Engineers are often inventors. A key issue for engineers is: who owns the inventions that they make? Who is entitled to file-for and obtain a patent on inventions made by an engineer? In addressing this question, we must distinguish between two types of engineers: engineers who are employees and engineers who are independent contractors.
Generally speaking, where the employer maintains control over the individual’s work, pays wages or other remuneration to the individual and has the right to discipline or dismiss the individual, the individual is considered an employee.
Where the Inventor is an Employee
The fundamental rule as to ownership of inventions is that an inventor owns the rights in his or her own invention. An inventor who is an employee is therefore entitled to file for and obtain a patent in their own name for the inventions that they make. But this is subject to exceptions.
A principal exception is the case of an inventor who is employed to invent. Most employed engineers fall into this category. Where an engineer is employed to produce a solution to a problem, the employer is entitled to the benefits of the inventor’s creativity. By the same token, when an employed engineer makes an invention that is unrelated to a problem that he or she has been assigned to solve by his employer, he or she will own the rights in the invention, and will be entitled to file for a patent for that invention.
In the United States a special rule exists that has no counterpart in Canada. An employer may be entitled to use an employee’s invention without paying compensation under the concept of a “shop right”. The employer only has a right of use. They cannot assign this right to another and they cannot prevent others, including the employee/inventor, from using or marketing the invention. The shop right exists and persists even when the inventor obtains a patent, providing the employer with immunity with respect to the invention for the life of the patent.
A shop right arises if the invention is developed on the employer’s time, or utilizing the employer’s money, property and labor. The theory is that, because the employer’s resources were used, the employee has impliedly consented to use of the invention by the employer.
Where the Inventor is an Independent Contractor
Where an inventor is an independent contractor, the fundamental principle in Canada is clear: the invention remains with the inventor unless there is an understanding to the contrary. Understandings in these circumstances can be based upon explicit agreements, whether in writing or oral, and can arise by implication from the circumstances of the relationship between the parties. In order to avoid misunderstandings, it is advisable that the agreement always be reduced to writing.
Employers will often address the issue of invention ownership in an employment agreement presented to an individual when they join the firm. Companies commissioning work under contract should stipulate as to the ownership of prospective inventions in their contract documents. Engineers confronted with clauses that require them to completely signed-off their rights should take care to seek legal advice before making a final decision to accept such terms. The essential role of a lawyer in such case is to ensure that the individual understands the consequences of the legal commitments being made.
Engineers, whether acting as employees or contractors should, before they sign-away valuable rights, appreciate their basic, background entitlements in respect of their future inventions. Those rights should not be given-up casually or frivolously; one day they may turn out to be of exceptional value.