Do You Own "Shop Right" to Your Employee's Invention?

Posted on October 12, 2009 by Joseph Falcon

Employment agreements and assignment provisions may transfer patent rights to the employer. Even in the absence of an express agreement to assign from the employment contract will not preclude the employer as a matter of law from asserting a claim to the employee's invention. See Agawam Co. v. Jordan, 74 U.S. (7 Wall.) 583, 19 L.Ed. 177 (1868).   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. See, Aetna-Standard Engineering Co. v. Rowland, 343 Pa. Super. 64, 71, 493 A.2d 1375 (1985).  As an implied license, shop rights allow the employer, and its employees, to use the patented invention. This is a limited right, restricted to a proximate use of the patented invention. 

Several factors will be examined in order to determine if a “shop right” exists, including: (1) the extent the employer provided wages, materials, tools, and a work place; (2) the time used (on the clock or off) by the employee for the development of the invention; (3) the existence of contractual relationship (written or unwritten) between the employer and employee; and (4) the employees consent and acceptability that the employer use the invention. In general, the employer will retain a shop right when the employee devises the invention on the employer's time and at the latter's expense, using his materials and facilities, and allows him to use the invention without special compensation. See Dubilier Condenser, supra; Gill v. United States, 160 U.S. 426, 16 S.Ct. 322, 40 L.Ed. 480 (1896).

                In order to clear any uncertainty of patent/invention ownership, employers should require employees to sign written patent assignment agreements.

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Do You Own Your Employee's Invention?

Posted on October 6, 2009 by Joseph Falcon

Owning a patent protected invention provides the right to exclude others from making, using or selling the invention throughout the United States for life of the patent. However, determining the ownership of those rights may be complicated. Generally, the inventor owns all rights to an invention. But, if the inventor is an employee, an employer may lay claim to the invention under certain circumstances. For instance, if an employee is hired to invent and the employer can demonstrate that this was clearly spelled out for the employee, the employer will be deemed the owner of any invention within the scope of the employee’s employment. In United States v. Dubilier Condenser Corp., 289 U.S. 178, 53 S.Ct. 554, 77 L.Ed. 1114 (1933), however, the Court stated that the mere existence of an employer-employee relationship does not of itself entitle the employer to an assignment of any inventions which the employee devises during the employment.

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