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
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

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

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"
President Trump's Termination of Member Gwynne Wilcox post image

President Trump's Termination of Member Gwynne Wilcox

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

Link to post with title - "President Trump's Termination of Member Gwynne Wilcox"
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

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

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
Gross Lease vs. Net Lease: Understanding the Key Differences post image

Gross Lease vs. Net Lease: Understanding the Key Differences

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.

Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"

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!

Please select a category(s) below: