Who owns the invention?

Question: If an employee invents something in the course of her employment, is it the employer or the employee who owns the invention?

Answer: Many cases have held there is a common-law presumption the employee would own the invention which she invented. This presumption is subject to two exceptions: an express contract to the contrary or where she was employed for the express purpose of inventing or innovating.

In determining who owns the invention, courts have held the nature and context of the employer-employee relationship must be taken into consideration, including the following factors:

•whether the employee was hired for the express purpose of inventing;

•whether the employee at the time she was hired had previously made inventions;

•whether an employer had incentive plans encouraging product development;

•whether the conduct of the employee, once the invention had been created, suggested ownership was held by the employer;

•whether the invention is the product of the problem the employee was instructed to solve (for example, was it her duty to make inventions?);

•whether the employee’s invention arose following her consultation through normal company channels (for example, was help sought?); and

•whether it was a term of her employment that she could not use the ideas which she developed to her own advantage.

Although there are significant references in the case law to the duty of good faith owed by a senior employee to her employer, the mere fact of holding a senior position does not disqualify an individual from claiming ownership rights over the invention.

Therefore, whether it is the employer or the employee who owns the invention will depend on the particular facts and context of the employment relationship. But employers should be aware that if they wish to avoid legal uncertainty in this area they can simply set out in the employment contract that any inventions created by the employee in the course of employment will belong to the employer.

Peter Israel is counsel to Goodman and Carr LLP in Toronto and is head of the firm’s Human Resource Management Group. Peter can be reached at [email protected] or (416) 595-2323.

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