Assignment of Intellectual Property Rights in Employment Contracts

Intellectual Property, namely patents, trademarks and copyrights are some of a company’s most valuable business assets, and accordingly, care should be taken to ensure that there is a clear chain of title with respect to ownership of these assets and that it is identified and determined at the onset of these creations. Unfortunately, there are many instances where ownership issues arises due to either poor planning on the part of the company, vague definitions as to what qualifies as a company asset and/or failure to have the necessary documents in place to automatically transfer an employee’s contribution directly to the company.

Imagine a situation in which a small sized company has an employee that conceives of a new invention that is outside of the scope of the company’s business however the company is interested in now developing the invention. Imagine another situation, where a marketing group is tasked with creating a new slogan and brand ahead of their next product release. Now imagine, that in each of these situations, if an employment contract even exists, there is no mention about who owns any intellectual property created during the employment, or any disclosure requirements about a new invention, or logo etc.

Under the United States Patent System, all inventions are initially owned by the inventors that were responsible for conceiving and reducing the invention to practice. Furthermore, upon submission of a Patent application, all inventors must be listed on the application. Trademark applications may be submitted by an individual, a partnership or a company; finally copyright applications must list the author of the work that was created. As such, there is no getting around the fact that unless the transfer of intellectual property rights is clearly defined, that a company may not end up owning the creation.

In spite of all of these potential pitfalls with ownership, there are some simple steps that a company may take to ensure that any and all patents, trademarks and copyrights are conveyed to the company at the time of creation, and that the company owns all rights that may result from a patent application, trademark application and/or copyright application.

First, it is imperative for a company to have a standard employment contract for each new employee to sign prior to undertaking any projects. Second, well an employment contract is important, if the contract is void of any sections that address intellectual property, and specifically an assignment of intellectual property rights clause, then you will still run into some of the same problems.

A sample assignment of intellectual property rights clause may read as follows:

Assignment of Inventions. I agree to disclose promptly and fully to the Company and to no one else any Development that results from tasks assigned to me by the Company or results from the use of the Company’s time, materials or facilities at any time or times during my employment, whether such Development is made, conceived, discovered or reduced to practice alone or with another. Such Developments and the benefits thereof shall immediately become the sole and absolute property of the Company. I hereby assign any rights I may have or acquire in the Developments and benefits and/or rights resulting there­from to the Company without further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary plans and models) to the Company. The determination as to whether an invention is in the Company’s business or field of interest will be made solely by an authorized representative of the Company.

The above provides some of the core language that should be present in these sections, especially mentioning that the employee “hereby assigns any rights”. Therefore, utilizing some version of the above clause will help avoid issues that may arise with the intellectual property of a company.