Most companies assume that any intellectual property (IP) created by their employees in connection with their job duties automatically become the employer’s property.  This assumption, however, is often incorrect, and can lead to lengthy and costly disputes.  Generally, an employer’s right to IP created by an employee depends on the circumstances of the employee’s hire and whether the employer and employee entered into an agreement that fully assigns the IP to the employer.

Companies seeking to avoid disputes and secure all IP rights to the inventions created by their employees should ensure that the employees have signed an Inventions Assignment Agreement (sometimes also known as Assignment of Inventions Agreement).

Without an agreement, although specific laws differ from state to state, the following general principles apply: (1) for employees employed to invent (i.e. engineers and scientists), the inventions are generally owned by the employer even if the employee did not sign an agreement;  (2) for general employees (i.e. sales and marketing), who have not been hired specifically to invent, the general rule is that the employee owns such inventions if there is no agreement that provides otherwise; and (3) for general employees whose inventions do not relate to the business of the employer, these inventions are generally owned by the employee if no invention assignment agreement is signed.

However, the above common law rights may be superseded there is an express and enforceable Inventions Assignment Agreement.  Accordingly, it is in the company’s best interest to require its employees to sign an agreement that clearly sets forth the employer’s rights in and to the inventions.

A carefully drafted Inventions Assignment Agreement would help ensure the employee-inventor’s rights are assigned to the company.  Without a clear agreement on the assignment of inventions, the employer is taking a large risk which can result in a dispute over ownership.