Who owns an invention made by an employee?

Rhys Williams , a patent attorney at Abel & Imray , answers a question concerning whether the rights to an invention are owned by an employee or his employer.

Question

"I run a medium sized engineering company, RacerParts Ltd, which machines parts for racing car engines. We are an innovative company always looking for new business opportunities. I recently discovered that one of our machinists has invented a new golf club which automatically corrects for sliced shots. This clearly does not relate to our core business, but the employee (without permission) made the prototype of the golf club using our machining tools during his lunch break. I have now ascertained that the employee has filed a patent application for the invention, naming himself as applicant.

Whilst our standard employment contract makes no mention of ownership of employee inventions, the invention was made on company premises and using company equipment and materials. Surely the rights to this invention should therefore belong to RacerParts Ltd?"

Answer

According to UK law, the invention made by your employee will only belong to RacerParts Ltd, his employer, if it was made under either one of two different scenarios. In any other circumstances, the employee will rightfully own the invention.

The first scenario is when the invention was made in the course of the employee’s normal duties or in the course of duties specifically assigned to the employee. For the invention to belong to the employer, it is also required that in the circumstances, an invention might reasonably have been expected to result from carrying out the duties.

In this case, it seems that the invention was made by a machinist during his own time, albeit including working during a lunch-break on your premises. The "normal duties" of the employee are often duties as defined in his contract of employment. However, the duties actually performed whilst an employee with your company may evolve over time and so the contract of employment should not be considered as the final word on what is included in the employee’s "normal duties". If the normal role of this machinist was simply to carry out machining work on the instruction of a supervisor, then it would seem that the invention was not made by the machinist whilst carrying out his normal duties.

I assume that the machinist was not specifically asked, or required by his employment contract, to research new business opportunities for your company, let alone being asked to think about improving golf clubs. Even if it transpires (unlikely in my opinion) that the duties, whether normal or special, of this particular machinist extend to machining golf clubs, would it really be reasonable to expect him, a low-level machinist, to make an invention in this field? It would seem that the invention was made more from the machinist’s interest in golf and not as a result of his employment with your company, although his skills have clearly given him the ability to make a prototype club by himself. Therefore, it is my initial opinion that RacerParts Ltd do not own the rights to this invention under the "first scenario".

In the second scenario, an invention made by an employee belongs to their employer if the following two conditions are met: first, the invention was made in the course of the duties of the employee; and second, due to a particular responsibility arising from nature of the duties they have a special obligation to further the interests of the employer.

Does the employee in question have a senior role or stake in the company? Would their role be considered as more than turning up for work and machining parts? If, as assumed above, the machinist was employed to carry out machining work on the instruction of a supervisor, then from the information that you have provided it does not appear that the employee has a special obligation to further the interests of RacerParts Ltd with innovation or business development. Therefore, it does not appear that the second scenario is satisfied either. However, if the employee, instead of being employed as a machinist, was employed as a Technical Director, with responsibility for business development and innovation, it is more probable that such an invention would belong to their employer, Racerparts Ltd.

From my initial consideration, it appears that RacerParts Ltd does not own the invention. However, if the assumptions made are incorrect and you still believe that RacerParts Ltd is entitled to ownership of the invention, there are various actions that can be taken in order to resolve the matter. Ownership disputes can be complicated (and thus incur expensive legal fees) and may result in the breaking down of the relationship you currently have with your employee, so, prior to seeking legal remedies I would suggest that you discuss this matter with your employee.

Either way, it seems that your employee has an idea and you have the technology available to exploit that idea. Once it has been determined who owns the invention, you may be able to come to a mutually beneficial agreement to resolve the matter, which may involve an assignment or a licence agreement concerning the patent application. I suggest that you contact a CIPA registered Patent Attorney, who will be able to provide specific advice relating to the particular facts of your case.

How could you have avoided this situation? It is worth noting that it is not possible to diminish an employee’s rights in an invention with their employment contract. Particularly, a contract may not specify as a term of employment that future inventions created by an employee, which would otherwise rightfully belong to the employee, are actually owned by the employer and such terms in a contract are unenforceable.

There are various ways in which a company can encourage innovation and strategies can be put in place for dealing with ownership issues.

Disclaimer - Please note that the above article is not intended as legal advice. Abel & Imray accept no responsibility for any actions that are undertaken as a result of reading the above article. If you have any issues relating to intellectual property we recommend you contact a Chartered Patent Attorney or Registered Trade Mark Attorney. Details of how to contact a local Attorney can be found on the Chartered Institute of Patent Attorneys website or the Institute of Trade Mark Attorneys website

Attorney: Rhys Williams, Abel & Imray