Intellectual Property Law · Licensing · Technology Innovation

Do employers “own” their employees’ ideas? 

On Behalf of | Jul 16, 2021 | Intellectual Property Law |

If you’re a business owner who depends on your employees’ experience and talent to create new products or come up with new ideas, it’s essential to understand how intellectual property (IP) laws apply to any inventions, designs, ideas or works that are created because of an employee’s talents and ingenuity. That’s particularly true if you seek a patent, copyright or trademark.

It’s best to have a clear agreement in writing from the time an employee is hired regarding any IP created for the business.

Clear, detailed language about IP is key

It’s important to clarify under what circumstances an employer can claim that IP. Generally, if an employee creates or improves something as part of their job, they can’t license it and take it to competitors. It belongs to their employer. Typically, a company will state in its employment agreements that it is entitled to that IP.

If an employee creates something that isn’t related directly to their job, that could lead to some confusion over who can license it. If there’s not an agreement in place stating otherwise, the employee could potentially sell their innovation to others, even if they created it on their employer’s time and using their resources.

It’s not just companies where innovative products are being created that need to make sure they codify who owns the things created by their employees. For example, media and entertainment companies often include language in their employment agreements that they own anything written or created by their employees during the course of their work.

What about compensation for an “outstanding benefit?”

There may be cases where employees can claim a share of the compensation for IP, such as when a patent for the invention they came up with created an “outstanding benefit” for their employer. It’s important to understand the law and how to address this scenario in employment agreements.

By having a clear and detailed agreement that is within the bounds of IP law with your employees from the start (and even making your policy clear with potential employees), you can prevent costly and time-consuming legal battles that can hurt your company and your brand.