Q&A with Paul Ross
Employee may not own inventions
Q: It's not uncommon for workers to make new discoveries or create and develop inventions while in their companies' employ. In those instances, can an employer require an employee to assign his ownership rights to such inventions over to the company?
A: Absolutely. Companies can (and many do) require as a condition of employment that its employees assign all rights to intellectual property they may develop through their employment relationship. Whether that assignment is a part of a written employment agreement or a stand-alone agreement, a well-drafted provision would clearly define the “intellectual property” that the company is entitled to own, including inventions, designs, discoveries, writings, drawings or even doodles and other documentation.
Q: Are employers required to provide employees with any type of consideration (such as a financial bonus) in exchange for assigning these rights?
A: In many states, the answer is “no,” and a recent Wyoming case is a great example. In Preston v. Marathon Oil Co., a worker developed a new process for improving methane gas extraction, and his company implemented the process. After his employment ended, he attempted to capitalize on the process personally. The company and the employee ended up in litigation to determine if his assignment of intellectual property was valid, preventing him from using the process without the company's permission. The employee argued that the assignment was not valid, as it was imposed upon after he was already an employee, and therefore he received no consideration for the promise to assign the intellectual property. Both the trial court and the appellate court rejected his argument, ruling that new consideration is not required to modify the terms of an at-will employment relationship. Because the employee was free to terminate his employment at any time, he could have chosen to end the relationship rather than agree to the new terms and conditions his employer was imposing. But by staying employed after agreeing to the new terms, he was bound by them.