Who Owns An Employee's Inventions In Washington?
In Washington, as in other states, inventors typically own the intellectual property rights to their inventions. Makes sense, right? But what about when the inventor is working for a business at the time of the invention? Who owns the rights to the invention then?
As a practical matter, this issue is often addressed in an employment agreement before the employee begins working. It should come as no surprise that employers want to keep control of valuable IP rights related to their business. And in an effort to capture these rights, an employer will often insist that its employees agree to assign to it the rights to any invention they create during the time of their employment.
Without an assignment agreement, the IP rights will usually be held by the inventor, though there are exceptions to this rule, including copyright ownership of “work made for hire,” a topic which was covered in an earlier blog post.
All in all, it’s safer and easier for employers to use assignment provisions in employment agreements. But there are limits to the use of these assignment provisions that Washington businesses (and their employees) should be aware of.
Washington Exempts Certain Inventions From The Effect Of Assignment Provisions
In Washington, as in a handful of other states, there are restrictions on when an invention assignment provision will be effective (i.e., enforced so as to give the employer IP rights to the invention).
Note: Other states with restrictions are California, Delaware, Illinois, Kansas, Minnesota, Nevada, North Carolina, and Utah.
Under Washington’s restrictions, an agreement to assign an employee’s invention to the employer will not be effective if the following four requirements are met:
The employee didn’t use the employer’s equipment, supplies, facilities, or trade secret information.
The invention was developed entirely on the employee’s own time.
The invention doesn’t relate directly to the employer’s business or to the employer’s actual or demonstrably anticipated research or development.
The invention doesn’t result from any work the employee performs for the employer.
These restrictions are sensible. They allow employees to work on creative projects outside of and unrelated to work, safe from the risk of having their inventions gobbled up by their employer. At the same time, they preserve the ability of employers to retain and protect their core IP from employees who might take advantage of the company’s resources, only to decamp with their invention to a competitor.
While these restrictions are meant to protect employees, it’s easy to imagine an employee not realizing they exist and forfeiting important rights as a consequence. That’s why Washington places the burden on employers to give timely notice to employees of these restrictions.
Washington Requires Notice Of This Exemption To Be Given When The Agreement Is Made
For an assignment provision to be effective, the employer has to give the employee written notice that the agreement doesn’t apply to inventions that meet all four requirements listed above. This written notice must be given at the time the agreement is made; if the employer fails to give timely notice, the assignment provision won’t be enforceable.
Tip: The notice provision can be and often is included in the employment agreement itself.
It’s critically important for employers to observe this notice requirement, particularly for companies with closely guarded proprietary rights. Washington courts have been willing to invalidate assignment provisions where the employer failed to give the employee contemporaneous notice of the restrictions. Companies would be wise to include this notice requirement as part of a checklist for employment agreements containing assignment clauses.
Employees Required To Disclose Inventions
Needless to say, when an ownership dispute arises over an invention, there must be disclosure of information about the invention in order to resolve the dispute. Hence, Washington’s requirement that the employee must disclose at the time of employment or after all inventions being developed by the employee.
The employer or employee may then disclose these inventions to the department of employment security, which has to maintain a record of the disclosures for at least five years.
Employers in Washington can protect their proprietary rights through use of assignment provisions. But it’s important to understand that these provisions don’t function like tractor beams swallowing up all employee inventions. There has to be some kind of real link between the invention and the employment.
It’s also essential that employers give timely notice to their employees of the restrictions on invention assignment provisions. Failing to do so will invalidate the entire provisions, leaving the employer potentially vulnerable to losing important employee work product.