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Small businesses make hiring decisions based not just on what an employee brings to the table today, but what he or she can bring to the company in the future. We want innovators with new ideas and meaningful contributions.
So what if those good ideas are patentable? Do they belong to you or your employee? Well that all depends on what kind of agreements you have in place before the invention.
As a legal baseline, inventors retain all patent rights until they transfer, assign, or sell them to another party. And no law requires employees to assign patent rights to their employers. So without a prior agreement, your employees' ideas will likely remain their own, even if they came up with them on company time.
Note that this could be different under the "shop rights" doctrine, which gives employers nonexclusive rights to use technology if it provided funding or work time specifically to develop the technology. And even then the employer's rights are only to use; they do not have exclusive patent rights to the innovation.
Assignment by Assignment
Employers could have rights to employees' inventions through a prior agreement. An invention-assignment agreement, executed upon hiring or later, can require the employee to sign over all work-related inventions to you, although some states have restrictive laws which prohibit requiring employees to assign inventions conceived outside of work.
As much as possible, these agreements should be executed before the employee begins work. If the agreement is made later, you may have to provide the employee some "consideration" (like royalties or stock options) in order to acquire patent rights to his or her invention.
As with anything in business, having a consistent employee policy on inventions and patents -- in writing and from the start -- will save you from some serious headaches down the road. If you'd like assistance crafting an invention-assignment agreement for new or existing employees, you can contact an intellectual property attorney near you.
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