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Who Owns Innovative Technology Developed at Home?

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One would suppose that the "garage inventor" owns her creation. However, the law typically transfers ownership to an employer from an independent contractor who signs a contract indicating that the project is a work for hire. Also, an employer owns an employee's intellectual property that has been produced in the scope of employment. Does "scope of employment" only involve time at the workplace? This comment will briefly address several of these questions.

The U.S. Supreme Court in 1989 addressed employee or independent contractor employment status in a widely cited decision (Community For Creative Non-Violence v. Reid). A studio created sculpture was not a work for hire. In addressing the employment status, the Court considered a variety of factors including the right to control the activity, the skill required, the source of tools and equipment, the location of the work, method of assignment and payment, if the work is part of the regular business of the employer, method of payment, employment fringe benefits, and the tax treatment of the worker.

If the worker is an independent contractor and has not signed a work for hire contract, he owns the creation. Even if a work for hire contract is signed, the Copyright Act lists the categories of works subject to this doctrine. I have quoted this statutory language in a prior comment providing an introduction to the work for hire doctrine.

If classified as an employee, the "scope of employment" question remains. Determining what is within the scope of employment involves considering the type of work the employee was hired to perform, the time and location boundaries of the employment, and if the work was completed at least in part to serve the employer. These factors are flexible and very fact specific. For example, taking work home may be much different from hobby tinkering. Telecommuting, flex time, and virtual offices complicate the analysis.

Some employers have a written contract in which the worker agrees that everything she creates while employed is a work for hire and that ownership is automatically transferred to the employer or, in the alternative, if not a work for hire, the ownership of created intellectual property is nevertheless assigned to the employer. Such broad provisions might be challenged on legal grounds related to fair notice and fair dealing. If the employer's resources are utilized to create the invention, the "shop right" doctrine may allow the employer to use the invention, even if the worker still owns it.

Another issue beyond the scope of this comment involves the marital status of the home inventor. If married, marital property law may provide a spouse with partial ownership. The invention may be an asset subject to division upon divorce. If divorced, earnings from the invention might be subject to spousal and child support obligations.

Computer related technology ownership disputes are commonplace. As this comment suggests, untangling such questions may be difficult. Utilize an experienced attorney to address in advance of creation the ownership of home created technology.