The Intellectual Property Enterprise Court, part of the High Court, recently gave guidance on the circumstances in which an employee will own patentable ideas created during their employment.[i] This is a key issue for businesses wishing to prevent employees leaving with valuable ideas and setting up as competitors.
The rules on ownership of employee inventions
Under section 39 of the Patents Act 1977, an invention made by an employee will belong to the employee unless it was made in the course of their “normal” duties or duties specifically assigned to them, provided that their duties were such that an invention could reasonably be expected to result – i.e. they must be ‘employed to invent’. The invention will also belong to the employer if the employee had a special obligation to further the employer’s interests, which often arises in the case of directors and partners.
In this case, the main issue at play was what constituted the employee’s “normal duties”. A former employee claimed ownership of a patent application relating to website filtering software as he had completed work on it from home, outside his normal working hours and using his personal computer.
Following the established approach from the Court of Appeal’s decision in the Pinkava case[ii], when deciding whether an invention is made outside an employee’s “normal duties”, the courts start by looking at the employee’s employment contract and assessing what they were employed to do. However, the employment contract is by no means the ultimate authority, and the courts look beyond the contract to the reality of the employment relationship, particularly to whether the employee was employed to invent. Moreover, an employee’s “normal duties” are by no means set in stone, and can change over time and become normalised.
Work done at home
Judge Hacon acknowledged that the fact that an employee works at home, outside office hours and on a personal device may be a factor indicating that the work to falls outside “normal duties”. However, in this case this did not apply given the circumstances, as the employee was doing the kind of work expected of him – i.e. creating software allowing filtering access to websites, an area in which he was bound to innovate if he wrote software qualifying for patent protection. Simply because the employee made the choice to carry out his normal duties at home and after hours did not mean he could claim entitlement to the patent application. A further factor against ownership by the employee was that he had posted the inventive concept on the company’s intranet.
This case will be welcomed by businesses concerned about the ownership of employee-created inventions because of its clear rejection of the idea that an employee can claim an invention as their own merely because they worked at home on it.
Employers should note that the rules on ownership of employee inventions in S.39 Patents Act cannot be contracted out of in the employment contract. However, as the courts generally start their analysis by looking at the employment contract it is important that the contract properly reflects the breadth of the employee’s duties and the fact that they are employed to innovate. Documenting the employee’s developing role may also be helpful.