A new bill has been introduced in the New Jersey Legislature regarding contracts with employees relating to their inventions. The bill, sponsored by Assemblyman David C. Russo and Assemblyman Craig J. Coughlin, is intended to protect employee common law rights to ownership and usage of employee inventions that are totally unrelated to the job functions of that employee and are created without the use of any employer resources.
The crux of the bill prohibits an employment contract between an employee and employer that requires the assignment of any employee invention developed entirely on the employee’s own time and without using the employer’s resources. If this bill passes, it means that provisions in employment contracts which state that employers own everything their employees create will be deemed against the public policy of the State of New Jersey and will be unenforceable.
There is a bright side to this bill for employers, however. The prohibition doesn’t apply to inventions that:
- Relate to the employer’s business or actual or demonstrably anticipated research or development; or
- Result from any work performed by the employee on behalf of the employer.
In addition, under this bill, if an employee (outside of an employment contract) voluntarily offers their employer the opportunity to acquire any of their rights to an invention created on their own time and without the use of the employer’s resources, the employer has only nine months from the initial date of the employee’s offer to accept or reject the opportunity to acquire any such rights. After that nine month period, the employee will retain all of his or her rights to the invention, and the employer is barred from any further opportunity to acquire any of those rights.
What do you think of this proposed bill? As an employer in New Jersey, do you currently retain rights to all employee inventions under employment contracts? If you’ve got questions about how this bill may affect your company’s current policies, The McHattie Law Firm can help.
(Abigail Remore)