Workers and Patents

Beautiful Hanging LanternsThe rules discussed here are for design patents—the type of patent most likely to apply to crafts works. However, the same rules would apply for utility patents, which are for functional, not ornamental innovations. (1) You automatically own any patentable rights in a design if it was created by an employee (not an independent contractor) who was hired to design. (2) You can alternately gain ownership of patentable rights in a design if the worker (whether employee or independent contractor) signs a written agreement transferring the rights to you. An employer may also obtain more limited rights, known as shop rights, to employees’ designs in certain specific circumstances.

  • Employed to design. If you hire someone to create designs, or if designing is one of the worker’s job functions, you will own the patent rights to any designs created by the worker during the course of the employment. Despite this principle—known as the “hired to invent” rule—most businesses prefer to use a written agreement because it is easier to enforce.
  • Assignment agreements. You can assure your ownership of any patentable designs by requiring employees or independent contractors to assign these rights to you. When these arrangements are used with employees, they are sometimes called “pre-invention” agreements, because the worker is agreeing to assign patent rights before the design is actually created. The following clause can be used for an employee:

Assignment of Innovations. Employee agrees that any design, invention, process, system or patentable creation (Innovation) conceived, originated, discovered or developed in whole or in part by Employee: (1) as a result of any work performed by Employee with Company’s equipment, supplies, facilities, trade secret information or other Company resources; or (2) on Company’s time shall be the sole and exclusive property of Company, provided that the Innovation either relates to Company’s business or anticipated research. Employee agrees to sign and deliver to Company (either during or subsequent to his employment) such documents as Company considers desirable to evidence: (1) the assignment to Company of all rights of Employee, if any, in any such Innovation; and (2) Company’s ownership of such Innovations. And in the event Company is unable to secure Employee’s signature on any -necessary document, Employee appoints Company (and each of its duly authorized officers and agents) as his agent and attorney-in-fact, to act for and in his behalf and to execute and file any such document. Employee agrees to promptly disclose in writing to Company all such designs or discoveries made or learned by Employee during the period of employment that are related to Company’s business, that result from tasks assigned to Employee by Company or from the use of facilities owned or otherwise acquired by Company.

Several states including California, Illinois, Minnesota, North Carolina and Washington have laws that limit pre-invention assignments to employers. These laws prevent an employer from claiming ownership of a patentable creation if the creation is created with employee resources, doesn’t result from work performed for an employer, and does not relate to the employer’s business.

Shop rights. Even though you may not acquire ownership of a patent or trade secret created by an employee or independent contractor, you may acquire a limited right to use these innovations, known as a shop right. With a shop right, the worker retains ownership of the patent or trade secret, but the employer has a right to use it without paying the worker. A shop right can only arise if the worker uses the employer’s resources (materials, supplies, time) to create an innovation. (Other circumstances may be relevant, but use of employer resources is the most important criterion.)