Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: December 16, 2016
The Firm
201-896-4100 info@sh-law.com
The New Jersey Assembly recently passed legislation that governs provisions contained in employment agreements related to the intellectual property created by an employee. The bill, Assembly Bill No. 492, aims to protect an employee’s rights to the exclusive ownership and usage of any employee invention developed on the employee’s own time and wholly without using any employer resources.”Under current law in New Jersey, nothing prevents an employer from acquiring the rights to any such employee invention through the express terms of an employment contract,” said Rep. Craig Coughlin (D-Middlesex) in a press statement. “This bill would prevent the employer’s acquisition of rights to the invention through such a contract, thereby preserving the employee’s rights to the employee’s own invention.”
Employers do not automatically assume the rights to any intellectual property (IP) created by their employees. Under U.S. patent law, inventors are presumed to hold ownership rights, and patents must typically be filed under the name of the inventor. Accordingly, many businesses use employment agreements to govern the ownership of employee-created IP, such as an assignment-of-inventions agreement or work-for-hire agreement.
The proposed legislation bans any provision in an employment contract between an employee and employer that requires the assignment by the employee of any employee invention developed entirely on the employee’s own time and without using the employer’s equipment, supplies, facilities or information, including trade secrets. However, the prohibition shall not apply to “inventions that: (a) relate to the employer’s business or actual or demonstrably anticipated research or development; or (b) result from any work performed by the employee on behalf of the employer.” To the extent any provision in an employment contract applies, or intends to apply, to an employee invention subject to the law, the provision will be deemed against the public policy and unenforceable.
In addition, Assembly Bill No. 492 provides that, outside the context of an employment contract, if an employee voluntarily offers his or her employer an opportunity to acquire any of the employee’s rights to an invention to which the bill applies, the employer would have no more than nine months from the initial date of the employee’s offer to accept or reject the opportunity to acquire any rights. After this period, the employee would retain all the rights to the invention, and the employer would be barred from any further opportunity to acquire any of the rights. As amended prior to passage by the Assembly, the bill expressly states that it “does not impede or otherwise diminish the rights of alienation of inventors or patent-owners.”
The bill, as written, “shall apply to any employment contract entered into on or after that effective date of enactment.”
The New Jersey Assembly unanimously passed the bill on November 21, 2016, but a companion bill has not yet been introduced in the Senate. We will continue to track the status of the proposed legislation and post updates as they become available.
Are you a New Jersey business owner unsure of how this employee invention bill could potentially affect your business? Would you like to discuss the matter further? If so, please contact me, Jason Mushnick, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]
Author: Marc J. Comer

Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]
Author: Jay McDaniel

For New Jersey data center owners and operators, a service agreement may look routine when it is signed. The network is functioning, the vendor is meeting its installation schedule, and the parties have agreed on pricing and performance specifications. The provisions that seem most important at that stage are often the technical ones. That changes […]
Author: George McGowan

The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]
Author: Donald M. Pepe

Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]
Author: Donald M. Pepe

The five most common real estate disputes are breach of contract claims, landlord-tenant conflicts, zoning and land use disagreements, construction claims, and boundary disputes. Understanding why each arises, and taking preventive steps early, can help property owners, tenants, developers, and investors avoid costly litigation. Key Takeaways: Real estate transactions are complex endeavors involving numerous parties […]
Author: Paul Grossman
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!