Common Clause

Can full-time employees own Intellectual Property?

Apr 25, 2023

The short answer is that most companies will ask you to renounce your Intellectual Property (IP) rights, but certain states specifically protect your right to do so for IP developed completely on personal terms. Every employment contract will cover IP ownership, so we’re dedicating a full blog post to this topic after touching on the basics in our “What should I look out for in my CIIAA” post. You could fill a library on the topic, but we hope this post is a good place to start (look for a separate post in the future for IP and freelancers!)

  1. What constitutes as IP

    The World Trade Organization (WTO) defines IP as “creations of the mind”, which provides a pretty broad coverage across employee outputs: ideas, presentations, code, etc. From the company’s perspective, these outputs amount to intangible assets that provide them a competitive edge, which is why they want protection from unauthorized use.

  2. Types of IP Rights

    To explain further what constitutes as IP, it’s helpful to look at the 5 types of legally-assigned IP Rights for some examples. If you’re a designer at Nike creating the next “it” sneaker, it might get patented for the new mesh technology, trademarked for the distinctive logo, and registered under Industry Design for its unique shoebox shape.

    Additionally, it’s helpful to break down the benefits of these rights between economic and non-economic (aka “moral rights”) IP rights. For the most part, IP rights are there to ensure only the owner can economically benefit, e.g. Adidas can’t copy your new sneaker and sell it for $10 cheaper. For individuals, while you initially have moral rights when you create a copyrightable work, you usually “waive” or sign your rights away to your employer, meaning that any works you produce for your employer no longer require attribution, for example.

  3. Who owns the IP

    For full-time employees, the rule of thumb contracts will try to enforce is that anything created on company time, on company materials, or related to company business falls under company IP ownership. This ownership is assigned to employers through CIIAAs or general Employment Agreement contracts, thought it can be subject to negotiation particularly when you’re being brought on specifically for your existing IP. Usually, you’ll be asked to renounce IP rights of future company creations, and be required to disclose existing IP ownership so it doesn’t transfer to your new employer.

    For IP created in your own time, on your own materials, and unrelated to your company business, 9 states, including California, have enacted language that delineate and protect personal inventions. For these states, the related statute must be included in the contract (e.g. California Labor Code § 2870). However, it’s often still the employee’s responsibility to report such inventions to the company to ensure the company doesn’t claim ownership of them.

  4. You responsibilities for company-owned IP

    Not only will you transfer your ownership to the company in most cases, your contract likely also includes clauses requiring your prompt disclosure and cooperation to assist your employer in obtaining IP rights such as patents. You will be responsible for helping obtain and enforce the patent, often past your period of employment.

We’ve had a number of users ask for follow-up resources on specific topics since each contract they receive is an educational opportunity to make sense of the jargon. We’d love to hear your feedback on this article and take suggestions for other topics of interest.

For advocacy and beyond!
The Ask Ginkgo Team

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