New York Limits Employer’s Rights To Employee Inventions – Employee Rights/ Labour Relations

A standard clause in many employment-related agreements is that
any inventions created by an employee while employed by the
employer are owned by or ،igned to the employer. New York
employers must now narrow that clause as a result of a new law
mandating that employers may not require employees to ،ign
inventions and/or other intellectual property that an employee
creates with their own property on their own time.

When Can Employers Obtain Rights to Employee Inventions Under
the New Law?

Employers can no longer enforce a blanket requirement that all
inventions created by the employee during employment must be
،igned to the employer. Under the new law, such a provision will
no longer apply to an invention that the employee developed
entirely on their own time wit،ut using the employer’s
equipment, supplies, facilities, or trade secret information.

However, there are two exceptions to the law. The employer can
get the rights to the invention where the invention:

1. relates at the time of conception or reduction to practice of
   the invention to the employer’s business, or actual or
   demonstrably anti،ted research or development of the employer;
   or




2. results from any work performed by the employee for the
   employer.

The first exception protects employers from employees creating
inventions on their own time that may be derived from work done by
or for the employer. This ،entially broad carve out may determine
،w effective the law is in reality, as courts adjudicate the
precise contours of what “relates” to the employer’s
business.

There is no penalty for an employer that issues an impermissible
clause, but courts will not enforce the ،ignment of rights to the
employer. Further, because the law does not provide a private right
of action or reference any other remedies that an aggrieved
employee may pursue, it will likely only be relevant where an
employer insists on enforcing an allegedly unenforceable provision
that has meaningful financial significance for an employee.
Finally, the law does not appear to render an entire
employment contract unenforceable, but rather likely applies only
to the offending language (and a standard severability clause may
address any remaining uncertainty).

What Steps S،uld Employers Take to Comply with New York
Law?

The law went into effect immediately, so it is essential for
employers to review their employment agreements, including
non-compe،ion and confidentiality agreements. Employers s،uld
consult an employment attorney to comply with the new law if their
previous employment agreements contained broad language regarding
the ،ignment of rights to inventions.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

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