Work for Hire and Patents

The work made for hire doctrine is a copyright concept — it has NO equivalent in patent law: COPYRIGHT WORK FOR HIRE (17 U.S.C. § 101): in copyright, an employer automatically owns a 'work made for hire' — a work prepared by an employee within the scope of employment; no written assignment is needed; the employer is deemed the 'author' from inception; PATENT LAW IS DIFFERENT: in patent law, the inventor is ALWAYS the first and original owner of the patent; 35 U.S.C. § 115: the patent application must be filed by the actual inventors; the inventors are the ones who conceived of the claimed invention; there is no doctrine in patent law that automatically vests ownership in the employer simply because the inventor was employed; WHY THE DIFFERENCE MATTERS: an employer who fails to obtain a written assignment from the inventor has NO patent rights — not even if the invention was made on company time, with company equipment, for a company project; the inventor can do whatever they want with the invention, including assigning it to a competitor or asserting it against the company; COMMON MISCONCEPTION: many startups and companies assume they own patents invented by their employees simply because of the employment relationship — this assumption is wrong and has led to disastrous outcomes; EXCEPTION — HIRED-TO-INVENT: even without a written IAA, if an employee is specifically hired to invent and does invent the thing they were hired to invent, the employer may own the invention under the 'hired-to-invent' doctrine; but this is a narrow exception, not the general rule; HOW TO SECURE PATENT OWNERSHIP: employers must use written Employment Invention Assignment Agreements (IAAs) with all employees and contractors who may create patentable inventions.

The hired-to-invent doctrine is the closest patent equivalent to the copyright work-for-hire concept: HIRED-TO-INVENT RULE: if an employee is specifically engaged to INVENT a particular device, process, or result, the employer owns the resulting patent outright — the inventor-employee holds the legal title in trust for the employer; the key is that inventing was the specific purpose of the employment; EXAMPLES WHERE HIRED-TO-INVENT APPLIES: employee is a R&D scientist specifically hired to develop a new polymer formulation; employee is a product engineer whose job description and task assignment was to design a specific product feature; startup hires a CTO explicitly to develop a novel algorithm; EXAMPLES WHERE HIRED-TO-INVENT DOES NOT APPLY: a software engineer hired to write code who, while employed, invents a new unrelated method; a general employee who makes a valuable invention in their field of expertise but whose core job duties did not include inventing in that area; an employee who invents something outside the scope of their job responsibilities; CRITICAL LIMITATION: hired-to-invent applies only if: (a) inventing was the employee's primary or explicit duty; AND (b) the invention is the thing they were hired to invent; CONTRAST WITH IAA: an IAA is broader — it can cover all inventions made during employment that relate to the employer's business, even if not in the employee's specific job duties; hired-to-invent is a narrow fallback when no IAA exists; EMPLOYER'S PREFERRED APPROACH: never rely on hired-to-invent; always use a comprehensive written IAA; hired-to-invent leaves too much room for dispute about the scope of the employment duty.

A properly drafted IAA is the foundation of a company's patent ownership rights: SCOPE OF INVENTIONS COVERED: inventions made DURING EMPLOYMENT; inventions RELATED TO the employer's current or reasonably anticipated future business; inventions resulting from work performed FOR the employer; inventions made using the employer's resources, time, or trade secrets; ASSIGNMENT LANGUAGE — FILMTEC RULE: use 'employee HEREBY ASSIGNS' (not 'agrees to assign'); 'hereby assigns' creates a present automatic assignment at the moment of conception — vests in employer without further action; 'agrees to assign' creates only a contractual obligation requiring a future assignment act; DISCLOSURE OBLIGATION: employee must promptly disclose all inventions that fall within the IAA's scope; disclosure allows the employer to decide whether to pursue patent protection; TIME LIMIT FOR DISCLOSURE: specify a time period (e.g., within 30 days of conception or reduction to practice); POST-EMPLOYMENT: inventions conceived AFTER employment terminates do NOT fall under the IAA (absent specific provisions); best practice: include a 6-12 month post-employment provision for inventions that derive from trade secrets or confidential information learned during employment; COOPERATION: employee must cooperate in executing patent applications, providing declarations, and assisting with prosecution; include obligation to do so even after employment terminates; CONSIDERATION: the employment itself is typically sufficient consideration for the IAA; if the IAA is signed after employment begins, additional consideration (bonus, salary increase) may be required in some states; STATE LAW COMPLIANCE: review California § 2870, Minnesota § 181.78, Washington, North Carolina, and Delaware limits; include a savings clause incorporating the applicable state law exceptions; attach a list of prior inventions the employee is excluding from the IAA.

The rules for independent contractors in patent law are stricter than for employees: EMPLOYEES: even without a written IAA, employers have a shop right (non-exclusive royalty-free license) to use inventions made using employer resources; the hired-to-invent doctrine may apply; IAA provides the strongest protection; INDEPENDENT CONTRACTORS: no automatic shop right arises; no hired-to-invent doctrine applies; without a written assignment, the contractor OWNS the patent even if paid to develop the technology for the client; the client has only an implied license in very limited circumstances; COPYRIGHT PARALLEL: same rule as copyright for commissioned works outside the statutory 'work for hire' categories — contractor keeps rights unless there is a written assignment; CRITICAL REQUIREMENT FOR CONTRACTORS: include an IP assignment provision in every contractor agreement; without it, the company may have no patent rights in technology it paid to have developed; COMMON SCENARIOS WHERE COMPANIES LOSE RIGHTS: hiring a developer as a 1099 to build the company's core product without an assignment agreement; engaging a design firm to invent a product without assignment provisions; using offshore contractors without proper assignment clauses; CONSULTANT-INVENTOR PROBLEM: Stanford v. Roche (S.Ct. 2011) — a Stanford researcher signed a consulting agreement with Cetus containing an automatic 'hereby assign' clause for inventions made during consulting; the researcher's earlier Stanford employment agreement only contained an 'agree to assign' clause; the Supreme Court held the 'hereby assign' in the Cetus agreement gave Roche (successor to Cetus) valid title, defeating Stanford's claim; PRACTICAL LESSON: a later 'hereby assign' in a contractor agreement defeats an earlier 'agree to assign' in an employment agreement.

Patent ownership disputes between employers and employees are litigated under federal and state law: FEDERAL COURT JURISDICTION: disputes about ownership of a federal patent application or patent involve federal patent law; federal courts have jurisdiction; but the underlying contract and employment law questions are state law; BURDEN OF PROOF: the party claiming ownership must prove entitlement; the inventor is presumed the initial owner; EMPLOYER'S AVAILABLE THEORIES (absent written assignment): (a) hired-to-invent (narrow); (b) shop right (non-exclusive license only, no ownership); (c) constructive trust (equity — if employee breached a duty); (d) breach of contract (if the employment agreement had an obligation to assign even without 'hereby assigns' language); INVENTOR'S DEFENSES: no applicable IAA; invention made outside scope of employment; invention made entirely on personal time without employer resources; state law exception (California § 2870); REMEDIES IF EMPLOYER WINS: court can order transfer of title; employer can be substituted as applicant/owner in a pending application; REMEDIES IF INVENTOR WINS: inventor retains title; employer may have a shop right if inventor used employer resources; employer has no patent rights if no shop right arises; AVOIDING DISPUTES: conduct IP audits when hiring key employees; review whether prior employer IAAs are still in effect; require disclosure and new assignment agreements when employees move between employers; document that inventions were made within the scope of employment.