How to Get Technical Help Without Losing Your Patent Rights

I want to talk to you today about how to get technical help for your business without losing your patent rights.

I want to start out with a quiz. Let’s say you have an employee and that employee does some technical work and ends up developing a patentable invention. Who owns the rights that patentable invention? The employee or the company?

The answer is the employee.

Under US law, whoever invents the patentable invention is the owner, unless they have assigned their rights to somebody else. So if you don’t have an assignment from that employee, the employee owns the invention.

Now there is an exception where an employee was specifically hired to invent. Also, even if you the employee did not assign the patent rights to your company, the company may get what’s called a “shop right” or a non-exclusive license, but that has much more limited value than owning the patent rights.

So if you have employees, ideally what you want them to do when they start working for you is to assign the company all future patent rights that may arise in the course and scope of their employment.  Have them sign that right when they start, day one. But make it a present assignment, not just an agreement to assign in the future, but an actual present assignment.

Then, as they develop inventions, have your employees sign specific assignments for the individual patent applications.  If for some reason they refuse to sign a specific assignment (e.g., if they have left the company), you will still have that initial assignment that you can rely on and record with the Patent and Trademark Office.

The same thing is true with contractors. Just because you pay a contractor to do some work for you, it does not mean you own the patent rights for that work. Under US Patent Law, the inventor (in this case the contractor) owns the patent rights unless he or she has assigned them. So again, what you want with a contractor is a present assignment of whatever patent rights  may arise in the course and scope of their engagement.  As with employees, you would also have the contractor sign specific assignment documents for individual patent applications once those are developed.

With the initial assignments you get from employees or contractors, you want to make sure it’s a present assignment of future rights. There’s a difference between that and an agreement to assign in the future. An agreement to assign the future is a contract; it’s not a transfer of rights.  If an employee or contactor refuses to abide by an agreement to assign, then you have to file a breach of contract lawsuit and get a court order obligating them to sign an assignment.  To avoid that, you want a present assignment both for the employee and for the contractor.

Failing to take care of these assignments properly can cause real problems.  I had a client come in with a contractor agreement that he was relying on to assign the contractor’s patent rights to his company.  The agreement had a provision in it called “work for hire” that my client thought would effect the transfer of patent rights. 

The problem is that “work for hire” is a copyright doctrine.  It does not apply in patent law. You cannot rely on the work for hire doctrine to transfer patent rights. Under US copyright law, the copyrights in works created in the course and scope of employment belong to the owner, but that is not true of patent rights.  Luckily, we were able to provide a revised assignment document and got the contractor to sign it.

So, in general, we recommend that if you have employees or contractors, get a present assignment of future patent rights and then have them sign individual assignments as they create individual patent applications while doing their work for you.   It may save you a lot of headaches later.