Patents when employees, contractors or co-founders join or leave
The person who invents something owns it unless the law or a contract moves ownership to the company, and the rules differ by country: in the US, in practice, only a written assignment does it; in the UK, Germany and Sweden statutes allocate employee inventions and often require compensation. Contractors and departing co-founders own what they created unless they assigned it. Sign present-tense invention assignments with everyone before work starts.
- 35 U.S.C. 262: in the absence of an agreement, each joint owner of a US patent may make, use, sell or license the invention without the consent of, and without accounting to, the other owners. Source: Cornell LII.
- Patents Act 1977 (UK), section 39: an employee's invention belongs to the employer only if made in the course of normal or specifically assigned duties where an invention might reasonably be expected, or by an employee with a special obligation to further the employer's undertaking. Source: legislation.gov.uk.
- California Labor Code section 2870: an employment agreement cannot require assignment of an invention developed entirely on the employee's own time without the employer's equipment, supplies, facilities or trade secrets, unless it relates to the employer's business or results from work for the employer. Source: California Legislative Information.
- Stanford v. Roche, 563 U.S. 776 (2011): the litigation turned on the difference between an agreement to assign future inventions and a present assignment; Stanford's agreement said "agree to assign" while the competing agreement said "do hereby assign". Source: Justia.
Why ownership is decided at hiring, not at filing
A patent application names inventors, but the company files as applicant only if it owns the invention, and ownership is decided by contracts and statutes that were, or were not, put in place when the inventor started work. Every route to funding or exit runs through this question. An acquirer's first request is the chain of title; a missing assignment from an engineer who left two years ago is one of the most common and hardest problems to fix.
The defaults by country
United States: the inventor owns the invention. The employer gets it by written assignment or, narrowly, if the employee was hired to invent that specific thing; otherwise the employer may hold a shop right to use it while the employee keeps title. California Labor Code section 2870 and similar statutes in several states void clauses that reach inventions made on the employee's own time, without company resources and unrelated to the business. United Kingdom: section 39 of the Patents Act 1977 gives the employer inventions made in the course of normal or specifically assigned duties, where an invention might reasonably be expected, and inventions by senior employees with a special obligation; section 40 lets an employee claim compensation for a patent of outstanding benefit. Germany: the Employee Inventions Act requires employees to report inventions; the employer is deemed to claim them unless released within four months and must pay statutory compensation. Sweden: the Act on the Right to Employees' Inventions gives the employer rights to inventions within the scope of employment against reasonable compensation, and university teachers and researchers own their inventions under the teacher's exemption.
Contractors, co-founders and previous employers
Contractors own what they invent unless the consulting agreement assigns it; the US work-for-hire doctrine covers copyright, not patents. Co-founders own what they conceived before incorporation unless a founder IP assignment moved it into the company, and a departing co-founder who never signed one keeps their share; in the US a joint owner can license the patent to anyone without the others' consent (35 U.S.C. 262), in the UK co-owners need each other's consent and get deadlock instead. A founder's previous employer may own the core invention under the old employment agreement, sometimes through a trailing clause covering inventions conceived shortly after leaving; universities usually claim staff inventions under IP policies, and Bayh-Dole applies to US federally funded work.
What to put in place
- Founder IP assignment at incorporation, covering everything created before the company existed.
- Present-tense invention assignment ("hereby assigns") in every employment and consulting agreement, with a duty to disclose inventions and to sign documents after leaving.
- A prior-inventions schedule for each person, so what they carved out is written down.
- Statutory compliance where it applies: compensation policies in Germany, Sweden and the UK; carve-outs in US states that require them.
- An invention disclosure process that records who conceived what and when, so inventorship and ownership can be shown later.
- Confirmatory assignments and recordal at the patent office for every application.
What most people get wrong
Assuming payment equals ownership. Assuming the co-founder who left on good terms will sign later. Using "agrees to assign" language, which creates a promise rather than a transfer. Filing in the company's name on a founder's invention from a previous job and hoping nobody checks. And not keeping the signed agreements with the patent files, so the chain of title has to be reconstructed in the data room.
How Lightbringer handles this
Lightbringer's invention disclosure process records inventors and conception as the work is captured, so inventorship is documented at the point the invention is described rather than reconstructed later. The platform holds each application together with its documents and deadlines, so the register a buyer asks for already exists. This page is general information, not legal advice on a specific employment contract; national employment law varies and a local attorney should review the agreements you rely on.
Related: What is IP due diligence? · Raising a round or selling the company. External sources: 35 U.S.C. 262 · Patents Act 1977, section 39 · California Labor Code 2870
Frequently asked questions
It depends on the country and on the contract, and the default is not always the employer. In the United States, the inventor owns the invention unless there is an assignment; an employer gets ownership through a written invention assignment agreement or, absent one, only if the employee was specifically hired to invent that thing. Otherwise the employer may hold a "shop right", a non-exclusive licence to use the invention, while the employee keeps title. Several states, including California under Labor Code section 2870, void clauses that claim inventions made on the employee's own time without company resources and unrelated to the business. In the United Kingdom, section 39 of the Patents Act 1977 gives the employer inventions made in the course of the employee's normal or specifically assigned duties, where an invention might reasonably be expected, and inventions by senior employees with a special obligation to further the business; everything else belongs to the employee, and under section 40 an employee can claim compensation where a patent has been of outstanding benefit to the employer.
Germany's Employee Inventions Act requires the employee to report every service invention in writing; the employer is deemed to have claimed it unless it releases the invention within four months, and must pay the inventor statutory compensation. Sweden's Act on the Right to Employees' Inventions gives the employer rights to inventions within the scope of the employee's duties in exchange for reasonable compensation, with collective agreements often filling in the detail; university teachers and researchers in Sweden keep their inventions under the teacher's exemption. The practical rule for a company in any of these countries is the same: do not rely on the default. A written assignment signed at hiring, a disclosure process that captures inventions as they happen, and, where the law requires it, a compensation policy are what make the company's ownership hold up in due diligence. This is general information, not advice on a specific contract.
Yes, for every founder, employee and contractor who might contribute to an invention, and before they start work. An invention assignment agreement transfers ownership of inventions made in the course of the work from the person to the company. Without one, the default in the United States is that the inventor owns the invention and the company at best holds a right to use it, and every other jurisdiction has gaps of its own: a UK employee's invention outside their normal duties, a US contractor's invention (work-for-hire covers copyright, not patents), a co-founder's pre-incorporation idea. Investors and acquirers ask for these agreements first in due diligence, and a missing one from a person who has since left is one of the hardest problems to fix.
What a good one contains: a present-tense assignment ("hereby assigns", not "agrees to assign", the wording distinction at the heart of the Stanford v. Roche litigation); a confidentiality obligation; a duty to disclose inventions promptly and cooperate with patent filings, including signing documents after leaving; a schedule of prior inventions the person is carving out; and, where local law demands it, carve-outs for inventions made on the person's own time with their own resources (California Labor Code section 2870 and similar statutes) and a compensation mechanism (Germany, Sweden, the UK's section 40). For founders, sign a founder IP assignment at incorporation covering everything created before the company existed; for contractors, put the assignment in the consulting agreement, since without it they own what they build. Store the signed agreements with the patent files: a portfolio register is only as good as its chain of title. See also Who owns a patent when an employee invents it?
Only if your previous employer or university does not own it, and that depends on what you signed and when you conceived it. Check three things. First, the invention assignment clause in your old employment agreement: most assign inventions made during employment that relate to the employer's business or used its resources, and some include a trailing clause claiming inventions conceived within six or twelve months after leaving; trailing clauses are enforceable in some jurisdictions and not others (California, for example, limits them). Second, conception date: if you conceived the invention after leaving and without using confidential information from the old job, it is generally yours, but you will need to prove the date, so document it. Third, the statutory rules: in the UK, section 39 of the Patents Act 1977 gives the employer only inventions made in the course of your duties; in Germany, service inventions belong to the employer once claimed; in the US the contract governs almost everything.
Universities are a separate case. Most US, UK and German universities claim inventions made by staff, and often by funded students, under their IP policies, and US inventions made with federal funding fall under the Bayh-Dole Act, which gives the university the right to take title. The usual route for a spinout is a licence or assignment from the technology transfer office in exchange for equity or royalties, negotiated before the company files anything. Sweden is the notable exception: under the teacher's exemption, university teachers and researchers own their own inventions, which is why Swedish spinouts often file directly. Whatever the situation, do not file in the company's name and hope: a patent later found to belong to someone else is a due diligence failure that investors treat as fatal. Get the release, licence or written confirmation first, then file.
The person who created it, unless they assigned it to the company in writing. For contractors, this surprises founders most: the US work-for-hire doctrine applies to copyright, not patents, and even for copyright it only covers contractors in narrow circumstances, so a freelance engineer who designs a novel mechanism owns the invention and the code unless the consulting agreement says otherwise. Paying the invoice buys the deliverable, not the intellectual property in it. The fix is an assignment clause in every consulting agreement before work starts, plus an obligation to sign confirmatory assignments later, since a contractor who has moved on has little incentive to help.
For a departing co-founder, the question is what was assigned to the company at incorporation and what the founder agreement says. If everything created before and during the company's life was assigned in a founder IP assignment and the person is still bound by it, the company keeps the IP and the founder keeps whatever vested equity they earned. If no assignment was signed, the departing co-founder still owns their share of the inventions they conceived. In the United States, joint owners of a patent may each use and license it without the consent of, or accounting to, the others (35 U.S.C. 262), so a departing co-founder could license your core patent to a competitor. In the UK, co-owners cannot license without the others' consent, which leads instead to deadlock. Both outcomes are worse than a signed assignment. If a co-founder is leaving and nothing was signed, negotiate the assignment as part of the separation agreement, while there is still something to trade. See also Do I need an invention assignment agreement?
Transform patents into momentum
See exactly what filing costs before you commit. No invoice shock. No budget-season surprises.