Hired to Invent

Your company may own your brainchild

3 min read

If you're an engineer, you were probably hired to invent. That means that if you come up with something that brings heaps of money to your employer, you are owed nothing beyond your paycheck.

That puts you on a 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 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 share in the proceeds of their intellectual endeavors. MIT, for example, gives its professor-inventors a third of the revenue coming from their patented inventions.

Some companies also go beyond what the law requires to reward their engineers. In 2004, a survey by the Intellectual Property Owners Association 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 provided the invention is of ”outstanding benefit” to the employer. Germany has a similar law, but alas, the amount of the compensation depends on the employee's salary, whether or not the person was hired to invent, and a lot of subjective factors.

But don't pack your bags just yet. A 2006 study of 1983 German employees found that only 18 had received more than their usual income.

Monetary incentives to invent may 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 staffers 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 that they also had a hand in it. 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. Here are a few tips:

  • Have an attorney attend regular meetings to review project design and capture patentable ideas.
  • Have patent attorneys conduct walkabout visits to teams of engineers working on specific projects to get them talking about their innovations.
  • 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 the company but only beans for the employee--maybe just a $1000 check and a brief mention at the corporate retreat. Although you can try to wring out more money by taking your employer to court, that's 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.

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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