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Ownership of Inventions

 

 

 

 

The question if ownership of an invention is sometimes a difficult one. Often this question becomes contentious many years after the invention was devised and a patent application lodged. The contention may arise because of the economic merit of the invention which is often not apparent at an early stage. In order to establish the ownership of an invention it is necessary first of all to establish who the inventor is and then establish whether or not the inventor, or some other person or company, is entitled to the invention.

 

Who is the Inventor

 

The first step in establishing the identity of the inventor is the realisation that a company cannot be an inventor. An invention can only be devised by an individual person or persons. Thus, the inventor will normally be the person who conceives the original idea. If that person instructs a second person, such as an engineering foreman, to come up with a prototype then the engineering foreman will normally not be regarded as an inventor. The reason for this is that the foreman is regarded as 'a machine' which carries out the instructions given to it. The engineering foreman may come up with a particularly good design of the apparatus of the invention which may be easy to fabricate, economic in the use of materials and the like, but even so the first person is the inventor. However, if the engineering foreman comes up with an arrangement which achieves some result or advantage not contemplated by the original suggestion, then the engineering foreman may be regarded as one of two joint inventors of the improved invention.

 

 

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Who owns the Invention

 

Having determined who is/are the inventor(s), the next question to be determined (where an inventor is not self-employed) is whether the employer of an inventor is entitled to the inventor's invention. This question is determined by a body of common law known as 'Master and Servant', i.e. employer and employee and the relationship between them. In many cases, it is quite straightforward and clear that the employee's invention belongs to his employer. This will particularly be the case where the employee is employed, for example, as a design engineer whose job it is to come up with new products for the employer. It is also clear where there is a specific employment contract, or other written agreement, between the employer and the employee which specifies that any invention made by the employee belongs to the employer.

 

In the absence of a written agreement, it is sometimes difficult to determine who owns the invention. For this reason it is highly desirable that where a consulting engineer, or other person who is not a full-time employee, is retained then the ownership of any invention created by such a person should be settled in writing at the commencement of the employment. In this way, a bitter argument at a later date as to who owns the invention can be avoided. The more important the invention, the more bitter the argument.

 

However, it is not sufficient, for an employer to claim an employee's invention merely because it was made in the employer's time, using the employer's tools and the employer's materials. Under these conditions it may simply be that the employer is entitled to some financial reimbursement for his time, facilities and materials by the employee rather than the employer being entitled to the invention. This situation may arise, for example, where the employee is making a 'foreign order' in the employer's time and, in so doing, produces an invention. Much will depend upon the technical field of the employee's invention and the fields of activity, or even proposed activity, of the employer. A good general rule to be applied is to ask the question, 'Is the expectation of the employer than an invention of this nature made by one of his employees should be the property of the employer?' For example, an employer manufacturing furniture or upholstery fabrics would not expect to own an employee's invention relating to a device for washing cars, but an employer manufacturing domestic electrical appliances may well expect to own an improved electric can opener invented by one of his employees.

 

There are a substantial number of previously decided cases on questions of this nature and, therefore, such matters should be referred to a patent attorney if there is any doubt. In this connection, it is important to bear in mind that if too many inventors, or not enough inventors, are named then the eventual patent may be invalid. In the first case someone who has not contributed to the invention has been named as an inventor. This sometimes arises because of a desire not to hurt any feelings by leaving someone out. In the second case someone who has contributed to the invention has not been named as an inventor.

 

In addition, where a patent for an invention is applied for in the name of an inventor, and the inventor's employer is entitled to the invention, then even through the patent may be granted in the name of the inventor, the law considers the inventor to be holding the patent in trust for the employer. This situation sometimes arises with inventions made by a director of a company, the director normally being employed by the company, and the patent is applied for in the name of the director. If the company should then experience financial difficulty and be placed in receivership or liquidation, the receiver or liquidator of the company will almost certain claim that the patent is the property of the company and, therefore, should be included amongst the company assets. This claim will often frustrate the original intention of the director to accumulate assets in his own name but liabilities in the name of the company.

 

An invention, whether the subject of a patent application or not, is personal property, is able to be owned by an individual or a company, and is able to be assigned, or sold, to another person or company. In addition to assigning either an invention or the right to apply for an Australian patent, it is normal to also assign the right to apply for corresponding patents in foreign countries. However, the overseas patent application right may be assigned to a person or company different from that applying for a patent in Australia. It is normal practice to have an employee execute an assignment in favour of his employer even though the employer owns the invention of the employee. Such an assignment confirms the situation and places the matter beyond doubt. Since this assignment carries the employee's signature, it will settle any dispute arising at a later date should the employer and employee fall out or disagree. It is common practice for such assignments to include a term, or condition, which requires the employee to assist his employer to obtain patents in Australia and other countries. Such assistance may involve the signing of forms for various countries and/or the provision of technical assistance in overcoming Examiners' objections.

 

 

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Our dedicated team can assist you with all matters relating to ownership and protection of Intellectual Property. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.