Who Owns Patent Rights: Employer or Inventor?

Rich Goldstein

Founder & Principal Patent Attorney

I know it can be pretty confusing on how to proceed if you’ve recently made a mindblowing discovery while working under a company. There is the issue of figuring out, as employee inventors, who owns the patent rights and whether your employer can claim ownership. 

Through my years of dealing with and researching areas including intellectual property, assigned ownership, assignment agreement topics, patent application, patent protection, patent infringement, and potential legal disputes, I have uncovered several angles to these situations. 

In this article, I’ll share my insights on patent rights under both an implied contract and an express contract, and how to secure your intellectual property. Even more important, if you’re under an employer, whether the patent rights would be owned by the employer or you, the inventor.

Who Owns Patent Rights: Employer or Inventor?

The patent rights for a new invention belong to the inventor by default unless the inventor concedes the rights to another individual. However, this rule changes when an invention is created within the employment context. Depending on the employee’s employment agreement, the employer may be granted the rights to the patent of an invention, and there would be an assignment agreement. 

A man and a woman shaking hands

When a company employs an individual to create something or solve a problem, the resulting inventions are considered to be made “within the course of employment.” They are, therefore, properties of the employer. However, while the default rule leans towards employer ownership, there are notable exceptions that can alter this scenario.

Who Is an Inventor?

In the context of patent law, an inventor is an individual who contributes to the creation and development of an invention. The inventor conceives of the idea and makes a significant and creative contribution to the conception of something described in no less than one claim in the patent application.

In some cases, multiple individuals can be considered joint inventors if their combined contributions lead to the creation of the invention. Joint inventors share the rights to the patent and should be listed on the patent application. Joint inventors are not required to have done any of the following before being eligible to be on the patent application:

  • Contributed equally
  • Contributed to every claim
  • Physically collaborated at any time

It’s important to note that inventorship is distinct from ownership. Just because an individual is an inventor does not necessarily mean they own the rights to the patent. Depending on the employment arrangement and applicable agreements, these rights belong to the inventor, the inventor’s employer, or others.

What Is Patent Ownership?

Patent ownership refers to the legal authority held by an individual or an entity to control and exercise exclusive rights over a patented formula or invention. The patent owner has the sole right to use, make, sell, offer for sale, or import the patented invention following approved patent applications.

In most patent applications where the inventor is an employee of a company, the company is seen as the applicant with the right to file and prosecute the patent application. In such cases, the inventor has no legal standing with the patent office. 

A man and a woman holding a document in a clipboard

The original patent applicant is typically assumed to be the owner of the patent application and any resulting patent by the U.S. Patent and Trademark Office (USPTO). However, the original applicant may transfer ownership of the patent to another entity after the patent has been granted, under the guidance of a patent attorney. 

Factors That Determine Patent Ownership 

Determining who should own the rights to a patent software or inventions created can involve various factors in cases where the inventor is an employee of a company. Some of these factors include: 

Scope of Employment

If the invention was created as part of an individual’s job responsibilities and within the scope of their employment, the employer might have a claim to the patent rights. However, the law would more likely assign the patent rights to the inventor if it was created outside the scope of employment, and this is an angle the patent attorney would argue.

Use of Employer Resources

If the inventor used their employer’s resources, equipment, and time to develop the invention, the employer may have more substantial ownership claims. However, if the reverse is the case, the employee will likely be granted the ownership patents. Depending on the situation, the employer may also receive an implied license to use the patent.

Employment Agreement 

Employment contracts and invention agreements can play a crucial role in determining who owns the patent. These agreements may specify how to allocate ownership, particularly if the invention’s creation occurred during employment, and for this, you would need a patent attorney. 

The Hired-To-Invent Doctrine

The hired-to-invent doctrine is a legal concept that addresses the issue of who owns the rights in employment relationships, mainly when an employee is specifically hired or contracted to create inventions as part of their job responsibilities. This doctrine aims to strike a balance between the interests of employers and employees.

The hired-to-invent doctrine assumes that if an employee is hired or contracted to create something or solve a problem, any inventions they create within the scope of their employment duties belong to the employer. Therefore, a court can assign the patent rights of the algorithm or invention to the employer. 

A man holding a paper while a woman is signing it

However, there may be exceptions to the doctrine. They include: 

  • If the employee’s work falls outside the scope of their employment duties
  • If the invention was created using personal resources
  • Or if the employment arrangement explicitly states otherwise.

Shop Rights

“Shop rights” is a legal doctrine that grants employers a non-exclusive, non-transferable, and royalty-free license to use the employee’s invention, even if the employee holds the patent rights. This means the employer can use the invention without infringing on the employee’s patent rights or paying any charges.

Shop rights often apply when an employee uses the employer’s facilities, equipment, materials, time, finances, or resources to create the invention. Note that shop rights are limited in scope. They only cover the invention’s use within the context of the employer’s business and do not extend to the employee’s personal use or the use by third parties.

Related Questions 

Do Shop Rights Transfer Ownership of a Patent to the Employer? 

No, shop rights do not transfer ownership of the invention from the employee to the employer. The employee retains the patent rights and can enforce those rights against third parties who might infringe on the patent. Shop rights only give the employer limited usage rights to the invention within the scope of their business. 

Can I Get Patent Rights if I Invent My Item at Home?

Yes, you can potentially obtain patent rights for an invention you create at home, even if you are an employee. If the invention you created at home is outside the scope of your employment duties or you developed it using your own personal resources, time, and equipment, you are likely to be the sole owner of the rights. You could also 

Can a Patent Have Multiple Owners?

Yes, a patent can have multiple owners. This arrangement is often called joint patent ownership and occurs when two or more individuals or entities share the rights and responsibilities associated with a patent. A joint patent partnership is usually a result of collaborative efforts between the partners during the invention process, implying multiple inventors. 

Conclusion 

Regarding patent ownership and whether it lies with the employer or the inventor, default rules often lean towards employer ownership. However, certain exceptions can alter this arrangement. To make matters easier, both parties must communicate agreements and duties and deeply understand the patent citation and laws. 

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