Lack of clarity of ownership or an inability to demonstrate chain of title can cause significant problems for patentees.  Here we discuss how ownership is established and the documentary evidence patentees should have in place.

First principles

The rights to an invention, and to file a patent application directed towards it, lie primarily with the inventor, i.e. the person or people that came up with the concept behind the invention and reduced it to practice. In some circumstances, though, the rights may pass automatically to a third party, for example, where the invention was made in the course of employment or where the inventor had assigned or was under an obligation to assign the rights.

The first step in deciding ownership of the invention is to identify the inventor.  The inventor is the actual deviser of the invention and/or someone who contributes inventive information to it.  This should be distinguished from someone who merely contributes common general knowledge, contributes non-patentable features or carries out routine experiments to provide examples that the invention works as expected.

Once the inventor has been identified, the chain of entitlement can be established, i.e. determining whether the patent rights pass from the inventor to a third party.

Inventions by employees

When a company employee works on an invention, it would be easy to assume that the company will own the resulting invention and patent rights. However, this is not always the case.

In the UK, Section 39 of the UK Patents Act 1977 sets out the circumstances in which the rights to an invention are automatically passed from an employee inventor to the employer.

The first circumstance is when the invention was made in the course of the normal duties of the employee or in the course of duties falling outside their normal duties, but specifically assigned to them. In either case, the circumstances must be such that an invention might reasonably be expected to result from the carrying out of those duties. This requirement tends to be relatively straightforward in companies that employ scientists and engineers specifically for research and development. For example, a chemist employed by a pharmaceutical company to carry out research on a cancer drug would most likely fall under this category. However, an employee whose normal duties are cleaning would not.

The second circumstance is when the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of the duties and the particular responsibilities arising from the nature of the duties, the employee had a special obligation to further the interests of the employer’s undertaking. This type of employee might include a commercial director or CEO.

It should not be assumed that everyone working for a company is an employee of that company. For example, company directors may not necessarily be employees. Care should also be taken with consultants, contractors and particularly with university staff and students. If an individual does not have a contract of employment, it is a good sign that they aren’t an employee, but are working for the company under a different arrangement.

Even where an invention is made by an employee, it may be worth putting some paperwork in place to confirm ownership. This is particularly important when patent rights are likely to be sought outside the UK. Whilst any decision on ownership should be based on the law in the country in which the invention was made, it is often easier to tackle any questions or challenges raised if confirmatory assignment has been put in place. Further, the patent offices in some countries require an inventor assignment, even if ownership has automatically passed from the inventor to the patent applicant. Such assignments may be requested several years after the original application was filed. It can sometimes be difficult to obtain signatures at this point, for example if the inventor has left the company. In these cases, a signed document confirming transfer of the rights in the invention from the inventor to the applicant can be very helpful.

It should also be remembered that inventions made by inventors employed in other jurisdictions may not automatically pass from them to their employers.

Inventions by third parties

If work on the invention is carried out by a third party, for example via an outsourcing arrangement, the rights to the invention do not automatically pass to the company instructing the work. In this case, it is important that the agreement between the instructing company and third party includes clauses on ownership of IP rights. Assignment documents for any patent applications resulting from this work are also likely be required.

Collaborations

In collaborations between two or more parties, the chain of entitlement may be further complicated due to multiple inventors being associated with different parties, and there is therefore an increased need to ensure ownership is clear. A collaboration agreement can be used to set out the ownership arrangement at the start of the project.  This should define background IP (i.e. the IP already owned by the parties to the agreement) to ensure that ownership of existing IP is clearly identified and to help identify whether any licensing arrangements are required.  In addition, the collaboration agreement should identify who will own IP going forwards. It is important to ensure all parties, including inventors and employers, agree on ownership to avoid any future disputes.

Recommendations

For any invention, it is important to investigate who the inventors are at an early stage. Once the inventors have been identified, the chain of entitlement from inventors to owners can be established.   

In collaborations or outsourcing arrangements, the ownership of IP should be agreed before the start of the project and set out in an agreement. The agreement should include information on background IP to prevent disputes concerning existing IP owned by the parties.

An assignment document is generally required if an inventor is not an employee or if there is doubt about the employment status.  Where the inventor is not an employee, care should be taken that the inventor is not under any obligation to assign the invention to a third party (for example, if the inventor is an employee of another company). Even where the inventor is an employee, a confirmatory assignment may be beneficial.

If you have questions about ownership of inventions, please contact our patents team. This update is for guidance only and should not be taken as legal advice.