ProIn today’s society, where value is placed on creativity and invention, employers need to be extra vigilant to protect the work of their employees, including the development of intellectual property (“IP”). IP, creations of the mind, includes patents for inventions, trademarks, and copyrights. Often after an employee leaves a company, the question arises as to whom has the rights to the IP the employee developed while employed.
Initially, for purposes of copyright, all works of authorship created by an employee “within the scope of his or her employment,” constitutes “works for hire” and are property of the employer, even without an assignment from the employee. 17 U.S.C. Section 101, et. seq. Copyright protection, however, does not extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, which are more likely to be protected by patents.
One way for an employer to protect its investment in an employee and the work the employee created while employed, is to request an employee sign an agreement assigning to the employer all of an employee’s rights to IP developed while employed by the employer. Agreements assigning an employee’s rights to his or her inventions to an employer are subject to state contract law. Contracts must be supported by consideration to be valid. This means, the employer needs to give something to the employees for signing the assignment. Case law is limited as to what is considered “adequate” consideration for an IP assignment. It is likely that if a court were to look at this issue, the court would determine “adequate” consideration for the assignment is similar to adequate consideration for a non-compete agreement. This means a bonus, promotion in job title, or raise is needed for an employee who is already employed. For a new employee, signing the assignment prior to or on the first date of employment is adequate consideration.