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New law increases employees’ IP rights to independent inventions

On Behalf of | Mar 31, 2024 | BUSINESS & COMMERCIAL LAW - Intellectual Property

If you have a company wherein employees are regularly developing new products and processes or improvements to them, the company typically has the right to patent that work, and the individual employee doesn’t.

That’s true even if an employee does some work on their own time and in part using their own resources, such as equipment or computers. It is their expertise, but that’s what you hired them for. Further, they still do the work as part of their job – likely at their manager’s direction and with the help or input of colleagues.

What about employee inventions that are independent of their work?

Last September, New York Gov. Kathy Hochul signed a law that prohibits employers throughout the state from requiring employees to give them intellectual property (IP) rights to anything the employee has invented themselves, using their own time and resources. Specifically, it states that “an invention developed entirely on an employee’s own time, without using an employer’s property or trade secrets, belongs to the employee.”

The law, which has been added to the New York Labor Law (Section 203-f) took effect with the signing. It is retroactive to agreements already in place. The law states that “employment provisions that require an employee to assign certain inventions that are made on the employee’s own time and which do not use the employer’s equipment, supplies, facilities, or trade secret information shall be unenforceable.” The law clarifies that it doesn’t apply to “IP created with actual or demonstrably anticipated research of the employer or …work by the employee in the course of their work for the employer.”

Increasing incentives for innovation

This law might be seen as an outgrowth of the general movement in the U.S. aimed at giving employees more rights to seek and obtain employment in their field without past employers placing restrictions on them – for example, through overly stringent non-compete agreements. As a preface to the legislation, the New York Senate stated, “Overly broad contracts can rob employees of their intellectual property… [T]hese clauses prevent employees from trying new ideas that can one day turn into new businesses.”

The law is ever-evolving. If you have questions or concerns about any of your contracts or your company’s compliance with the new law, it’s a good idea to get legal guidance.