Work for Hire

For Copyrights

• The Copyright Act (17 U.S.C. § 101) defines work made for hire as: (a) a work prepared by an employee within the scope of employment
• OR (b) a work specially ordered or commissioned for use in one of nine specific categories (as part of a collective work; as a contribution to a motion picture or other audiovisual work; as a translation; as a supplementary work; as a compilation; as an instructional text; as a test; as answer material for a test; as an atlas) IF the parties agree in a written instrument signed by them
• Copyright in a work made for hire belongs to the employer or commissioning party as the 'author'

For Patents

• There is NO automatic work-for-hire doctrine in US patent law
• The patent initially vests in the human inventor(s)
• An employer does NOT automatically own an employee's patent
• Stanford v. Roche (S.Ct. 2011) confirmed: 'Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor. The inventor is the presumptive owner'

How Employers Obtain Patent Rights

• (a) written assignment agreement: employee assigns future inventions to employer (pre-invention assignment agreement, PIAA or PRAIA)
• (b) implied assignment (shop right): employer gets a non-exclusive, royalty-free license to use the invention if employee used employer's resources, time, or facilities

Typical Piaa Provisions

• (a) ASSIGNMENT OF FUTURE INVENTIONS: employee agrees to assign all inventions made during employment that: relate to the employer's current or anticipated business
• Result from work performed for the employer
• Are made using employer's resources (time, equipment, facilities, information)
• (b) DISCLOSURE OBLIGATION: employee must promptly disclose all inventions to the employer
• Even if employee believes the invention is personal and outside the agreement
• (c) ASSISTANCE OBLIGATION: employee must assist employer in obtaining patents
• Sign patent applications
• Execute assignments
• Cooperate with prosecution
• (d) CONFIDENTIALITY: related NDA provisions protecting employer's trade secrets

State Law Limitations — Statutory Carve-outs

• Several states limit what an employer can claim through PIAAs
• CALIFORNIA (Labor Code § 2870): employer cannot claim inventions for which: NO employer equipment, supplies, facilities, or trade secret information was used
• AND developed entirely on employee's own time
• AND do not relate to employer's business or anticipated R&D
• AND do not result from any work performed by employee for employer
• ALL FOUR CONDITIONS must be met for the invention to be the employee's
• Minnesota, Washington (RCW 49.44.140), North Carolina, Delaware have similar statutes

Best Practices for Employers

• PIAA should acknowledge state law limitations
• Narrow scope to what is legally permissible
• Use clear definitions of 'related to business'
• Review and update as company's business evolves

Best Practices for Employees

• Carefully review PIAA before signing
• Disclose pre-existing inventions to carve out existing IP
• Document side projects to show they meet carve-out criteria.

Default Rule for Patent Inventions

• For patents, the human inventor always starts with ownership
• If an independent contractor invents something, the contractor owns the patent unless there is a written assignment
• The hiring party does NOT get automatic ownership merely by paying for the contractor's work

Default Rule for Copyrights

• Work made for hire for contractors requires: (a) written agreement designating the work as 'work made for hire'
• AND (b) the work must fall into one of the nine specific copyright categories in § 101
• If these conditions are not met, the contractor owns the copyright
• Often, the work doesn't fall into a § 101 category (e.g., a software program written by a contractor is NOT on the list of nine categories)
• Result: copyright in the software belongs to the contractor unless there is a separate written assignment

Common Mistakes

• Assuming contractor work is automatically owned by the hiring company
• Using oral agreements or email confirmations instead of written assignments
• Failing to obtain assignments before the contractor becomes unavailable or disputes arise

Contractor Patent Assignment

• The hiring party should obtain a written patent assignment BEFORE work begins
• Include in the services agreement: present tense assignment ('Contractor hereby assigns') rather than an agreement to assign in the future (which might require further action)

Immigration Status Note

• Some contractors are on visa status that limits their ability to file as sole inventors
• Employer sponsorship may be needed

Shop Right Requirements

• The employee must have: (a) used the employer's time, facilities, equipment, or materials
• OR (b) developed the invention while performing the employer's work
• The employee is the inventor and owns the patent
• But the employer gets a royalty-free license to practice the invention

Non-exclusive

• The employer cannot exclude others
• The employee/inventor retains the right to license others

Irrevocable

• The shop right is permanent — it cannot be revoked by the employee/inventor
• No injunction against employer

What Shop Right Does not Give

• Ownership of the patent
• The right to exclude others
• The right to license the technology to third parties
• The right to take the license in a company transaction (shop rights typically do NOT transfer with a company sale — they belong to the original employer entity, not successors)

Practical Impact

• Shop right arises when employer does NOT have a PIAA
• Shop right prevents the employer from being sued for infringement but does not give full ownership
• A startup that failed to get employee assignments may only have shop rights — making the patents useless as assets (cannot be pledged as collateral; do not transfer in an acquisition) unless the inventors later assign

Estoppel and Equitable Shop Right

• Courts may also imply shop rights from the employee's conduct in assisting the employer in using the invention
• Cases of employer reasonable reliance.

California Labor Code § 2870 — Most Protective

• Four-part test for employee-owned inventions (must meet ALL): entirely on employee's own time
• No employer equipment, supplies, facilities, or trade secret information used
• Does not relate to employer's current or reasonably anticipated business activities
• Does not result from any work performed by employee for employer

Practical Application

• A software engineer at a tech company who codes a mobile app at home on personal equipment: does the app relate to the employer's business? (broad question)
• Does it use any confidential employer information? (even mental knowledge of internal systems could trigger this)
• A strict reading makes California carve-outs narrow for tech employees whose employer is broadly in 'technology'

Disclosure Requirement

• California employers must provide employees with a copy of Labor Code § 2870
• Some employers include a notice in the PIAA

Washington Rcw 49.44.140

• Similar to California
• Additional requirement: employer must provide written notice of the law to employees

Non-compete Interaction

• In states that ban non-competes (California), employees leave freely but PIAAs remain enforceable
• An employee who leaves and continues working on a project started at the prior employer must carefully evaluate ownership

Startup Founders

• Founders often sign PIAAs at prior employers
• Inventions conceived while still employed may be owned by the prior employer regardless of when filed
• A gap between prior employment and the startup's incorporation may be important
• Best practice: have founders disclose all prior work and obtain clearance letters from prior employers.