assignment of employment rights

Assignment Of Employment Agreement

Jump to section, what is an assignment of employment agreement.

An assignment of employment agreement is a contract between an employer and employee that give employees rights in inventions they make. This agreement applies to inventions made while employeed with the contracted company and is meant to entice employees to come on board with the company. Since these agreements are so crucial in ensuring an employee's intellectual property is protected, employers place a special emphasis on the wording of these agreements.

The purpose of the agreement is to ensure the contracted company has the rights to use inventions of the employee without risk of legal retaliation.

Common Sections in Assignment Of Employment Agreements

Below is a list of common sections included in Assignment Of Employment Agreements. These sections are linked to the below sample agreement for you to explore.

Assignment Of Employment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.26 28 f8k0210ex10xxvi_envision.htm ASSIGNMENT OF EMPLOYMENT AGREEMENT, DATED FEBRUARY 10, 2010, BY AND BETWEEN CASITA ENTERPRISES, INC., ENVISION SOLAR INTERNATIONAL, INC. AND ROBERT NOBLE , Viewed September 19, 2022, View Source on SEC .

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Jonathan G.

Small Business Attorney licensed in Texas and Colorado. Based in Dallas, appointments available in DFW area.

A business-oriented, proactive, and problem-solving corporate lawyer with in-house counsel experience, ensuring the legality of commercial transactions and contracts. Michael is adept in reviewing, drafting, negotiating, and generally overseeing policies, procedures, handbooks, corporate documents, and more importantly, contracts. He has a proven track record of helping lead domestic and international companies by ensuring they are functioning in complete compliance with local and international rules and regulations.

I am an attorney with six years of experience drafting and negotiating a wide variety of business contracts, in industries including technology and software, finance, professional services, hospitality, and non-profits.

Attorney Joshua K. S. Cali is a respected business, estate planning, and real estate attorney based in Ashland serving Middlesex County and other nearby areas. Joshua graduated summa cum laude from Bentley University in Waltham, MA, and from UCLA School of Law in Los Angeles. Before starting his own firm, Joshua practiced estate planning for high net worth clients at a boutique law firm in San Diego, CA.

Businesses, Contracts, Operating Agreements, Corporate, Real Estate, Start-Ups, Cannabis

Drew is an entrepreneurial business attorney with over twenty years of corporate, compliance and litigation experience. Drew currently has his own firm where he focuses on providing outsourced general counsel and compliance services (including mergers & acquisitions, collections, capital raising, real estate, business litigation, commercial contracts and employment matters). Drew has deep experience counseling clients in healthcare, medical device, pharmaceuticals, information technology, manufacturing, and services.

Daniel is an experienced corporate attorney and works closely with corporations, privately held companies, high-net worth individuals, family offices, start-ups and entrepreneurs. Daniel graduated from the Gonzaga University School of Law and is licensed to practice law in Illinois.

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EMPLOYEE ASSIGNMENTS OF INVENTIONS – AN UPDATE

Intellectual property update.

In 2011, the U. S. Supreme Court held that a present assignment by a Stanford University faculty member to a company where he was consulting was effective despite an earlier promise to assign in the employment agreement between Stanford University and the faculty member. In other words: “I assign” beats “I will assign”.  Bd of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Systems Inc. , 563 U.S. 776 (2011).

When the assignment is effective is a key issue to address in the contract language. Because the owner of a patent is initially the inventor, only the inventor has standing to sue for patent infringement without an assignment. Rights granted in the employment agreement using “passive verbs in the indefinite or future tense” require a subsequent assignment.  Omni Medsci, Inc. v. Apple Inc ., ___ F.3d ___ (Fed. Cir. August 2, 2021) (a provision stating patents “shall be the property of the University” was not an automatic assignment and as such required a subsequent assignment to effectuate the transfer).  

Consequently, language such as “employee hereby assigns” should replace “employee shall assign”  in employment contracts ( link ).

What post-employment inventions can be assigned  is a second key issue recent cases have identified.

Employee Alleshouse assigned to his employer  

“all inventions, improvements, developments . . .or patentable material that Employee conceives or hereafter may make or conceive . . . resulting from or suggested by Employee’s work for the Company . . . .”

The assignment language included inventions conceived after employment terminated. Using no confidential information of the former employer, Alleshouse conceived and patented post-employment inventions. The successor in interest to the former employer sued seeking an assignment of the patents. Applying a California statute protecting employees [1] , the Court found the broad assignment language void. The obligation to assign inventions conceived after the employee’s departure was held to function as an unlawful non-compete.  Whitewater West Industries, Ltd. v Alleshouse , 981 F.3d 1045 (Fed. Cir. 2020).

A subsequent International Trade Commission case (applying California law) interpreted an assignment of all

“inventions (including new contributions, improvements, designs, developments, ideas, discoveries . . . ) which I may . . . conceive, develop or reduce to practice during  the period of my employment . . . .”

The “inventions” (and in a later version, “intellectual property”) language was interpreted as limiting the assignment to “subject matter that itself could be protected . . .  before  the termination of employment.” Patent rights could not exist “until at least conception of that invention.” In this case the conception date was after termination. So the assignment language did not include “ideas . . . contributing to a post- employment patentable invention”.  Bio-Rad Laboratories Inc. v. ITC , ___ F.3d ___ (Fed. Cir. April 29, 2021),  petition for rehearing pending . [2]

The court’s narrow reading of the assignment language requiring the invention to be conceived before termination of employment avoided the need to apply the California statutes discussed in  Alleshouse . [3]  Consequently, cases not subject to the California statutes are subject to the same limiting construction if they use comparable language regarding assignment of “inventions” or “intellectual property”.

As the law is developing, employee patent assignments should (and if California law applies, must) be reviewed to confirm a straightforward reading (1) creates a present assignment, and (2) reasonably limits the assignment of post-employment inventions, most conservatively to inventions (a) conceived during employment or (b) made using the former employer’s trade secrets.

[1]  California Business and Professions Code §16600 voids any contract restraining lawful trade of any kind. California Labor Code §2870 (a) limits an employee agreement to assign to only certain inventions. The court found the contract duty to assign was void as a substantial restraint on the former employee and §2870 did not approve assignments of post-employment inventions.

[2]  The court specifically noted: “We do not deem a mere joint inventor’s contribution to a post-agreement conception sufficient”. Bio-Rad argues in the petition for rehearing that this was error.

[3]  The court referred to the California statutory limitation on assignments as a “confirmatory reason” for the court’s “straightforward reading”.

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Patent Assignments in Employment Agreements – a Sometimes Overlooked, but Always Important Component

• November 16, 2021

By: Peter C. Lando and Thomas P. McNulty

By: Thomas McNulty and Peter Lando, with assistance from summer intern Tyler Gruttadauria

Businesses, of course, have a strong interest in owning intellectual property created by their employees. Intellectual property—patents, copyrights, and other confidential and proprietary information including trade secrets—is often the most valuable asset a business can own, so it is important to ensure that employee developments and inventions belong to the employer. In the United States, inventions presumptively belong to the inventor, and any transfer of ownership (“assignment”) must be in writing to be effective. Rather than requiring employees to sign assignment agreements for each patent application filing, employers sometimes rely on employment agreements and handbooks to establish ownership in intellectual property created by an employee. Employers often provide employment agreements with assignment clauses that are intended to give the employer rights in inventions made by the employee during the period of employment. These assignment clauses are often treated as mere boilerplate, yet the precise wording of these clauses can have major impacts on the effectiveness and limitations of any assignment.

Ensure that you have an Assignment and not a mere promise to assign

When drafting an agreement to have an employee assign future inventions, it is vital that the language used in an assignment clause states a present-tense, actual assignment. Phrases such as “hereby assign,” “agrees to grant and does hereby grant,” or that inventions “shall belong” to the employer and employee “hereby conveys, transfers and assigns” have been deemed by the courts to be effective to transfer ownership of a future invention without the need for any subsequent agreement. Ownership effectively transfers immediately, once the invention has been made. Assignment clauses that use future tense language, on the other hand, generally will require an additional agreement to result in a transfer of ownership of the invention, and any intellectual property (“IP”) covering the invention. Terms such as “will assign,” “agree to assign,” “will be assigned,” and the like, have been found by numerous courts to constitute nothing more than a promise or contract to assign an invention in the future, but not to serve as an actual assignment.

In addition to the wording used in the assignment clause, the language of any carve-outs should also be scrutinized. Agreements may contain a carve-out clause to exclude a new employee’s prior inventions from being assigned, or to prevent assignment of inventions unrelated to the employee’s work from being swept into the assignment provision. A broad, non-specific carve-out clause may prevent an employee agreement from automatically assigning inventions of that employee, even where the assignment clause includes the proper “hereby assign” type of language, because this leaves open the possibility that an invention is not subject to the assignment clause. This contrasting language may create an ambiguity in the employment agreement that subjects it to construction under state law, which in turn may allow for the employee to introduce extrinsic evidence, such as conversations that took place during employment negotiations, to defeat the automatic assignment. While patent assignment provisions are governed by Federal Circuit law, resolution of contractual ambiguities is governed by state law, which varies considerably regarding the admissibility of such extrinsic evidence.

Failure to obtain an automatic assignment can have negative consequences

An assignment clause that is deemed ineffective to automatically transfer ownership of an invention can create significant problems for an employer. In such circumstances, a business would not have standing to bring a patent infringement suit until it has taken the necessary steps to obtain a valid assignment. This may require the filing of a breach of contract claim against the employee to require fulfillment of the contractual obligations, including execution of assignment documents. In the interim, infringers could continue practicing the invention; and if the infringing activity has gone on long enough, the six-year statute of limitations may prohibit full recovery of damages. Further, if an inventor/employee has made only a promise to assign, and instead transfers ownership to a third party who lacks knowledge of the assignment obligation, that second transfer of ownership may well prevail, leaving the original employer with no exclusionary rights at all.

Ineffective assignment provisions can affect more than just litigation. Businesses and investors typically conduct IP due diligence when entering into transactions involving the investment in or sale of IP assets, company divisions or entire entities, and any weaknesses in assignment provisions may affect the perceived value of the IP assets and/or business being considered.

Do not count on the “Hired-to-Invent” doctrine to result in ownership of employee inventions

Some employers do not require employees to sign an agreement containing an assignment of inventions because they believe that they automatically own inventions that they paid someone to create. Under the “hired-to-invent” doctrine, this will only occasionally be correct. Employees or contractors hired (and paid) specifically to create a particular invention or to solve a particular problem may be deemed to have implicitly assigned their rights in the invention to the employer. This is a highly fact-based determination, however, and applies only to inventions created in response to the specific thing the employee was hired to do. A mere title of “researcher” or even “inventor” will not, standing alone, suffice to ensure ownership of inventions by the employer. Further, until a court has ruled one way or the other, an employer relying on this doctrine will not have any certainty in its rights to the invention. Should the court rule against the employer, it would lose the exclusionary rights it believed it possessed and may face an infringement lawsuit from the employee or anyone to whom the employee may have assigned the invention/patent rights.

Absent an effective assignment, an employer may obtain limited “shop rights” in inventions made using the employer’s time, materials, facilities or equipment. Shop rights take the form of an implied license to practice the invention, precluding the employee from obtaining damages or injunctive relief on a patented invention. Shop rights are limited, however, and do not allow the employer to prevent others from competing by practicing the invention. Further, shop rights cannot be transferred via license or assignment, effectively devaluing the IP assets and, perhaps, the company.

Other Considerations

In addition to having the proper “hereby assign” language, employment contracts should ensure that inventions , rather than just patents or patent applications, are subject to the assignment clause. Language stating that all inventions, improvements, discoveries, and the like, whether or not patentable or copyrightable, are subject to the assignment, ensures that information that could be protected through other regimes, such as trade secrets, automatically become the property of the employer.

Intellectual property has taken on an ever-increasing role in determining the value of a business. A company’s ability to develop and protect its intellectual property is a key factor in its future success. Given this, it is important that businesses recognize that assignment provisions of employment agreements are not mere boilerplate, but instead may be one of the most important legal provisions that ultimately can impact not only an employment arrangement, but the value of the business itself.

• Peter C. Lando
• Thomas P. McNulty

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Assignment of Employee Inventions State Laws Chart: Overview | Practical Law

Assignment of Employee Inventions State Laws Chart: Overview

Practical law practice note overview 4-582-6485  (approx. 14 pages).

Assignment of Rights Agreement: Everything You Need to Know

An assignment of rights agreement refers to a situation in which one party, known as the assignor, shifts contract rights to another party, known as assignee. 3 min read updated on February 01, 2023

An assignment of rights agreement refers to a situation in which one party, known as the assignor, shifts contract rights to another party. The party taking on the rights is known as the assignee.

An Assignment of Rights Agreement

The following is an example of an assignment of rights agreement. Dave decides to buy a bicycle from John for $100 and after agreeing on the price, Dave and John draw up a written agreement. Let's suppose that there will be a one week wait before the bicycle is ready for delivery to Dave and before anything is passed between them.

Meanwhile, John accepts that he will transfer his right to be paid $100 from Dave to Rob, in exchange for Rob paying John $90 immediately. Let's assume that John's motivation is an immediate need for cash. In this context, John is regarded as the assignor and Rob is the assignee.

John is the assignor as he is giving the assignment to Rob and Rob is the assignee because he is acquiring the assignment from John. To put it simply, the assignee is the party who gets something. In this case, Rob will receive $100.

Rules of Assignments

Assignments frequently occur in contracts. It's important to note the following points:

• The assignor (e.g. John) is accountable according to the contract unless the parties make an agreement that states otherwise.
• This means that if Dave does not receive the bicycle, he can sue John for it.
• Assignments are allowed in almost every type of agreement unless the contract includes an explicit ban on assignments or unless a specific exception is applicable.
• The assignor does not need to speak to the other contract party in order to create the assignment. For example, John would not need to ask Dave if John can transfer his right to be paid to Rob.

Exceptions Where a Contract Cannot be Assigned

• Some exceptions dictate that a contract cannot be assigned .
• Unenforceable assignments include the following: a personal services agreement, changing the contract duties, changing the material provisions of the agreement (e.g. time, amount, location, etc.).
• An example of a personal services agreement, which cannot be assigned, would be if you decided to employ a particular professional writer to write a book for you.
• That writer would not be allowed to take your payment and then give the work to another writer because you employed that particular writer to write the book, rather than someone else.
• Some kinds of assignments have to be in writing in order to be enforceable such as assignments of actual property (e.g. selling your house), loans, or debts.
• It's best to look at the statute of frauds for more information on the kinds of agreements that must be in writing.

Delegations and Novations

A delegation is very similar to an assignment in terms of what it involves. A delegation takes place when a party moves his or her obligations (or liabilities) under an agreement to a different party. Assignments, on the other hand, involve the transfer of rights.

If the parties in our previous example had created a novation , Rob would be entirely accountable to Dave and John would be clear of responsibility. A novation replaces the earliest party with a new party.

Contract Assignment

An Assignment Agreement can also be called a Contract Assignment. Another example of this would be if you're a contractor who needs assistance finishing a job. You could give those tasks and rights to a subcontractor, but only if the original agreement does not prohibit the assignment of these rights and responsibilities.

Creating an Assignment Agreement

In an Assignment Agreement, it is important to include details such as:

• The name of the person assigning the responsibilities (known as the assignor)
• The name of the of the party who is taking the rights and responsibilities (the assignee)
• The other party to the first agreement (known as the obligor)
• The name of the agreement and its expiration date
• Whether the first contract necessitates the obligor's approval before assigning rights
• The date of the obligor's consent
• When the contract will be put into effect
• Which state's laws will regulate the contract

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Content Approved by UpCounsel

• Assignment of Rights Example
• Assignment of Contract Rights
• Assignment of Rights and Obligations Under a Contract
• Partial Assignment of Contract
• Assignment Contract Law
• What Is the Definition of Assigns
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When a Promise Isn’t Enough – Crafting Proper Employee Patent Assignments

Christopher M. King

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Patent Assignments in Employment Agreements – A Sometimes Overlooked, but Always Important, Component Intellectual property is often the most valuable asset a business can own.

By Peter Lando and Thomas McNulty • Dec 20, 2021

Opinions expressed by Entrepreneur contributors are their own.

Businesses, of course, have a strong interest in owning intellectual property created by their employees. Intellectual property — patents, copyrights and other confidential and proprietary information including trade secrets — are often the most valuable assets a business can own, so it is important to ensure that employee developments and inventions belong to the employer. In the United States, inventions presumptively belong to the inventor, and any transfer of ownership (assignment) must be in writing to be effective. Rather than requiring employees to sign assignment agreements for each patent application filing, employers sometimes rely on employment agreements and handbooks to establish ownership in intellectual property created by an employee. Employers often provide employment agreements with assignment clauses that are intended to give the employer rights in inventions made by the employee during the period of employment. These assignment clauses are often treated as mere boilerplate, yet the precise wording of these clauses can have major impacts on the effectiveness and limitations of any assignment.

Ensure that you have an assignment and not a mere promise to assign

When drafting an agreement to have an employee assign future inventions, it is vital that the language used in an assignment clause states a present-tense, actual assignment. Phrases such as hereby assign, agrees to grant and does hereby grant or that inventions shall belong to the employer and employee hereby conveys, transfers and assigns, have been deemed by the courts to be effective to transfer ownership of a future invention without the need for any subsequent agreement. Ownership effectively transfers immediately, once the invention has been made.

Assignment clauses that use future tense language, on the other hand, generally will require an additional agreement to result in a transfer of ownership of the invention, and any intellectual property ("IP") covering the invention. Terms such as will assign, agree to assign, will be assigned and the like, have been found by numerous courts to constitute nothing more than a promise or contract to assign an invention in the future, but not to serve as an actual assignment.

In addition to the wording used in the assignment clause, the language of any carve-outs should also be scrutinized. Agreements may contain a carve-out clause to exclude a new employee's prior inventions from being assigned, or to prevent assignment of inventions unrelated to the employee's work from being swept into the assignment provision. A broad, non-specific carve-out clause may prevent an employee agreement from automatically assigning inventions of that employee, even where the assignment clause includes the proper hereby assign type of language, because this leaves open the possibility that an invention is not subject to the assignment clause. This contrasting language may create an ambiguity in the employment agreement that subjects it to construction under state law, which in turn may allow for the employee to introduce extrinsic evidence, such as conversations that took place during employment negotiations, to defeat the automatic assignment. While patent assignment provisions are governed by Federal Circuit law, resolution of contractual ambiguities is governed by state law, which varies considerably regarding the admissibility of such extrinsic evidence.

Failure to obtain an automatic assignment can have negative consequences

An assignment clause that is deemed ineffective to automatically transfer ownership of an invention can create significant problems for an employer. In such circumstances, a business would not have standing to bring a patent infringement suit until it has taken the necessary steps to obtain a valid assignment. This may require the filing of a breach of contract claim against the employee to require fulfillment of the contractual obligations, including execution of assignment documents. In the interim, infringers could continue practicing the invention; and if the infringing activity has gone on long enough, the six-year statute of limitations may prohibit full recovery of damages. Further, if an inventor/employee has made only a promise to assign, and instead transfers ownership to a third party who lacks knowledge of the assignment obligation, that second transfer of ownership may well prevail, leaving the original employer with no exclusionary rights at all.

Ineffective assignment provisions can affect more than just litigation. Businesses and investors typically conduct IP due diligence when entering into transactions involving the investment in or sale of IP assets, company divisions or entire entities, and any weaknesses in assignment provisions may affect the perceived value of the IP assets and/or business being considered.

Related: The How-To: Protecting Your Intellectual Property As A Small Business

Do not count on the hired-to-invent doctrine to result in ownership of employee inventions

Some employers do not require employees to sign an agreement containing an assignment of inventions because they believe that they automatically own inventions that they paid someone to create. Under the hired-to-invent doctrine, this will only occasionally be correct. Employees or contractors hired (and paid) specifically to create a particular invention or to solve a particular problem may be deemed to have implicitly assigned their rights in the invention to the employer. This is a highly fact-based determination, however, and applies only to inventions created in response to the specific thing the employee was hired to do. A mere title of researcher or even inventor will not, standing alone, suffice to ensure ownership of inventions by the employer. Further, until a court has ruled one way or the other, an employer relying on this doctrine will not have any certainty in its rights to the invention. Should the court rule against the employer, it would lose the exclusionary rights it believed it possessed and may face an infringement lawsuit from the employee or anyone to whom the employee may have assigned the invention/patent rights.

Absent an effective assignment, an employer may obtain limited shop rights in inventions made using the employer's time, materials, facilities or equipment. Shop rights take the form of an implied license to practice the invention, precluding the employee from obtaining damages or injunctive relief on a patented invention. Shop rights are limited, however, and do not allow the employer to prevent others from competing by practicing the invention. Further, shop rights cannot be transferred via license or assignment, effectively devaluing the IP assets and, perhaps, the company.

Other considerations

In addition to having the proper hereby assign language, employment contracts should ensure that inventions, rather than just patents or patent applications, are subject to the assignment clause. Language stating that all inventions, improvements, discoveries and the like, whether or not patentable or copyrightable, are subject to the assignment, ensures that information that could be protected through other regimes, such as trade secrets, automatically become the property of the employer.

Related: Securing Your IP: The Two Key Legal Documents Every UAE ...

Intellectual property has taken on an ever-increasing role in determining the value of a business. A company's ability to develop and protect its intellectual property is a key factor in its future success. Given this, it is important that businesses recognize that assignment provisions of employment agreements are not mere boilerplate, but instead may be one of the most important legal provisions that ultimately can impact not only an employment arrangement, but the value of the business itself.

Related: Top 5 Intellectual-Property Challenges Businesses Face

*The authors would like to thank Lando & Anastasi summer intern Tyler Gruttadauria for his contributions to this article.

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Related Practices & Jurisdictions

• Intellectual Property
• Labor & Employment
• Federal Circuit / U.S. Court of Spec. Jurisdiction

Manufacturers have an inherent interest in owning the intellectual property rights created by their employees in the course of performing their jobs.  Employees are the engine that drives a manufacturer’s innovations, but employees’ potentially patentable innovations only become the employer’s intellectual property if the proper patent assignment language is used.  All employees that may develop potentially patentable innovations during the course of their employment should be required to sign contracts transferring ownership of all intellectual property rights to their employer.  This may even include factory employees who submit ideas for product improvements through an employee suggestion program.  However, if employee patent assignments are not carefully crafted, manufacturers may end up in a nightmare situation – believing they own a valuable patent invented by an employee when, in reality, it belongs to the employee.

In the United States, patent rights vest in the inventor, not the inventor’s employer.  In order for an employer to own patent rights to innovations created by an employee, those rights must be transferred by an assignment to the employer.  To do so, an employee patent assignment must contain language that clearly indicates a present transfer of all patent rights to current and future inventions from the employee to the employer.  The magic words for the assignment of patent rights in employment contracts are “I do hereby assign” or other language indicating a present transfer of patent rights from the employee to the employer.  A promise that the employee “agrees to assign” is not sufficient to assign the employee’s patent rights to the employer.  The contrast between the results of these two phrases is clearly demonstrated through two cases,  IPVenture, Inc. v. Prostar Computer, Inc. , and  Picture Patents, LLC v. Aeropostale, Inc.

IP Venture:  Promise or Agreement to Assign in the Future Does Not Assign Employee Patent Rights to Employer

In a cautionary tale for employers, the court in  IPVenture  decided that the patent assignment language in Douglass Thomas’s employment agreement was not sufficient to assign his patent rights to his employer.  Thomas signed an employment agreement with Hewlett-Packard (“HP”) in which “Proprietary Developments” were defined as “inventions and discoveries…that are conceived or made by me alone or with others while I am employed by HP; that relate to the research and development of…HP, or result from work performed by me for HP…are the sole property of HP” and in which Mr. Thomas stated, “I agree…to assign them to HP.”

While employed by HP, Thomas filed a patent in his name for a thermal and power management system for computers.  Thomas later started IPVenture, and sued several parties for infringing the patent.  The defendants moved to dismiss for lack of standing, alleging that IPVenture did not own the patent.

In view of established precedent, the court determined that the “I agree…to assign” language in Thomas’ employment agreement was an agreement to assign patent rights in the future and was not sufficient to assign the patent from Thomas to HP.  Accordingly, Thomas was found to be the owner of the patent, not HP.

Picture Patents: Only a Present Transfer of Patent Rights Assigns Employee Patent Rights to Employer

In contrast,  Picture Patents  provides a path for how an employer should secure the patent rights in inventions developed by their employees.  Michelle Baker signed an intellectual property agreement with her employer, International Business Machines Corp. (“IBM”).  The agreement stated “I hereby assign to IBM my entire right, title, and interest in any idea, invention, design…or other work of authorship” and applied to any intellectual property she created while employed by IBM that related to the actual or anticipated business of IBM.  Prior to working for IBM, Baker had conceived of an improved computer and then refined the computer system during work hours and using IBM’s equipment and resources.  After Baker left IBM, she filed for three patents in her name for the computer system.

Baker eventually sued several parties for patent infringement. Similarly to the defendants in  IPVenture , the defendants moved to dismiss on the grounds that IBM, not Baker, owned the patents.  The court agreed with the defendants, saying that the words “I hereby assign” indicated a present assignment of current and future patent rights from Baker to IBM and that the subject matter of the patents was clearly covered by Baker’s agreement with IBM.  The court found that a present assignment of patent rights in a future invention not yet invented by the employee divests the employee of ownership of those patent rights; once the invention is made, ownership automatically transfers to the assignee.

Because of these and other similar decisions, employee patent assignments should include “I do hereby assign” or other language indicating a present transfer of the employee’s current and future patent rights to ensure that employee-created patent rights are validly assigned to the employer.  An agreement to assign in the future, as indicated by language like “I agree to assign” is not by itself sufficient to assign the employee’s patents rights to the employer.  Unless employee patent assignments are drafted with care, manufacturers will find themselves in the unenviable position of not owning patent rights to their employees’ work.

* Please note Foley Summer Associate Lea Gulotta was a contributing author of this post. The Manufacturing Industry Advisor team thanks her for her contributions.

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IP Clauses In Employment Contracts And Assignments

Written by Saad Khan | March 30, 2022

IP Contracts

If you have a contract of employment, there’s a good chance it includes a section that deals with intellectual property (IP) rights. The IP clause will likely state that all IP created by the employee in the course of their employment is owned by the employer. As IP encompasses a broad range of rights, such as trade marks, designs, copyright, database rights and patents, it’s important to read this clause carefully before signing your employment contract.

This blog will focus only on the IP clause in the context of copyright. Copyright protects works such as books, music, software code and film (amongst other things), and arises automatically – so there is no requirement to register the right. The owner of copyright has many exclusive rights in relation to the work in question. For example, an author of a book has exclusivity to copy the book, issue copies to the public, and make adaptations. As such, the owner of copyright work holds the cards when exploiting the IP’s potential. Whether you’re an employer or employee, pre or post-contract, it’s extremely useful to know your rights in relation to IP clauses.

The general rule of copyright

The general rule is that the author (defined as the person who creates the copyright work) is the first owner. However, if a literary, dramatic, musical or artistic work is made by an employee in the course of their employment the employer is the first owner, subject to any agreement to the contrary. As mentioned earlier, employers will reinforce this by including an IP clause in the employment contract, along with the other rights.

Firstly, you need to know whether you are in an employee-employer relationship, as opposed to a worker or self-employed. The contract document isn’t determinative, so it’s necessary to look at the practical reality and nature of the relationship between both parties.

Secondly, the work needs to be made during the course of an employee’s employment. Below are some factors that will help determine this:

• a) The terms of the contract of employment
• b) Where the work was created
• c) Whether the work was created during normal office hours
• d) Who provided the materials for the work to be created
• e) The level of direction provided to the author
• f) Whether the author can refuse to create the work/s
• g) Whether the work is ‘integral’ to the business

To illustrate, in a recent case, the High Court dealt with the interpretation of an employment contract. The employee (Mr P) created virtual forensic computing (VFC) software prior to his employment at a company called MD5. MD5 employed him on the premise that he would develop that VFC software for the company’s product, which would be sold to their customers. Mr P argued he worked on the VFC software at home on his own computer and during his time off. Similarly, Mr P worked at home on a user guide to assist the end-users of MD5’s product.

The Judge stated that it did not matter that Mr P developed the software using his own computer at home as he was paid to do this, and it was part of his employment duties. Similarly, the guide was also integral to the software and also formed part of his duties. Therefore, MD5, the employer, was held to be the first owner of the copyright to the VFC software and user guide.

As this case shows, doing work at home on a personal computer was deemed to be in the course of employment, but this was based on Mr P having been hired to develop the software for MD5. Had Mr P worked on a different software unrelated to his MD5 duties, he would have a stronger argument. It’s also important to note that the factors listed above are not a checklist exercise when determining ‘in the course of employment’. The court will look at those factors which are relevant to the facts of each case.

Assignment of copyright

Another key thing to consider is commissioning someone to create work for you. If you hire someone such as a freelancer/creative agency to produce a copyright protectable work, such as a logo, they will be the first owner of the copyright in the artistic work. These individuals or companies will not be your employees, meaning you do not automatically become the first owner of their copyright works. Such a situation can be overlooked and, before you know it, the copyright has been assigned to some other party.

Accordingly, you will want them to assign the IP rights in the work to you as soon as possible. An assignment means they transfer the ownership of the IP rights in question to you.

An assignment must be in writing, signed by or on behalf of the assignor. It is wise to have this document prepared before commissioning any work.

The IP clause in an employment contract will of course be relevant to some employees more than others. Certain roles may require employees to create pieces of work eligible for IP protection over the course of their employment. Equally, an employee may take some initiative outside of work to create something innovative and unique that is closely related to their employment.

From an employee’s perspective, check whether any work you create is protected by copyright. Then, make sure you are in fact an employee. And finally, consider whether you are creating the work in the course of your employment. Before creating work while employed, ask yourself if the copyright work is something you would create in the course of your employment. It’s also worth checking the clauses in the contract as some can be quite wide and potentially try and take ownership of all IP you create.

From the employer’s side, ensuring there is an employer-employee relationship in the first place would be wise to start with. Then, include an IP clause and ensure it covers all IP rights, regardless of whether it may or may not be relevant to you and your business. Sound recordings and broadcasts don’t fall under the general rule so if these are important, consider getting these assigned to you.

If you require assistance with IP clauses in contracts or drafting an assignment, no matter how small or complex, then please get in touch with one of our specialist lawyers.

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US Department of Labor issues final rule to clarify rights to employee representation during OSHA inspections

Osha national news release.

March 29, 2024

WASHINGTON – The U.S. Department of Labor today published a final rule clarifying the rights of employees to authorize a representative to accompany an Occupational Safety and Health Administration compliance officer during an inspection of their workplace.

The Occupational Safety and Health Act gives the employer and employees the right to authorize a representative to accompany OSHA officials during a workplace inspection. The final rule clarifies that, consistent with the law, workers may authorize another employee to serve as their representative or select a non-employee . For a non-employee representative to accompany the compliance officer in a workplace, they must be reasonably necessary to conduct an effective and thorough inspection.

Consistent with OSHA's historic practice, the rule clarifies that a non-employee representative may be reasonably necessary based upon skills, knowledge or experience. This experience may include knowledge or experience with hazards or conditions in the workplace or similar workplaces, or language or communication skills to ensure an effective and thorough inspection. These revisions better align OSHA's regulation with the OSH Act and enable the agency to conduct more effective inspections. OSHA regulations require no specific qualifications for employer representatives or for employee representatives who are employed by the employer.

The rule is in part a response to a 2017 court decision ruling that the agency's existing regulation, 29 CFR 1903.8(c), only permitted employees of the employer to be authorized as representatives. However, the court acknowledged that the OSH Act does not limit who can serve as an employee representative and that OSHA's historic practice was a "persuasive and valid construction" of the OSH Act. Today's final rule is the culmination of notice and comment rulemaking that clarifies OSHA's inspection regulation and aligns with OSHA's longstanding construction of the act.

"Worker involvement in the inspection process is essential for thorough and effective inspections and making workplaces safer," said Assistant Secretary for Occupational Safety and Health Doug Parker. "The Occupational Safety and Health Act gives employers and employees equal opportunity for choosing representation during the OSHA inspection process, and this rule returns us to the fair, balanced approach Congress intended."

The rule is effective on May 31, 2024.

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REAL ESTATE LAW

Renting out a room in your house: california's tenant's rights.

By Jessica Zimmer

March 31, 2020

Reviewed by John Rak, J.D.

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• Short-Term Rental Laws in California: Regulations, Airbnb & More

A tenant must check her lease to see if she is allowed to rent out a room in an apartment, condominium, home, accessory dwelling unit (ADU) or junior accessory dwelling unit (JADU). If the lease is silent on the issue, it is presumed that the tenant is allowed to rent out a room, but the tenant should not take this for granted. She should discuss the matter with her landlord before renting out the room. A tenant who rents a room to another party in violation of a written or oral lease can be evicted for breaching the terms of the lease.

Co-Tenant  Vs. Subtenant

A tenant and landlord should also clarify whether a new resident would be considered a co-tenant or a subtenant. A co-tenant forms a contract with the landlord and will pay rent directly to the landlord. The original tenant does not have the power to evict a co-tenant. Only the landlord has this power.

A subtenant pays rent to the original tenant, who is also called the master tenant. In this situation, only the master tenant has formed a contract with the landlord. The master tenant has rights and obligations under the lease, but the subtenant does not. Both the master tenant and the landlord have the power to evict the subtenant .

Read More: California Sublet Laws: Rules for Tenants & Subtenants

Assignments of Lease Interest

An assignment occurs when a tenant transfers his entire interest in the lease to a new resident. The original tenant then stops being a tenant. The new tenant takes her place. The lease then becomes a contract between the new tenant and the landlord. A lease can prohibit assignments. If a lease is silent or ambiguous on assignment, California law provides that “the ambiguity...shall be construed in favor of transferability.”

A tenant who makes a complete assignment of the lease usually remains liable under the lease. The original tenant is liable for his initial term and any extension options granted before the assignment. This means that if the new tenant stops paying rent, the landlord can collect rent from the original tenant. The original tenant can make an agreement with the landlord and pay additional money to be freed from such liability.

State Restrictions

A tenant must make sure that renting to another individual will not violate California state law concerning the maximum number of people in a room and dwelling. California utilizes the two-plus-one formula. This allows two people to occupy each bedroom and one additional person in the living space. There is an exception to allow a young child to be in the same room as her parents. If having more people in the unit does not present health and safety concerns, more people can live in the dwelling.

City Ordinances

A tenant should review her city and county ordinances regarding renting a room. For example, San Francisco’s rent ordinance generally allows a tenant to replace a departing roommate and/or increase the number of occupants living in the unit. This is true even if such replacements or increases are prohibited by the written lease. Yet a tenant cannot sublet or assign the entire lease to a new tenant in violation of a lease. The tenant also cannot sublet the unit to a tourist or for transient use as defined in the city’s short-term rental ordinance for a period of less than 30 days.

Oakland provides that subletting is not grounds for termination of a lease if the landlord unreasonably withheld the right to sublet after a written request by the tenant if the tenant continues to reside in the unit and the sublet is a one-for-one replacement of a departing tenant. A landlord who does not respond to a tenant’s request to sublet within 14 days is deemed to have approved the subletting. The city attorney has the authority to enforce this rule, which is part of Oakland’s "just cause for eviction" ordinance .

Illegal Uses Not Protected

Even if a tenant’s rental agreement allows him to rent out a room in the house, the tenant cannot rent out the room for an illegal purpose. This would violate the lease and state law. It would also potentially violate city and county ordinances. As an example, a tenant cannot rent out a room in an apartment for the purpose of manufacturing an illegal drug.

Illegal Units

A tenant cannot rent out an illegal unit. An illegal unit is a dwelling that does not meet the requirements for habitability that are defined by state law and city or county ordinances. As an example, a room would be uninhabitable if it had a condition that created a hazard, such as lead paint.

When a master tenant rents a room that is uninhabitable, the rental agreement between him and the subtenant is void. This means that the tenant is not entitled to collect or request rent from the subtenant. A tenant who rents such a room can also be evicted by the landlord for breaching the lease. This is because she engaged in an illegal activity relating to the property.

Some cities, such as San Bernardino, have special inspection programs to reduce unauthorized rentals of certain types of properties. San Bernardino’s program concerns single-family rental properties. By offering a single-family home for rent, the owner consents to have the property inspected by the city on an annual basis. A tenant of a single-family home should be aware that a city officer can visit the residence and determine whether he has rented an illegal unit.

Short-Term Rentals

Many California cities and counties have enacted ordinances that determine whether a renter can offer a short-term rental. Renters often use a technology platform like Airbnb or VRBO, or a website like Craigslist to advertise short-term rentals. Ordinances affect parties differently depending on where the property is located, what type of property it is, how long the short-term rental is for and the terms of the lease or rental agreement. Local ordinances also affect the owner of the property. A city or county can require the owner to register the property, get a license or permit or pay fees and taxes to offer a short-term rental.

A renter and owner who violate a local ordinance can suffer financial penalties and other sanctions, like denial of future permits for short-term rentals. A renter should avoid trying to generate extra cash through rental income without talking with his landlord. The renter should clarify who is entitled to receive the new resident’s rent. A renter should also be aware that collecting rent is considered to be earning money. The money now becomes taxable income, which the renter must report.

Read More: Short-Term Rental Laws in California: Regulations, Airbnb & More

Background Checks and Security Deposits

A master tenant who offers a room for rent to a subtenant may require a subtenant to get a background check. She may also require the subtenant to pay a security deposit to her. When a subtenant pays a security deposit to a master tenant, he is not considered to have paid a security deposit to the master tenant’s landlord.

Some cities and counties in California have ordinances that regard background checks and security deposits. Oakland prohibits a landlord from asking about a potential tenant’s criminal history. A master tenant should seek to abide by the same rules as a landlord. A tenant who is unclear as to whether laws like this apply to him should consult a landlord-tenant attorney.

A master tenant that leases to a subtenant must follow California state law with regard to the amount of the security deposit. A master tenant that sublets an unfurnished room can require the subtenant to pay up to two times the monthly rent for the security deposit. A master tenant subleasing a furnished room can require the subtenant to pay up to three times the rent. She can also require that the security deposit be used for the last month’s rent. This can be risky because the security deposit may not be enough to cover the last month’s rent and any damages to the room.

Read More: California Security Deposit Law: A Guide for Landlords & Tenants

Duty to Repair

California law requires a tenant to use reasonable care to maintain a residential rental unit, including all common areas inside and outside the unit. A tenant who damages any part of the premises is financially responsible for repairs. A master tenant is financially responsible for his subtenant’s damages. This includes damage that makes the premises fall below the standards of habitability.

Read More: Landlord Repair Responsibilities in California: Tenant Rights

Fair Housing Rules

A master tenant who rents out a room cannot violate California state law and local ordinances regarding fair housing. This means a master tenant cannot discriminate against a subtenant on the basis of factors such as race, color and disability. There are certain factors about which a master tenant has more freedom to decline an applicant. These include citizenship, immigration status and primary language.

A master tenant in a senior community would be allowed to decline an applicant because of the applicant’s age. This is true because California state law protects senior communities and rules relating to them. A master tenant could decline an applicant who was under the age limit of the community. In fact, a master tenant could face problems if she did not decline such an applicant.

Generally, a person offering housing cannot discriminate against an applicant because of the applicant’s familial status. Familial status covers a household with children under the age of 18, a person who is pregnant, or an individual or family pursuing legal custody of children under the age of 18. Yet a master tenant renting out a room might have some room to decline an applicant because of this factor.

If a master tenant rented a room in a house to a subtenant who brought children with him, the master tenant could face a situation in which there were too many people in the room. The master tenant would be responsible for violating state law, local ordinances and his own lease for overcrowding. A master tenant with questions about the application of fair housing laws to subletting should consult an attorney experienced in landlord-tenant law.

Raising the Rent

California law and local ordinances combine to determine whether the landlord can raise the rent if a new tenant moves in. Generally, California law provides that a landlord can raise the rent if a subtenant entirely takes over an apartment. A landlord can also increase the rent by up to 10 percent for an additional occupant if that person is not a spouse or child of the original tenant.

San Francisco provides an example of how local ordinances can change these rules. Here, a landlord cannot increase the rent for a unit because of the replacement of the departing tenant or the addition of new occupants. This is true even if the original tenant agreed to the increase. Yet if the original tenant or all of the original tenants have permanently vacated the unit, and the only remaining occupants are subtenants who moved in on or after January 1, 1996, the landlord can increase the rent to market rate.

Read More: California Rent Control Law: An Overview for 2020

• San Francisco Rent Board: Topic No. 151, Subletting and Replacement of Roommates
• Santa Monica Municipal Code: 1806, Eviction
• San Diego Municipal Code: Article 8, Housing
• City of Oakland: Just Cause for Eviction Ordinance, Measure EE
• California Department of Housing and Community Development: Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs)
• California Health and Safety Code Sections 17920-17928 Rules and Regulations
• Justia: Gruzen vs. Henry (1978)
• California Civil Code, ART 2. CONTRACTS [1549 - 1701], TITLE 1. NATURE OF A CONTRACT [1549 - 1615], CHAPTER 5. Consideration [1605 - 1615]: 1608
• California Civil Code, TITLE 5. HIRING [1925 - 1997.270], CHAPTER 6. Assignment and Sublease [1995.010 - 1995.340]: ARTICLE 2. Restrictions on Transfer [1995.210 - 1995.270]
• Legal Beagle: California Sublet Laws: Rules for Tenants & Subtenants
• Legal Beagle: Short-Term Rental Laws in California: Regulations, Airbnb & More
• Legal Beagle: Tenant Responsibilities in California: Things to Know
• Legal Beagle: California Security Deposit Law: A Guide for Landlords & Tenants
• Legal Beagle: Landlord Repair Responsibilities in California: Tenant Rights
• Legal Beagle: California Rent Control Law: An Overview for 2020
• Legal Beagle: How to Evict a Subtenant
• Legal Beagle: Landlord Retaliation in California: Rent Increases & Evictions

Jessica Zimmer is a journalist and attorney based in northern California. She has practiced in a wide variety of fields, including criminal defense, property law, immigration, employment law, and family law.

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United States Court of Appeals for the Federal Circuit

22-1421: sonos, inc. v. itc [opinion], nonprecedential.

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SONOS, INC. v. ITC [OPINION](pdf) Appeal Number: 22-1421 Origin: ITC Nonprecedential

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• April 8, 2024

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A new video examines the former first lady’s legacy.

The Postal Service has released a video on its new Betty Ford stamp.

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The four-minute video features comments from Susan Ford Bales, her daughter; Dr. Joseph Lee, president and CEO of the Hazelden Betty Ford Foundation; and Amber McReynolds, vice chair of the USPS Board Governors, who spoke at last week’s stamp dedication ceremony .

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