Patent rights initially vest with the person that conceives of the invention. For example, if a company hires an independent contractors, patent rights initially vest with the independent contractor. If the company hiring the independent contractor wants to exploit the invention, the company must acquire the patent rights from the independent contractor through an assignment. Companies should negotiate with the independent contractor before hiring the independent contractor with respect to ownership of the intellectual property. Will the independent contractor solely own the intellectual property? Will they share ownership? Will the company have all rights to any and all intellectual property created for the project?
Problems arise when the company does not have an agreement by the independent contractor to assign inventions to the company. In this situation, the independent contractor owns the invention even though the company hired the independent contractor. The company may have a license or the right to use the invention due to the nature of the relationship between the independent contractor and the company. However, the company cannot exploit the patent rights because the independent contractor owns the invention, not the company. The company cannot license the patent rights to another, cannot file a patent application on the invention, etc. As such, it is important to negotiate ownership terms with independent contractors before engagement.
In relation to employer-employee relationships, read Avoid Problems: Get an Invention Assignment Agreement.
You may also be interested in Conflicting Invention Assignment Clauses.
For more information, please feel FREE to contact me at (949) 433-0900 or [email protected].