Practice Areas
Services on Intellectual Property Matters Arising out of an Employment Relationship
Frequently Asked Questions
In the absence of a written contract, who owns an employee's invention?
Inventorship is the starting point for determining ownership of patent rights. The general rule is that an individual owns the patent rights in the subject matter of which he is an inventor even though he conceived of the subject matter or reduced it to practice during the course of employment. The fact of employment, standing alone, does not endow an employer with exclusive ownership rights to an invention, even though the invention may occur during working hours.
In most cases, a contract of employment between the inventor and her employer will determine their respective rights to the employee’s invention. It should be noted, however, that unilaterally promulgated employment manuals or policies that are not incorporated into the employment contract may not enforceable unless the employee manifested an intent, express or implied, to be bound by it.
If there is no enforceable express agreement between the parties, the common law allocates property rights in inventions between employee-inventors and employers based on the nature of the employment relationship, the subject matter of the invention, and the resource contributions of the employer. If the employee is “hired to invent,” the employee’s inventions are the property of the employer. If the employee was not specifically hired to invent, then title to the invention vests in the employee. The employer, however, retains a limited, non-exclusive right (called a “shop right”) to practice the invention if it is developed on company time or though the use of company resources.
In the absence of an enforceable non-compete or confidentiality agreement, what obligations does an ex-employee owe his employer?
An ex-employee has a continuing duty of confidentiality, even after the employment ends, regarding his employer’s trade secrets, even if the employee does not sign a confidentiality agreement. Furthermore, in the absence of a non-compete agreement, an employee has a right to go into competition, and may even plan and take active steps to go into competition while still employed, without disclosing his plans to the employer – provided he does not appropriate his employer’s trade secrets, solicit his employer’s customers while still working for the employer, or carry away confidential information, such as customer lists. Finally, an ex-employee has the right to use in subsequent employment the general talent, knowledge, skill, and experience he acquired during employment.
When are non-compete agreements enforceable?
In Texas, a non-compete agreement is not enforceable unless the restrictions set forth in a non-compete agreement are reasonable with respect to time, geographical area, and scope, and are not be greater than necessary to protect the goodwill or other legitimate business interest of the employer. Also, in Texas, the non-compete agreement must be supported by consideration – for example, by furnishing the employee with trade secrets – and designed to enforce an “ancillary” obligation by the employee – such as the employee’s obligation not to misuse or disclose the employer’s trade secrets.