Who owns patent rights--employers or employees?

• Position: Inventions - Brief Article

Employers may assume they have rights to market or produce an employee invention, but that is not always the case, indicates Jeffry W. Smith, a patent attorney at the Lathrop & Clark law firm, Madison, Wis. "Employee inventors present unique problems to their employers. Ideally, there is an express written agreement that assigns patent rights for inventions made on the job to the employer. But if no written agreement exists, the employee owns any patent rights in his or her invention."

The perils of having no written agreement far outweigh the effort required to obtain such an agreement. "Even if the employer wins a dispute over patent ownership, considerable resources and employee good will could be lost," he points out.

Most litigation involving employer patent rights does not involve a written assignment of rights. "The potential for a patentable invention is often ignored at the time of hiring, and the question concerning the ownership of patent rights does not arise until the invention of a marketable or valuable product or process occurs," Smith explains. At that point, it may be too late for the employer to claim rights to the invention. "If an employee signs an agreement assigning his or her rights in any invention to the company, the company owns it. But these agreements should be executed by all employees at the time they are hired and as a condition for employment."

In some cases, the courts have found that written agreements to assign patents, signed after the employee begins working, are not enforceable. "The key is whether the employee received adequate compensation for assigning those rights. Merely receiving a salary or hourly wage is not sufficient."

There are certain circumstances under which current employees can assign present or future patent rights to the employer. "Periodic bonuses, promotions, incentive programs, and even separation agreements have [been] found to be appropriate compensation for assigning patent rights...