Employees' Inventions: Who Owns What Rights?

Often, when an employee is hired for a position that may entail inventive work ' such as tasks completed as an engineer or research scientist ' the employment agreement includes a clause relating to assignment of inventions. Typically, the employee agrees to assign to his employer all inventions that he develops during his employment that relate to his work, or, more broadly, to the employer's business. Agreements of this kind are typically enforceable. 'The right of an employer to contract for patentable discoveries made by its employees within certain limits is well recognized.' Guth v. Minnesota Mining and Mfg., 72 F.2d 385, 387 (7th Cir. 1934). However, terms of an agreement that are overreaching are not enforceable. For example, a term that requires assignment of an invention conceived after the inventor is no longer an employee may not be enforceable. Id. at 388-89. As another example, if a former employee develops improvements on patented inventions that he had assigned to his former employer, the latter may have no rights in any patents on the improvements. Crites v. Radtke, 28 F.Supp. 282 (S.D.N.Y. 1939).

What happens when there is no written assignment agreement? The answer depends on the nature of the employment contract. Unless the contract of employment imposes an obligation to assign, either expressly or by implication, the employer does not have a right to ownership of the invention. The general rule is that an employee's invention belongs to the employee. As the Supreme Court stated more than 100 years ago, 'An employee ' may exercise his inventive facilities in any direction he chooses, with the assurance that whatever invention he may thus conceive and perfect is his individual property.' Solomons v. United States, 137 U.S. 342, 346 (1890). For example, in Hapgood v. Hewitt, the inventor, Hewitt, had been hired as a superintendent of the manufacturing department of a plow manufacturer, Hapgood and Co. Hapgood v. Hewitt, 119 U.S. 226 (1886). In the course of his work, he developed an improved plow design. He later left the company, patented the improvements he had developed at Hapgood and Co., and threatened to sue the company for patent infringement. The Supreme Court found that, because there was no agreement requiring Hewitt to assign his patent to Hapgood, the company had no rights in the invention.