Do Employees Own Their Inventions?

Employers should incorporate rules of ownership in employment contracts.

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Employers should incorporate rules of ownership in employment contracts.


Do Employees Own Their Inventions?

Employers should incorporate rules of ownership in employment contracts.

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The way we work continues to be redefined by the rise of flexible and remote working; for example, a recent report from CIPD found that 54% of workers can now operate outside typical nine-to-five hours.

With increasing scope for employees to work away from their desk, is there a risk that they could extract inventions from your business? For tech businesses in particular, whose enterprises are built on creation and innovation, how can they keep up with the times to ensure their inventions don’t go missing?

What does the law say?

Section 39 of the Patents Act 1977 provides that an invention made by an employee will belong to them personally, unless it was made in the course of their “normal” duties and those duties could have reasonably resulted in an invention.

Similarly, section 11 of the Copyright Designs and Patents Act 1988 states that copyright works made by an employee “in the course of their employment“ will be owned by their employer.

These provisions have been at the heart of many cases over the years, and earlier this year the High Court considered what “normal duties” are in the case of Prosyscor Ltd v Netsweeper Inc and Others.

In its judgment, the court confirmed that the starting point is to look at the employee’s contract of employment and consider what they are employed to do, and also the reality of the situation.

In short, just because an employee works from home, if he conducts the work expected of him that results in the creation of intellectual property (IP), this does not mean that the employee then owns that IP.

What is normal?

To avoid disputes over ownership of IP, employers should carefully consider the extent of their employees’ duties and make sure they are clear (whether written in the contract, or in reality), so that any resulting IP will be considered to have been made in the course of their “normal” employment.

Contracts of employment come in all shapes and sizes; some attach job descriptions detailing what is expected of an individual, and others simply make statements such as “the employee shall do such duties as the employer reasonably requests from time to time”.

According to the intellectual property lawyers at Heer Law, a comprehensive employment contract ought to include a clause that states that any intellectual property created by an employee, whether or not conceived in their normal working environment or within their normal working hours, that is reasonably related to the business of their employer is owned by the employer to ensure the employer’s rights are protected.

What a “normal duty” is will depend on the circumstances of each case.

For example, it will be easier to determine what “normal duties” are in some situations than in others – for example, in Prosyscor, the employee was employed to create software, he created the software he was employed to create at home, in his own time and on his own equipment, but the court held that the employer retained ownership.

There will be some situations where that distinction is not so easy to make – but the key question will be whether the invention resulted from something that is expected of the employee in their day to day activities.

How to protect against threats

The definition of “normal duties” can be relatively straightforward where an individual comes to work, does their duties in an office or workplace environment and goes home. But working practices are becoming ever more imaginative, and remote working means that the lines between work and home life can become blurred.

Flexible working practices are often welcomed, by both sides of the fence, but where they are adopted, employers would be wise to ensure they have clear policies and procedures in place that cover eventualities that may arise while working at home.

Where employees work remotely, it is worthwhile for organisations to consider implementing a specific homeworking or remote working policy, which sets out the standards of behaviour expected when working remotely.

Also, the circumstances in which requests may be granted; as well as making clear that intellectual property created at home but in the course of normal duties will remain in the company’s ownership.

Such steps would also help protect confidential information and shield an employer’s IT systems from potential cyber security threats. Where set protocols are breached, employers would then be able to take disciplinary action as appropriate to the circumstances.

The shifting sands of the employment relationship

Employers should also take care to consider how employees’ roles evolve and change.

The courts have confirmed that the reality of the employees’ duties will be considered when examining the ownership of intellectual property.

But it will be much easier for an employer to argue an invention was made in the course of their normal duties if contracts of employment and job descriptions are kept up- to-date and amended as an employee’s role develops, setting out clearly what duties are expected of the employee.

Contracts of employment should also provide the ownership of any intellectual property created in the course of employment passes to the employer.

Recent decisions from the court will provide some comfort to employers that they are able to retain ownership of inventions created in employment. However, to take full advantage, protection contracts of employment and comprehensive policies should be created and regularly updated.

Rebecca Berry is Senior Associate and Tom Lingard is a Partner at Stevens & Bolton LLP.

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Do Employees Own Their Inventions?

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