Who owns an employee’s inventions when they are invented outside work hours?

Sam Brown | Director | Law | +44 (0) 207 7783 0518 | SBrown9@uk.ey.com

In today’s fluid and fast-moving labour market, where an individual’s employment status can be unclear, it can be difficult to determine when and how an invention is conceived. Yet this can be of crucial importance for establishing whether it is the employee or the employer that owns an invention.

In an important decision, the Intellectual Property Enterprise Court (IPEC) recently considered the right to inventions made by employees where the invention has, in part, been conceived in an employee’s own time at home and has given guidance on the circumstances in which an employee will own patentable ideas created during their employment.

Background and the rules on ownership of employee inventions

Section 39 of the Patents Act 1977 provides that an employee invention will automatically belong to their employer if it was made in the course of the employee’s “normal” duties or duties “specifically assigned” to them, provided an “invention might reasonably be expected to result” from the carrying out of the duties. An invention will also belong to the employer where there is a special obligation to further the employer’s interests, typically in the case of directors or partners.

What is the position though where an invention is made by an employee at home, on their own equipment and in their own time? This was considered in Prosyscor Ltd v Netsweeper Inc & Ors [2019] EWHC 1302 (IPEC).

The facts of the case

A software engineer, Bradley Kite, was employed by Netsweeper during which time he developed IP authentication software which allowed separate treatment of different types of users who shared a single IP address. Mr Kite worked on the development at home in his own time, but also posted his ideas on the employer’s intranet and discussed them internally amongst colleagues.

Mr Kite subsequently left Netsweeper and continued to work on the software for the benefit of his own company, Prosyscor, with the intention of filing a patent application. Netsweeper had continued to develop its own version of the software and had filed patent applications. On becoming aware of the applications, Prosyscor sued for ownership of the patents.

Normal Duties

At the centre of the dispute was the question of what Mr Kite was hired to do.

In establishing this the courts will first look at the employee’s employment contract, alongside any ancillary documents, and assess what it is they were employed to do. However, the contract itself is not the only determining factor and the courts will look beyond it to the reality of the relationship, particularly where the employee is employed to invent. It is acknowledged that what are considered “normal duties” can change over time.

Working at Home

The judge in the case acknowledged that working at home, on your own equipment and in your own time may all be factors in establishing that work falls outside of “normal duties” but, in the case of Mr Kite, this did not apply as he was doing the type of work expected of him. This position was supported by the fact the Mr Kite had shared his invention on the employer’s intranet.

Take-aways for Employers

  1. Ensure that, where appropriate, the individuals working on inventions are employed as employees rather than being engaged as self-employed contractors or workers
  2. Be clear in employment contracts about the type of work an employee has been hired to do, particularly if it may lead to inventions
  3. Record any changes over time in the scope of the work of the employee
  4. Record any specific projects the employee is assigned/works on
  5. Keep accurate records of new ideas and discussions
  6. Always include explicit IP assignment and confidentiality provisions in employment contracts

Take-aways for Employees

  1. Don’t assume work done at home in your own time will be yours; it needs to be sufficiently separate/different from the work you have been employed to do and/or your job description
  2. Avoid discussing your own work with colleagues or documenting it formally with your employer