Patent Laws when using Consultants

You are the Director of IT for a mid-sized company.   You hire a consultant and, while doing work for you, they create an incredible new invention.  Since you hired them and paid them for work that resulted in the invention your firm owns it, right?  When it comes to patent laws, you should pause and look at the facts.

What a lot of technology people don’t realize is, that if you are not careful, your contractors may own the rights to the work they produce.  When a consultant or employee develops an invention, trade secrets or processes, it is not protected by copyright law, but may be protected by patent laws.   But, who will be entitled to the patent? Who owns the invention, process, or other trade secret information?  In order to protect yourself/your company, you need a well-written invention assignment clause that will settle that issue.

Note:  This is different than the Work-for-Hire provisions which we discussed in a separate blog, Part 1 – Do You Own the Work of Your Consultants and Employees? (Copyright Laws)

The invention assignment clauses assign the inventor’s right, title and interest in the invention to another party.  You will want to consider this provision for both consultants and employees.  In the employment relationship, the clause will assign and transfer all rights to the employer. Here is an example of how an invention assignment clause might read:

Employee agrees that all inventions s/he develops;  a) using Company’s equipment, supplies or trade secrets; b) resulting from work s/he performs for Company; or c) relates to Company’s current or anticipated research and development will be Company’s sole and exclusive property, and I hereby assign all right, title and interest in same to Company.

Note that the assignment does not cover inventions made by the employee or contractor on his or her own time, using his or her own resources that do not involve any misappropriation of the employer’s trade secrets or other confidential information. Note also, that while the above only covers actual inventions, your attorney might want to provide language that is properly worded to cover ideas.

As always, I recommend you check with your attorney in the state you operate to obtain language that will meet your state laws and requirements on patent laws.  Some states have imposed restrictions on invention assignment clauses.

This blog is not legal advice and does not create an attorney-client relationship!

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