Home > Legal Library > Article




Join Matindale-Hubbell Connected


Intellectual Property Rights and Ownership




by:
Joseph R. Falcon
Barley Snyder - Malvern Office

 
November 23, 2012

Previously published on November 20, 2012

Intellectual property, like real property, has monetary value, and an educational institution should not be immune from realizing the value of intellectual property they currently having or may acquire in the future.  In fact, by appropriately managing intellectual property rights, the institution may create opportunities to grow, protect, and exploit these rights for commercial value.  For educational institutions, intellectual property may even assist in funding research and/or foster innovation through patent protection.  For instance, an educational institution that owns patent protected inventions has the right to exclude others from making, using or selling the invention throughout the United States for life of the patent, giving that institution an advantage over competitors and providing potential revenue for future research through technology transfer.  To realize the full value of its intellectual property, the institution must own it. Unfortunately, defining ownership is never easy, especially under an employee-employer relationship.

In the United States, the inventor is generally the applicant and owner of the invention. Under certain circumstances, an employer may lay claim to the invention created by the employee.  If an employee is hired to invent and the employer can demonstrate such duties were clearly spelled out for the employee in writing, the employer may claim ownership of the invention through assignment, as long as the employer can demonstrate the invention was created within the scope of the employee’s employment.  However, inventions are not always created within a defined scope of employment. It has been found that the mere existence of an employer-employee relationship does not of itself entitle the employer to an assignment of any inventions, even if that employee devises the invention during their employment. There are situations where the employee may perceive that his/her actions in creating the invention were outside the scope of his/her employment, and the employee wants to retain ownership in the invention.  Hence, there is no meeting of the minds between the employee and employer to who owns the intellectual property.   

Certain business policies and conduct ensure that ownership of intellectual property is properly acquired by the institution.  Employment agreements and assignment provisions effectively transfer patent rights to the employer.  Through these agreements, or through clear and concise policies (i.e. employee handbooks), it may be required that the employee assign his or her intellectual property rights to the institution. In certain cases, the employee may be required to keep all proprietary information confidential.  In another circumstance, the employee may be required to disclose all creative ideas made during employment.  However, some institutions fail to require disclosure or even educate their employees about intellectual property.  Even worse, some do not even establish contractual relationships with their employees or even inform them on company policies affecting the same.  As a result, the aforementioned situation occurs, and the employee believes they are the rightful owner to the invention that are to be assigned to the employer.

There are certain situations where ownership questions occur and the employer may only be left with licensing rights to the invention. Even in the absence of an express agreement to assign, the employment contract may not preclude the employer as a matter of law from asserting a claim to the employee's invention. Even in situations where the employee owns the invention and a resulting patent, the employer may have a "shop right" to the invention, where the employer will have a license to use the invention without paying the employee any additional compensation as royalties.  As an implied license, shop rights allow the employer and its employees to use the patented invention.  However, this is a limited right and restricted to a specific use of the invention.

In many circumstances, it is not satisfactory that the employer merely retain a shop right. Rather, the employer will want to avert uncertain ownership and preserve the rights in intellectual property developed by the employee under the scope of their employment.  In order to clear any uncertainty of ownership, the employer should require employees to sign a written agreement with assignment provisions that clearly define ownership, or at minimum, provide the employee with employment handbooks having assignment provisions, in order to avert unintentional ownership issues.  Even with a contract in place, the employer should clearly point out and explain its intellectual property policies to its employees.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

View More Library Documents By...

 
 
Barley Snyder Overview