Now Law:  Coughlin & Conaway Bill to Protect Employee Ownership & Usage Rights to Inventions Developed on Their Own Time

(TRENTON) – Legislation sponsored by Assembly Speaker-elect Craig Coughlin & Assemblyman Herb Conaway, Jr., M.D. to protect employee rights to the ownership and usage of inventions developed entirely on the employee’s own time and without using an employer’s resources was signed into law this week.

“The goal is to preserve an employee’s common law rights to the exclusive ownership and usage of any invention totally unrelated to their job functions and created wholly without using any employer resources,” said Coughlin (D-Middlesex). “Under previous law, nothing prevented an employer from acquiring the rights to any such employee invention through the express terms of an employment contract. This new law will prevent the employer’s acquisition of rights to the invention through such a contract and preserve the employee’s rights to his or her own invention.”

“If someone invents something using their own resources on their own time, their employer has no right to claim that invention,” said Conaway (D-Burlington). “People should feel confident that their intellectual property will be protected. This law will provide that protection by codifying into New Jersey law that employers don’t have a property interest in inventions created by their employees on their own time, without the use of the employer’s resources, and unrelated to the employer’s business.”

The new law (A-492) prohibits an employment contract between an employee and employer that requires the assignment by the employee of any employee invention developed entirely on the employee’s own time and without using the employer’s resources.  However, this prohibition shall not apply to any such invention that: (1) relates to the employer’s business or actual or demonstrably anticipated research or development; or (2) results from any work performed by the employee on behalf of the employer.

To the extent any provision in an employment contract applies, or intends to apply, to any such employee invention falling under the scope of the bill, the provision shall be deemed against the public policy of this state and shall be unenforceable.

Under the law, no employer shall require a provision made void and unenforceable by this act as a condition of employment or continued employment. Nothing in this act shall be construed to forbid or restrict the right of an employer to provide in contracts of employment for:

• disclosure, provided that any disclosure shall be received in confidence, of all of an employee’s inventions made solely or jointly with others during the term of the employee’s employment
• a review process by the employer to determine any issues that may arise; and
• full title to certain patents and inventions to be in the Unites States, as required by contracts between the employer and the United States or any of its agencies.

Nothing in this law should be deemed to impede or otherwise diminish the rights of alienation of inventors or patent-owners.