents to assign all rights in an invention to the employer; or (ii) an implied-in-fact contract where an agreement is inferred from the conduct of the parties, such as when an employee is hired to invent or solve a problem for the employer. The mere existence of an employer-employee relationship does not necessarily entitle an employer to immediate ownership of an invention. Rather, a valid contract, in its most basic form, requires an offer, acceptance, consideration, and mutual assent to the terms essential to the contract. Without one or more of these elements, a valid and enforceable contract likely does not exist.
If you feel your rights have been violated or if you have any other questions regarding your employment rights, please contact the experienced Birmingham employment law attorneys at Wrady Michel & King. You can contact us either online or by calling us at (205) 319-9724. We are here to serve you.