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Hired to Invent By Kirk Teska

First Published January 2008
It isn't fair, but engineers have weaker patent rights than other employees
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If you’re an engineer, you were probably hired to invent. That means that even if you come up with something that brings in heaps of money for your employer, you are owed nothing beyond your regular paycheck.

That puts you on different ground from that of accountants, truck drivers, and other people who were not hired to invent—they get to keep their patent rights. Even if they did their inventing on the job, using company resources, all the company gets is a “shop right” to use the patented invention without paying a royalty fee.

The courts haven’t been all that clear on what “hired to invent” means, and therefore most companies require all new employees to sign a contract handing rights to any future inventions to the company. Your company might even require that you assign to it any patentable ideas you may have within a year after termination to dissuade you from quitting your job to perfect an invention that you’d conceived earlier, on company time.

Of course, employers can, if they want, renounce some of their rights in your patents. Universities have generally found it worth their while to let professors (and sometimes even grad students) share in the proceeds of their intellectual endeavors. MIT, for example, gives its professor inventors a third of all the revenue coming from their patented inventions.

Why are universities more generous than companies? One view is that engineers employed at companies are more highly compensated than academics (and compensated for a job that specifically involves inventing), whereas professors are hired to educate, publish, and conduct research for publication. The resulting disclosures can make it a pain to get a patent.

Publications can themselves pass into the possession of the employer if writing is part of the employee’s job. In this respect, copyright law mirrors patent law.

Some companies also go beyond what the law requires to reward their engineers. In 2004, a survey by the Intellectual Property Owners Association in Washington, D.C., found that 61 percent of the responding companies paid their employees US $1000 to $3000 upon the filing of a patent application, and 37 percent paid from $1000 to $2000 upon the issuance of a patent. If all you got was a plaque, you can use these findings as ammunition the next time you talk to your boss!

You can also relocate to a country where the law leans more toward the inventor. In the United Kingdom, for example, the employee inventor must be compensated when the invention is of “outstanding benefit” to the employer. Germany has a similar law, but without the proviso; alas, the amount of the compensation depends on the employee’s salary, whether or not he was hired to invent, and a lot of subjective factors.

But don’t pack your bags just yet, because the odds of meaningful compensation are against you. In a 2006 study of 1983 German employees, only 18 received more than their usual income because their companies had paid them for inventing something.

Monetary incentives to invent sometimes have perverse results. They may encourage employees to file so many patents that their companies’ legal departments (and legal budgets) can’t keep up with the work. The companies may then respond by capping the number of patents employees can file.

Employees can also get into nasty disputes over who invented what. Two engineers may conceive of a new idea for a product, and then several other engineers and a manager or two may assert they also had a hand in it. In these cases, a patent attorney may have to intervene. I have even had engineers fight over whose name was to be listed first on the patent.

Companies can avoid a lot of problems by making the disclosure process as simple as possible—for instance, by running seminars that show employees how to spot patentable innovations and how to document work on them. Here are a few tips:

  • Have an attorney attend regular meetings to review project design and capture patentable ideas. This will both assure full disclosure and free up engineers’ time.

  • Have patent attorneys conduct walkabouts—visits to teams of engineers working on specific projects. The idea is to get them talking about their innovations, improvements, and ideas.

  • Invite engineers to lunches to introduce them to patents and talk about new ideas. Include a lecture by a patent attorney about patent basics, patent law, or perhaps a case that’s in the news.

None of these considerations will mollify the engineer whose invention brings in billions for his company but only beans for himself—maybe just a $1000 check and a brief mention at the corporate retreat. Of course, you can try to wring out more money by taking your employer to court, but that is an all-or-nothing strategy: if you win the case, you get a lot of money, but if you lose it, you may lose your job as well.

When employees do win big, it’s typically because they demonstrated some violation of a company policy or contract. For example, in April, a retired chief researcher at Sharp filed a suit against that company, citing its policy of providing “reasonable compensation” to inventors, He asserted that his contribution to inventions that improved both the speed and energy consumption of Sharp’s LCD monitor was worth $4.6 million. This Japanese case settled in April for an undisclosed amount.

You can take heart in knowing that despite all these problems, invention can still do wonders for your career. According to that 2004 company survey, engineers whose inventions contributed above and beyond the call of duty reported receiving larger monetary awards, stock options, and, of course, promotions.


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