Employers, Employees, and Independent Contractors: Who Owns The Patent?

Here’s a common situation and question I often receive: For inventors and individuals who work as a part of a larger company, who owns the invention (and patent)? The individual or the company?

The basic rules on ownership of inventions (and any patents based on the invention) are well established.  The starting place is that an individual owns the patent rights of which he or she is a sole or joint inventor.  The inventor must have conceived the invention.  He or she must have formed, in his or her mind, a definite and permanent idea of the complete and operative invention and how to make it.

However, there are two exceptions and one limitation to this general rule: 1) express written contracts, 2) employed to invent doctrine, and 3) the shop right doctrine.

Under the express written contracts exception, employees or other individuals who expressly grant their rights to their employer (in writing) will not own the invention or patent.  Instead, the employer will own it.  This is the most often applied exception.  When companies hire employees, the companies often have the employees sign an agreement with an express assignment provision.  This way, any new technologies invented by the employees will belong to the employer.

Under the employed to invent doctrine, the employer will own the invention if the employer hired the employee to exercise his or her “inventive faculties” or to solve a specific problem.  There are many factors in finding whether the doctrine applies, and generally the most important factor is the specificity of the task assigned to the employee.  It is generally not enough if the employee was hired generally or later directed to do research.

Finally, the “shop right” doctrine (also called the implied license doctrine) acts as a limitation on the inventor’s rights to sue.  The doctrine provides that an employee who uses his employer’s resources to conceive of an invention must give his employer a non-exclusive, royalty-free, nontransferable license to make or use the invention.  This doctrine does not affect the ownership of the invention or patent, but rather constitutes a defense to a charge of patent infringement by the employee against the employer.