Inventorship, Authorship, Ownership: Employees and Patent/Copyright

© 2002, Deeth Williams Wall LLP. All Rights Reserved. By: Jennifer Jannuska (June 19, 2002)

Ownership of Inventions, Patent Rights by Employees
Under the Patent Act, the inventor is the first person having the right to apply for a patent. In practice, where an invention has been assigned to a company, the company may apply for a patent in its own name by providing evidence of the assignment of rights from the inventor.

Who is an Inventor?
An inventor is a natural person, not a company. There may be one inventor of an invention, or several. There are two requirements for inventorship: (1) conception of an idea, and (2) reduction of the idea to a practical form. A person who merely does testing under direction from others is not an inventor; nor is someone an inventor who merely suggests avenues for exploration, but does not participate in the development of the practical application.

Naming all inventors on a patent application is critical. There is some uncertainty in the law as to the effect of omitting names of inventors. At worst, omission may cause the patent application (and subsequent patent) to be void for material misrepresentation. At best, where co-inventors are all employees of one company (and the company is the applicant), the presumption is that the unnamed employee-inventors would have assigned to the company anyway, and there is not considered to be a material misrepresentation.

What is an Assignment?
In an employment situation, the employee-inventor is considered to be the first owner of any patent rights, unless the employee was hired to invent. In theory, an employee must assign his/her invention to an employer for the employer to have any rights in the invention (including the right to obtain a patent). In practice, even in the absence of such an express assignment, an implied assignment is often deemed to exist, where an invention was made "in the course of employment".

The courts have interpreted "in the course of employment" on the facts of each case. Some of the factors tending to support an implied assignment include:

• inventor is a director or an officer of the company;
• use of company funds or equipment to do R & D on the invention;
• development (e.g. software) done on company time;
• inventor was hired in research, engineering, or experimental capacity.

Some of the factors tending to go against implied assignment include:

• development begun prior to or continued after employment;
• development with inventor's own funds or equipment (especially simple mechanical inventions);
• inventor does marketing or raises funding for invention;
• invention is not related to employer's business or inventor's specific job.

The situation is especially problematic with independent contractors. An independent contractor may be under a certain degree of control by the company and be treated almost like an employee, or an independent contractor may be considered to be acting completely autonomously from the company (and may be entitled to patent the fruits of his/her work without even having to disclose the patent application to the company). The presumption is that an independent contractor owns his/her own inventions, regardless of the circumstances surrounding the invention.

Practical Assignment Solutions
Companies who rely on innovation in their business should have employees sign a general assignment on beginning employment, and inventors should sign invention-specific confirmatory assignments with each potentially patentable invention. Independent contractors, likewise, should be required to sign a general assignment as part of their engagement contracts, and should covenant to sign later confirmatory assignments of specific inventions as necessary.

Having an employee sign a general assignment is usually straightforward at the beginning of employment, when such a condition is presented in the whole scheme of compensation and benefits, and alongside other restrictions, such as non-competition covenants, and confidentiality obligations. In such cases, employment itself is sufficient consideration for the assignment. Such assignment clauses should contain at least:

• full assignment of any inventions which are invented in the course of employment or through use of the company's technology or resources; and
• an obligation to disclose inventions invented in the course of employment or through use of the company's technology or resources.

Other obligations may also be included in a thorough assignment (such as, further assurances and reasonable assistance in prosecuting patent applications).

Once employment has begun, it is more difficult to convince employees to sign specific assignments. Specific recognition or compensation may be offered, both to encourage individuals to assign patent rights, and to provide clear consideration for the assignment. Some companies have started specific innovation incentive programs for this purpose.

Even express assignments may be open to challenge, however. The validity of an assignment may be challenged by the person alleged to have signed, or it may be challenged by a third party (such as to attack the validity of the patent or the standing of a party asserting patent infringement). The recent decision of the Ontario Court of Appeal in Techform v. Wolda leaves open the possibility that later-date assignments may be challenged on the basis of duress or lack of consideration. That case held that there was sufficient consideration for the employee technology assignment in Wolda's continued employment/engagement. But the court was willing to consider the argument that continued employment alone would not be sufficient in some cases. The question is whether the company would actually terminate the employee, if the assignment is not granted. Duress is not likely to be an issue if an employee/contractor is given time to think over an assignment presented for execution, and the opportunity to avail him/herself of independent legal advice.

Rogue or Missing Inventors
Difficulties may be encountered where an employee-inventor or co-inventor has left the company, or where an independent contractor relationship has ended on a sour note. An assignment agreement may be entirely rejected by such individuals, or they may try to hold the company for ransom. On occasion, an inventor may appear to have simply vanished off the face of the Earth.

Even in these circumstances, all inventors must be named in any patent application for the invention. Lead inventors should identify all those who worked on the invention and the roles they played. Former employees and contractors should be contacted for an assignment. If there is any doubt about whether an individual played an inventive role, an assignment should be obtained, if possible. If an inventor cannot be located, details of the search should be retained in the invention file. In the case of a "rogue inventor" who refuses to assign, efforts to get an assignment from the inventor (including, letters, follow-up telephone calls, e-mails) should be documented. The Patent Act provides a mechanism for proceeding with an application even in the event of a missing or rogue inventor.

In a worst case scenario, where none of the company's rights can be established vis-à-vis a rogue/missing inventor, the patent application may be limited to what can reasonably be claimed without that inventor's contribution.

Ownership of Copyright by Employees/Contractors
Under the Copyright Act, there is a codified system of first ownership. The general rule is that the author (human creator) of a work is the first owner of copyright. However, if a work is made in the course of employment under a "contract of service", copyright belongs first to the employer. Case law has construed this provision strictly. Independent contractors and quasi-employees are not usually considered to be under a "contract of service". If the parties consider their relationship to be one of independent contractors for purposes of employment or tax law, they cannot treat it as an employment relationship for copyright purposes.

Questions may also arise as to whether works were created "in the course of employment". Depending on the nature of the employment relationship and the scope of the employee's duties, some works made by employees outside company time may be considered to belong to the company, while other works may be considered to be owned by the employee even if they were made on company time. As with the patent cases noted above, the copyright cases on this issue are all very fact-specific. Generally speaking, similar considerations will apply. Absent agreement otherwise, an independent contractor is always considered to own his/her own works.

Assignment of Copyright & Waiver of Moral Rights
An explicit assignment is recommended, even in the case of employees, to clarify ownership of copyright. Under the Copyright Act, no assignment is valid unless it is in writing. Recognizing that it would be too cumbersome to have a specific assignment for every piece of company literature, each employee should at least sign a general copyright assignment as part of their employment agreement (generally included in overall IP rights assignment). Work-specific assignments might be executed for works of special magnitude or significance (e.g. software releases, technical or user manuals). Ownership of copyright should also be consistently marked in the standard notices on company documentation, web pages, etc. (e.g. © 2002, Creativeco Inc.).

When creative workers (such as programmers, web designers or writers) are hired on contract, there is a particular need to clarify copyright ownership. It is particularly important that these contracts should explicitly assign copyright in any work product created during the term of the contract.

Moral rights also attach to works subject to copyright. The most significant of the moral rights in a literary work are the right of integrity of work and the right to attribution. The company may want the right to modify (or edit) a work after the fact. The company may also want to avoid having to name the author(s) of a work, especially if it is a group effort or if one author is no longer with the company. Therefore, all authors, whether employees or contractors, should be asked to waive their moral rights. Moral rights cannot be assigned but can be waived in favour of another party in whole or in part. It is good policy, even in the presence of a waiver of moral rights, to reasonably and properly attribute works to their authors, to the extent it is practical to do so. It goes without saying that there should never be deliberate misattribution or plagiarism.

Experienced IP lawyers can help in assessing inventorship/authorship issues, crafting effective assignments and reviewing IP terms in employment agreements for innovative companies.

Contact Jennifer Jannuska for more information on protecting your intellectual property rights.