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.comThe 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.
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Author: Matthew F. Mimnaugh
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]
Author: Robert L. Baker, Jr.
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!