Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Employee Invention Bill to Protect Employee Intellectual Property Rights

Author: Scarinci Hollenbeck, LLC

Date: December 16, 2016

Key Contacts

Back

NJ Assembly Passes Employee Invention Bill – What Could This Mean for Your Business?

employee invention bill

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.”

Employment Agreements Governing IP

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.

Provisions of Assembly Bill No. 492

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.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Corporate Transactions: Best Practices for Successful Deals post image

Corporate Transactions: Best Practices for Successful Deals

Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]

Author: Dan Brecher

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

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!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!