Who owns the inventions of independent contractors? Patent Edition

Ownership in an invention defaults to the inventor or inventors, but, like copyright, ownership can be transferred. In some narrow instances, ownership can transfer without a written agreement or instrument, though written agreements and instruments of transfer are the safer path.

When a company retains a contractor specifically to work on an invention, ownership in the invention may be transferred to the company under the hired-to-invent patent doctrine. The doctrine, while more than a century old, is seldom fought over because companies typically require employees and contractors to sign written agreements that clarify who owns what rights. If a company is forced to rely on this doctrine because its written agreement with a contractor is insufficient, the scope of the contractor’s work is likely to determine who owns title to the invention. That’s because the doctrine assigns title to the employer only when an employee/contractor is employed to solve a particular problem. Thus, if the contractor’s work encompassed much more than the invention at issue, or the problem solved by the invention was incidental to reason for employment, the employer may not own title to the invention under the hired-to-invent doctrine.

In some circumstances, employers may retain “shop rights” to inventions developed by contractors and employees for use by the employer. The shop-rights doctrine is similar to an implied license, and it grants an employer a right to use an invention. But that right carries limits: the employer can generally use the invention only in its own business, and the doctrine does not extend to an employer’s sale of the patented invention to a third party for that party’s unfettered use.