There is a latent conflict between the law of employee invention

NEW YORK UNIVERSITY

JOURNAL OF INTELLECTUAL PROPERTY AND ENTERTAINMENT LAW

VOLUME 8 FALL 2018 NUMBER 1

IS THE COPYRIGHT ACT INCONSISTENT WITH THE LAW OF EMPLOYEE

INVENTION ASSIGNMENT CONTRACTS?

CHARLES TAIT GRAVES

There is a latent conflict between the law of employee invention assignment

contracts and the Copyright Act’s work for hire doctrine. Countless employees

sign contracts specifying that, in most cases, the employer will own trade secrets

and patentable inventions, as well as copyrightable works. When employees

create in the workplace, these rules are largely uncontroversial. But when

employees create something outside the workplace for a new venture, there can

be a conflict between these two areas of intellectual property law. The work for

hire doctrine is more favorable to employee-ownership than the law of invention

assignment contracts. As a perhaps surprising result, where an employee’s

outside-the-workplace creation might constitute both a trade secret and a

copyrightable work, these two ownership tests can point in opposite directions.

Further, when an employee prevails as to copyright ownership, there are good

reasons why that result precludes an employer’s conflicting claim to trade secret

ownership in the same work. This friction on the boundaries of two areas of

intellectual property law has important policy ramifications for employees who

create intellectual property on the side, while planning for their next job.

Partner, Wilson Sonsini Goodrich & Rosati, San Francisco, and Adjunct Faculty, University

of California, Hastings College of the Law.

This essay is the first in a three-part series addressing under-analyzed areas of intellectual

property and employee mobility law which impact creative employees when changing jobs.

Departing employees can face a tangled body of contract, tort, and statutory claims brought by

former employers. Academics and practitioners have provided little commentary about some of

these overlooked areas of law. This relative inattention is surprising given the important policy

concerns so often at stake in mobility disputes.

2018]  IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT?  2 
INTRODUCTION ................................................................................................................................ 2 
I.  SETTING THE STAGE: PRE-DEPARTURE CREATIVE ACTIVITIES ............................................ 5 
II.  INVENTION ASSIGNMENT CONTRACTS AND EMPLOYEE-EMPLOYER CONFLICTS.................. 6 
A. State Invention Assignment Statutes and Default Common Law Rules ........................ 8 
B. How Invention Assignment Contracts Favor the Employer ....................................... 13 
C. The Case Law on Invention Assignment Contracts is One-Sided ............................... 19 
III.  THE WORK FOR HIRE DOCTRINE AND EMPLOYEE-EMPLOYER CONFLICTS ........................ 22 
A. Work for Hire Law and the Restatement of Agency .................................................... 22 
B. The Scope of Employment Case Law is More Balanced............................................. 30 
IV.  IS WORK FOR HIRE LAW INCONSISTENT WITH INVENTION ASSIGNMENT LAW? ................. 36 
CONCLUSION – THE USE-VALUE OF THE SCOPE OF EMPLOYMENT TEST ....................................... 40 
 
 INTRODUCTION 
This article considers the conflict between two commonplace but little-discussed areas of 
intellectual property law: the law of invention assignment contracts and the law of works for hire 
under the Copyright Act. 
Both can encompass the same subject matter. Both offer tests to allocate ownership between an 
employer and an employee when the employee creates something. However, sometimes these 
tests are in tension, if not outright conflict. This conflict is particularly apparent in the context of 
employee mobility disputes; i.e. those that arise when someone creates intellectual property on 
the side, outside the workplace, before quitting and leaving for his or her next opportunity. 
Employees planning a new venture face a tangle of potential tort, contract, and statutory claims 
brought by employers seeking to halt competition or to claim ownership of the departing 
employee’s ideas. Two such claims center on whether the former employer can claim a property 
right in ideas or work product that a departing employee created offsite, on his or her own time. 
This essay is the first to compare these related areas of law, tease out the potential conflicts in 
their tests for employee ownership, and identify the reasons one offers better protection than the 
other for departing employees. 
The law of invention assignment contracts and the work for hire law under the Copyright Act 
provide the basis for two claims employers can bring to seek ownership of intellectual property 
an employee has created, whether at the workplace or outside the workplace. Both areas of law 
start with contract terms that purport to govern whether an employer or an employee owns 
intellectual property that an employee creates. One applies to trade secrets and patentable 
inventions. The other applies to copyrightable works of expression. The former, the law of 
invention assignment agreements, is largely a matter of state contract and state statutory law. The 
latter, the work for hire doctrine, is largely a matter of federal copyright law. Through these 
extra-contractual sources, both provide rules that allocate ownership of employee work product, 
including creative work done entirely apart from the employer’s business. Thus, while many may 
believe that ownership of employee-created work product is a straightforward matter of contract, 

3 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

that is not always the case when we focus on creative materials an employee has prepared

outside the company, for purposes outside the company.

There is a marked contrast between these dueling areas of law. Invention assignment law is

highly one-sided, favoring the employer, while work for hire case law is more balanced, and

employees often prevail in establishing ownership of their copyrighted creations. This difference

arises because the Copyright Act focuses on what an employee was hired to do and what he or

she intended by creating the work at issue. The law of invention assignment contracts, by

contrast, treats the employee’s role and mental state as irrelevant and instead asks whether the

created work is related in some manner to the employer’s business – a broad definition the

boundaries of which remain unclear.

Increasing this tension, the subject matter of these doctrines can overlap, which means that the

law can dictate different ownership outcomes for the same employee work product. For example,

whenever an employee creates a work of expression that is simultaneously a potential trade

secret (such as software code), the law of invention assignment contracts and the law of works

for hire are both in play. Ownership results may differ depending on the set of tests used to

adjudicate a particular dispute. This article will analyze cases where the outcome might have

differed if the court and litigants had analyzed a different body of law.

Where there is a conflict, copyright ownership appears to override a conflicting ownership claim

to trade secret rights in the same work product. Specifically, where an employee prevails and a

copyrightable work is not the employer’s work for hire, the employer likely cannot win by

asserting trade secret rights. Because a copyright owner can disclose and publish the work at

will, trade secret rights – which require secrecy – would be precluded from the outset. Thus,

from a departing employee’s perspective, establishing copyright ownership may be paramount.

That may well be better public policy given the potential for overreach in the law of invention

assignment agreements.

To parse these areas of law which could govern ownership rights in the same subject matter, this

article will explore both areas of law in depth, with a survey of virtually all of the available case

law on ownership disputes between employers and employees. Providing this survey may help

address issues that largely remain unexplored by courts and commentators, even those who are

sympathetic to the obstacles departing employees can face.

Section I explains that when employees create outside-the-workplace material for a future new

venture, two categories of intellectual property law are relevant: the law of invention assignment

contracts and work for hire law under the Copyright Act. This article will focus on employees

One powerful, if rare, example of the sort of thoroughgoing critique that is all too often

lacking is found in Orly Lobel, The New Cognitive Property: Human Capital Law and the Reach

of Intellectual Property, 93 TEX. L. REV. 789, 792-93, 798-99, 801-03, 813-15 (2015) (tying the

overbreadth of employee invention assignment agreements – noting, among other things, post-

employment holdover clauses – to broader concerns over employer overreach and resulting

harms to mobility and growth of new enterprises).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 4

acting in good faith to create for a potential new company, in order to set the stage for the latent

clash between these doctrines.

Section II provides a historical overview of the development of invention assignment law. This

runs from early common law rules and their important exceptions, to the modern era, where the

combination of state invention assignment statutes and commonplace contract terms have

substantially modified the common law. Setting up the conflict between the law of invention

assignment contracts and work for hire law, this section also demonstrates how invention

assignment case law significantly favors employers over employees.

Section III sets forth a contrasting body of law which also addresses employees’ creation of

intellectual property, with sometimes different outcomes for disputes between employers and

employee: work for hire law and its three-part scope of employment analysis. Gathering virtually

every reported case, this section shows that work for hire law is more balanced than invention

assignment law in weighing the interests of employers and employees.

With this divergence in mind, Section IV explains how both of these categories of intellectual

property law can overlap in the same employee-created material. This is where the conflict

between these doctrines arises – where applying one test instead of the other could lead to a

different outcome in a dispute over whether the employer or the employee owns what the

employee has created. This section also provides a tentative solution. Where the employee owns

the copyright in a work under the work for hire doctrine, and therefore has a right to publish the

work, the employer’s competing invention assignment claim should fail, because it is based on

trade secrecy. As the Fourth Circuit held in a 1994 decision,

a decision which may provide the

key to resolving the latent conflict between these areas of law, a competing trade secret claim

cannot exist where a copyright-owner has the right to publish (and thus to disclose) the work at

issue.

Finally, Section V examines the public policy implications of the clash between invention

assignment law and work for hire law. In the context where an employee operating in good faith

creates material outside the workplace that has only an attenuated connection to the employer’s

business, the more balanced regime seen under the work for hire doctrine provides better

protection for employees forming new ventures and thus better promotes innovation. Asserting

the work for hire doctrine where copyrightable material is at stake may prevent overreaching by

employers where their ownership claims are weakest.

Employees around the country are subject to contracts which grant their employers ownership in

workplace creations – and sometimes also outside-the-workplace creations. Given the

importance of these questions to mobile employees and those who wish to form new ventures,

this essay looks to ask new questions about this corner of the law.

Avtec Sys. v. Peiffer, 21 F.3d 568 (4th Cir. 1994).

5 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

SETTING THE STAGE: PRE-DEPARTURE CREATIVE ACTIVITIES

This essay focuses on a narrow period of time and the intellectual property laws that govern that

moment. To set the stage for highlighting a conflict between two areas of intellectual property

law, we focus on the point when an employee begins to think about changing jobs, perhaps

starting his or her own new venture, or when an employee simply creates work on the side, for

purposes not yet known. We consider the situation in which the employee does not misuse the

employer’s trade secrets, the employee works on the proverbial nights and weekends outside the

office, and the employee is not attempting to create material that is related to the employer’s

business.

Many people who would like to quit and start a new venture understandably do not want to

resign until a concrete plan is more or less in place. Sometimes that means weeks or months of

planning with other nascent co-founders or slowly seeking funding. If the employee creates no

intellectual property before leaving, the only legal questions at stake are those of fiduciary duty,

the duty of loyalty, and making preparations for the next job.

Sometimes, however, pre-departure planning also means that one or more employees creates new

ideas, and commits those ideas to writing or to software code. Assuming the ideas or expression

are original, novel, or not generally known in the relevant industry, he or she has probably

created some form of intellectual property. So the question arises: who owns that intellectual

property – the current employer or the employee who created it?

Events such as these are hard to capture for analysis. They occur in secret, because the employee

fears that discovery will result in immediate termination.

Further, where attorneys become

involved in counseling departing employees, the attorney-client privilege means that

practitioners are not free to discuss particular situations in a public setting. Even where the

employer later discovers the pre-departure preparations and sends a cease-and-desist letter, many

potential lawsuits are averted. Probably only a small fraction of such cases result in lawsuits, and

even fewer court rulings are available in public databases.

To delve into the ownership disputes that may arise in these contexts, we will put aside disputes

where departing employees misuse employer trade secrets, or create work product that overtly

In general, and while definitions vary slightly from state to state, a trade secret is non-public

business information valuable to competitors that the owner has protected with reasonable

security measures. E.g., Defend Trade Secrets Act of 2016 § 2(b)(1), Pub. L. No. 114-153, 18

U.S.C. § 1839(3), 130 Stat. 376, 380.

Disputes over these so-called “preparations to compete” will be the subject of the next

essay in this series.

Even if preparations to compete are legal, an employer can terminate an employee found to

be engaging in such activities. See Fowler v. Varian Assocs., Inc., 241 Cal. Rptr. 539, 544 (Ct.

App. 1987) (granting summary judgment for employer where employee brought wrongful

termination claim after being fired for making preparations to leave and compete).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 6

relates to (or even competes directly with) the business of the employer. Our focus will be

situations where the employee intends to launch a different, non-overlapping business, and

creates new intellectual property with that end in mind. That is, we will assume the departing

employee’s good faith, and analyze who might own such work product when both the Copyright

Act and the law of invention assignment contracts could encompass the work at issue. We begin

with invention assignment law.

INVENTION ASSIGNMENT CONTRACTS AND EMPLOYEE-EMPLOYER CONFLICTS

In order to understand how invention assignment law and work for hire law are sometimes in

conflict, we will first examine the historical development of invention assignment law and then

turn to the body of case law, which tends to significantly favor the employer over the employee.

Invention assignment agreements are commonplace in employment contracts. They reverse the

historical common law presumption that an employee owns what he or she invents or develops,

and they broaden a longstanding common law exception, which allows for employer ownership

when the employee was hired to invent the type of intellectual property he or she then created.

Terms in invention assignment contracts address ownership of trade secrets and patentable

inventions, but not copyrights.

Although these agreements allow for employee ownership in

certain contexts, by and large they substantially favor employers.

Readers may wonder why this essay refers to employers’ trade secret rights through

invention assignment agreements, rather than patent rights. After all, and as the very phrase

“invention assignment” suggests, patents are what scholars and practitioners likely think of first,

if not exclusively, when the subject of invention assignment arises. But this misses an important

timing point: when an employee conceives a patentable invention, it first exists as intellectual

property in the form of a trade secret, not a patent. If the employer chooses to pursue a patent

application, that election comes after the point of initial, automatic assignment. That is why this

essay points to a clash between competing copyright and trade secret rights in the same work

product.

While ownership of an invention would otherwise vest in the inventor, the standard rule and

practice is that an employee can contract ownership away through an invention assignment

agreement. See Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248 (Fed. Cir. 1993);

Access Cardiosystems, Inc. v. Fincke (In re Access Cardiosystems, Inc.), 340 B.R. 127, 147

(Bankr. D. Mass. 2006) (explaining rules). Thus, “an employer owns an employee’s invention if

the employee is a party to an express contract to that effect.” Banks v. Unisys Corp., 228 F.3d

1357, 1359 (Fed. Cir. 2000); Grove v. Grove Valve & Regulator Co., 84 Cal. Rptr. 300, 303-04

(Ct. App. 1970) (early case finding that employer owned improvements to various inventions in

enforcing terms of employee invention assignment agreement signed in 1959).

Although such contracts assign ownership of rights including those governed by federal law

– i.e., patents, but also trade secrets given the 2016 Defend Trade Secrets Act – their

interpretation is largely, but not entirely a matter of state law. Until 2008, the interpretation was

solely one of state law. See Affymetrix, Inc. v. Illumina, Inc., 446 F. Supp. 2d 292, 296 (D. Del.

7 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

While it is hard to find a definitive source pinpointing when employers began using written

invention assignment contracts to alter default common law ownership rules, the practice

certainly dates back many decades. In one 1938 California case, for example, a court stated that

“[a]n employee’s agreement in the contract of employment to assign patents to his employer is

specifically enforceable as to patents, clearly within its terms, as strictly construed against the

employer.”

2006) (applying California law; “The proper construction of assignment agreements is a matter

of state contract law.”) (citing Minco, Inc. v. Combustion Eng’g, Inc., 95 F.3d 1109, 1117 (Fed.

Cir. 1996)). This default rule was modified in 2008, when the Federal Circuit ruled that, at least

as to the question of whether an assignment contract creates an automatic future conveyance of

inventions not yet in existence – which is accomplished by the inclusion of the magic words

“hereby assign” – is one of federal law. See DDB Techs., L.L.C. v. MLB Advanced Media, L.P.,

517 F.3d 1284, 1289-90 (Fed. Cir. 2008). DDB’s reasoning was based on federal courts’ powers

as to “the question of standing in patent cases.” Id. See also Intellectual Ventures I LLC v. Erie.

Indem. Co., 850 F.3d 1315, 1320 n.1 (Fed. Cir. 2017) (stating rule). The decision was notably

silent on what law would govern the future conveyance of state law trade secret rights in an

employee creation.

See discussion and cases infra Section B.

Hercules Glue Co., Ltd. v. Littooy, 76 P.2d 700, 701 (Cal. Dist. Ct. App. 1938) (enforcing

employee invention assignment contract in favor of employer: “By the terms of this contract,

appellant agreed that he would devote his entire time, knowledge, skill, best efforts, and services

to the work of respondent as it might direct; that all patents, processes, or formulas, pertaining to

spreader, which he invented, developed or perfected during his original and present employment,

should be the property of respondent, and that he would, on demand, execute any assignments,

transfers or other instruments necessary to perfect respondent’s title thereto. He further agreed

that he would not, during its life or subsequently, divulge to any person, or use for his own

benefit, any secret processes or formulas invented, developed, or perfected by him or respondent

between October 1, 1924, and the termination of the agreement.”). Other early cases involving

written contacts include: Kober v. United States, 170 F.2d 590, 592, 594 (4th Cir. 1948) (finding

that an employment agreement with a U.S. government employer providing for “the complete

assignment” of inventions made by the employee was a “reasonable agreement entered into for a

lawful and proper purpose” and holding that inventions made by an engineer subject to this

agreement therefore belonged to the government-employer); Crown Cork & Seal Co., v.

Fankhanel, 49 F. Supp. 611, 613, 615 (D. Md. 1943) (construing and finding enforceable an

invention assignment agreement that required the employee to assign rights over to the employer

for “[a]ll inventions and discoveries which I make while in the employ of said Company, along

the lines of its general work, constituting improvements both in its then existing products and

methods of manufacture, or otherwise, shall become its exclusive property,” and holding that the

employment agreement was valid and enforceable).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 8

A. State Invention Assignment Statutes and Default Common Law Rules

In most states, invention assignment contracts are governed by common law, though there are

not many reported cases in jurisdictions outside of California. However, eight states, beginning

with Minnesota in 1977, have enacted similar statutes that seek to lay out boundaries for when

employers can obtain ownership of employee creations, all of which favor the employer.

California’s version is illustrative.

While awkwardly phrased, it provides six different ways in

which the employer can own the employee’s creation: (1) use of the employer’s trade secrets; (2)

use of the employer’s time; (3) use of the employer’s resources; (4) the creation is related to the

employer’s current business; (5) the creation is related to the employer’s “demonstrably

anticipated” research and development; and (6) the creation results from the employee’s work for

the employer.

These possibilities are disjunctive, meaning that the employer need only

demonstrate one of them to prevail.

State statutes regulating invention assignment agreements are not entirely identical. For example,

California’s version requires that employers provide notice to the employee, and also allows

employers to require that employees disclose all new creations – even if outside the scope of

contractual ownership terms – for an ownership review “in confidence.”

Washington does not

require that the employer treat employee disclosures in confidence, but gives the employee a

right to disclose the creation to “the department of employment security.”

Both California and

Washington put the burden of proof on the employee to show that the creation is outside the

scope of employer ownership.

A ninth state, Nevada, enacted a statute relating to invention assignment agreements later than

the states discussed above, in 2001, with a different aim.

In what was apparently seen as a bid

to improve the business environment for technology companies in the state, the statute renders an

invention assignment contract unnecessary and broadens the scope of employer ownership

compared to the common law. It states: “Except as otherwise provided by express written

agreement, an employer is the sole owner of any patentable invention or trade secret developed

See Cᴀʟ. Lᴀʙ. Cᴏᴅᴇ §§ 2870-2872 (West 1979); Dᴇʟ. Cᴏᴅᴇ. Aɴɴ. tit. 19, § 805 (1984); 765

Iʟʟ. Cᴏᴍᴘ. Sᴛᴀᴛ. 1060 / 2 (1983); Kᴀɴ. Sᴛᴀᴛ. Aɴɴ. 44-130 (West 1986); Mɪɴɴ. Sᴛᴀᴛ. ANN. §

181.78 (West 1977); N.C. Gᴇɴ. Sᴛᴀᴛ. §§ 66-57.1-.2 (1981); Uᴛᴀʜ Cᴏᴅᴇ. Aɴɴ. § 34-39-3 (West

1989); WASH. Rᴇᴠ. Cᴏᴅᴇ Aɴɴ. §§ 49.44.140, .150 (West 1979). Based on this author’s

experience, companies often mimic the structure of these state statutes in employment

agreements, even for employees residing in other states. As a result, these eight statutes have

great influence beyond their home jurisdictions.

See Cᴀʟ. Lᴀʙ. Cᴏᴅᴇ §§ 2870-72 (West 1979).

Id. § 2870. The “results from” clause is unclear, but its interpretation has not yet been the

subject of a published decision.

Id. § 2871.

WASH. REV. CODE ANN. § 49.44.150 (West 1979).

See id.; Lᴀʙ. § 2872.

See NEV. REV. STAT. ANN. § 600.500 (West 2001).

9 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

by his or her employee during the course and scope of the employment that relates directly to

work performed during the course and scope of the employment.”

As one commentator noted

at the time, this sort of one-sided regime is unlikely to foster the birth of new technology

ventures in Nevada.

State law invention assignment agreements have been the subject of a fair amount of

commentary, albeit mostly limited to the question of whether the default rules granting

employers ownership of workplace inventions fairly compensate employee-inventors in a way

that best promotes innovation equitably.

Some commentators have addressed other issues about

Id.

See Mary LaFrance, Nevada’s Employee Inventions Statute: Novel, Nonobvious, and

Patently Wrong, 3 NEV. L.J. 88 (2002) (well-done dissection of the then-new state statute, noting

its departure from the common law, contrast with other state statutes, and contrast with the work

for hire rules; predicting the statute would not, as apparently intended, encourage the growth of

technology companies in Nevada).

There is a cottage industry of notes and law review articles positing that if employees were

given greater compensation for, or some ownership stake in, inventions created for the employer

in the workplace, innovation would increase. See Shlomit Yanisky Ravid, Rethinking Innovation

and Productivity Within the Workplace Amidst Economic Uncertainty, 24 FORDHAM INTELL.

PROP. MEDIA & ENT. L.J. 143 (2013) (arguing that employees would have a greater incentive to

invent if they retained a greater interest in – and received financial compensation for – workplace

inventions); Ann Bartow, Inventors of the World, Unite! A Call for Collective Action by

Employee-Inventors, 37 SANTA CLARA L. REV., 673, 677 (1997) (advocating that employees

refuse to sign invention assignment agreements and instead try to own workplace inventions

themselves); Evelyn D. Pisegna-Cook, Ownership Rights of Employee Inventions: The Role of

Preinvention Assignment Agreements and State Statutes, 2 U. BALT. INTELL. PROP. L.J. 163, 185

(1994) (general survey of common law and state statutes; concluding by advocating additional

compensation for employee-inventors and greater adoption of statutes to regulate invention

assignment contracts); Steven Cherensky, Note, A Penny for Their Thoughts: Employee-

Inventors, Preinvention Assignment Agreements, Property, and Personhood, 81 CAL. L. REV.

595 (1993) (in an argument premised on a Hegelian-inflected notion of personhood and property

rights, advocating a greater property allocation to employees for workplace inventions); Henrik

D. Parker, Note, Reform for Rights of Employed Inventors, 57 S. CAL. L. REV. 603, 624-25

(1984) (arguing that compensation schemes for workplace inventions would increase

innovation); William P. Hovell, Note, Patent Ownership: An Employer’s Rights to His

Employee’s Invention, 58 NOTRE DAME L. REV. 863, 887-88 (1983) (advocating that employee-

patent inventors receive a “reverse shop right” “to use any patent assigned to his employer”). All

are speculative, and some rest on seemingly needless concepts of Hegelian personhood and the

like. As much as I tend to favor departing employees, this line of articles is frustrating. Many

seem to imagine that workplace inventions are created by a sole inventor rather than by teams,

none contemplate the quagmires that could result in bickering over who owns what within the

office, and the philosophical reference points seem arbitrary.

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 10

the reach of invention assignment agreements which provide helpful background for the

questions discussed in this article.

Contracts between employers and employees dictating ownership of workplace creations arose

because the default common law rule provided a narrower path to employer ownership.

Specifically, case law dating to the nineteenth century provides that an employee owns his or her

inventions, even when it is conceived during the term of employment,

subject to an important

but narrow exception. Those who were “hired to invent” the same type of work product they then

duly created owed an automatic assignment duty to the employer, vesting title in the company.

These rules developed from early Supreme Court decisions.

In turn, the common law provided

I consider all of these fully answered by Robert P. Merges, The Law and Economics of

Employee Inventions, 13 HARV. J.L. & TECH. 1, 14-18 (1999) (arguing that the current employer-

ownership regime is best calibrated to avoid problems such as disruptive employee “holdups”:

“The employees could hold up the firm for the full value of its investment.”). Merges notes the

seemingly obvious problems that would arise in scenarios where employees share in ownership

of inventions made for the employer’s benefit. This essay is by contrast focused on outside-the-

workplace creations by employees planning their next venture which have no connection, or only

some tenuous connection, to their present employer’s business.

Articles which address topics other than whether assigning workplace inventions to the

employer is equitable include: Parker A. Howell, Whose Invention is it Anyway? Employee

Invention-Assignment Agreements and Their Limits, 8 WASH. J.L. TECH. & ARTS 79 (2012)

(practitioner-oriented overview of state statutes and a sampling of case law); Joshua L. Simmons,

Inventions Made for Hire, 2 N.Y.U. J. INTELL. PROP. & ENT. L. 1, 49 (2012) (arguing that the law

of employee-patent assignments contains too many procedural stumbling blocks and advocating

that patent law be amended to match the work for hire terms of the Copyright Act); Donald J.

Ying, A Comparative Study of the Treatment of Employee Inventions, Pre-Invention Assignment

Agreements, and Software Rights, 10 U. PA. J. BUS. & EMP. L. 763 (2008) (survey of invention

assignment laws in the United States and other countries); Michael R. Mattioli, The Impact of

Open Source on Pre-Invention Assignment Contracts, 9 U. PA. J. LAB. & EMP. L. 207, 228-34

(2006) (article on what might happen if an employee creates a patentable invention while

contributing to an open source project).

See generally Solomons v. United States, 137 U.S. 342, 346 (1890) (“[W]hatever

invention [an inventor] may thus conceive and perfect is his individual property.”); Gayler v.

Wilder, 51 U.S. 477, 478–93 (1851) (“But the discoverer of a new and useful improvement is

vested by law with an inchoate right to its exclusive use, which he may perfect and make

absolute by proceeding in the manner which the law requires.” The case involved an assignment

by the inventor to a businessperson.).

“[U]nless there is an agreement to the contrary, an employer does not have rights in an

invention ‘which is the original conception of the employee alone.’” Bd. of Trs. of the Leland

Stanford Junior Univ. v. Roche Molecular Sys., 563 U.S. 776, 786 (2011) (quoting United States

v. Dubilier Condenser Corp., 289 U.S. 178, 189 (1933)). “In most circumstances, an inventor

must expressly grant his rights in an invention to his employer if the employer is to obtain those

rights” because “the respective rights and obligations of employer and employee, touching an

11 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

that if an employee who was not hired to invent nonetheless created an invention using the

employer’s time or resources, the employee retained ownership, but the employer received a

permanent, royalty-free license known as a “shop right” to practice the invention. Historical case

law on the hired-to-invent exception and the shop right rule – that is, before the age of ubiquitous

written invention assignment agreements and state statutes governing them – were often fact-

invention conceived by the latter, spring from the contract of employment.” Id. at 786. (quoting

Dubilier, 289 U.S. at 187). Thus, the Court has “rejected the idea that mere employment is

sufficient to vest title to an employee’s invention in the employer.” Id. at 789. However, there is

an exception for employment situations where the employee has “only produced that which he

was employed to invent.” Dubilier, 289 U.S. at 187. This “hired to invent” exception exists

because the employee’s invention “is the precise subject of the contract of employment. A term

of the agreement necessarily is that what he paid to produce belongs to his paymaster.” Id. at

187. “On the other hand, if the employment be general, albeit it cover a field of labor and effort

in the performance of which the employee conceived the invention for which he obtained a

patent, the contract is not so broadly construed as to require an assignment of the patent.” Id. The

Supreme Court first applied the hired to invent exception in a 1924 case, Standard Parts Co. v.

Peck. In that case, the defendant was employed under a contract to “devote his time to the

development of a process and machinery for the production of the front spring now used on the

product of the Ford Motor Company.” Standard Parts Co. v. Peck, 264 U.S. 52, 59 (1924). After

inventing the specific process and machinery contemplated by his employment contract, the

defendant secured a patent on the aforementioned technology which he refused to convey to the

plaintiff. Finding that the invention of the specific patent at issue was the “object and effect” of

the defendant’s employment contract, and that in inventing the technology at issue, the defendant

was “doing nothing more than he was engaged to do and paid for doing,” the Court held that the

patent belonged to the plaintiff. Id. at 59-60.

For other early cases, see Houghton v. United States, 23 F.2d 386, 389 (4th Cir. 1928)

(Surgeon General appointed government employees to a board whose purpose was to develop a

safer fumigant, and thus the defendant “did merely that which he was being paid his salary to

do,” so there could be “no doubt” that his invention belonged to the government.); Magnetic

Mfg. Co. v. Dings Magnetic Separator Co., 16 F.2d 739, 741 (7th Cir. 1926) (on contested facts,

finding that employee was hired to invent from his own conduct, where he had promptly

assigned two prior inventions, and thus owed an assignment duty even as to an invention that

related to only a peripheral part of his employment duties). An employer might overcome hired-

to-invent issues where a manager came up with the invention, and the employee claiming

ownership was merely the one who reduced it to practice. In one early California case, the court

distinguished between an employer who had the “general idea of a machine” and an employee

who implemented the idea – even though the employee was the signatory on the patent

application – in granting ownership to the employer in an improvement for movie studio

lighting. Famous Players-Lasky Corp. v. Ewing, 194 P. 65, 66 (Cal. Dist. Ct. App. 1920).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 12

intensive.

Even in more recent cases, these common law rules still apply in situations where,

for whatever reason, there was no written contract.

See, e.g., Fish v. Air-O-Fan Prods. Corp., 285 F.2d 208, 210-11 (9th Cir. 1960) (finding

implied in fact assignment contract where evidence showed employee was hired to invent);

Consol. Vultee Aircraft Corp. v. Maurice A. Garbell, Inc., 204 F.2d 946, 949 (9th Cir. 1953)

(although employee had conceived invention before joining employer, he had used employer’s

resources to perfect it, and thus employer had shop right to manufacture, use, and sell “airplanes

embodying” the invention); Aero Bolt & Screw Co. v. Iaia, 5 Cal. Rptr. 53, 58 (Cal. Ct. App.

1960) (employee retained ownership of invention with no shop right for employer where, among

other things, trial court found that employee “on his own time, and at his own expense, designed

and developed the [invention]; that he paid all of the development costs out of his own pocket”);

Zahler v. Columbia Pictures Corp., 4 Cal. Rptr. 612, 617 (Ct. App. 1960) (where employee was

hired to create background music, court applied a version of the hired-to-invent doctrine to grant

employer performance rights; “Where an employee creates something as part of his duties under

his employment, the thing created is the property of his employer.”); Banner Metals, Inc. v.

Lockwood, 3 Cal. Rptr. 421, 428-33 (Ct. App. 1960) (where salesperson had only an oral

employment contract, court found that employer did not own the employee’s invention through

the hired-to-invent-doctrine and also did not have a shop right in the invention, because the

employee had created it on his own time and, on contested facts, had not used the employer’s

materials); Quaker State Oil Ref. Co. v. Talbot, 174 A. 99, 101-04 (Pa. 1934) (employee was

hired to invent under oral contract, but employer did not obtain shop right to employer’s pre-

existing work that was not created with use of employer’s resources).

See Peregrine Semiconductor Corp. v. RF Micro Devices, Inc., No. 3:12-CV-0911-H

(WMC), 2014 U.S. Dist. LEXIS 2668, at *13 (S.D. Cal. Jan. 8, 2014) (where former employer

sued former employee who transferred patent rights to a third party, and where employer could

not prove it had a signed employment agreement, hired to invent doctrine did not favor employer

on motion for preliminary injunction where it did not appear employee was hired for specific

inventions at issue); Gen. Elec. Co. v. Wilkins, No. CV F 10-0674 LJO JLT, 2012 U.S. Dist.

LEXIS 124642, at *59-60 (E.D. Cal. Aug. 31, 2012) (finding trial issues of fact on a hired-to-

invent dispute where employee had not signed the company’s invention assignment agreement,

but was a patent co-inventor); McClain v. State, 269 S.W.3d 191, 198-99 (Tex. App. 2008)

(prosecution failed to show that defendant was hired to invent, such that improvements he made

to “set up sheets” belonged to him, with a shop right to his employer); Pedersen v. Akona, 429 F.

Supp. 2d 1130, 1143 (D. Minn. 2006) (in absence of invention assignment contract, finding that

employer owned patent because employee was hired to invent); Scott Sys., Inc. v. Scott, 996

P.2d 775, 779 (Col. App. 2000) (reversing summary judgment where there were triable issues of

fact as to whether individual was hired to invent or not with respect to certain inventions); Teets

v. Chromalloy Gas Turbine Corp., 83 F.3d 403, 408 (Fed. Cir. 1996) (using the terminology of

an implied-in-fact contract, but engaging in same analysis as hired to invent cases, reversing trial

court and finding implied employee assignment obligation for invention where employee worked

at company’s direction and used its resources); Liggett Grp., Inc. v. Sunas, 437 S.E.2d 674, 678-

80 (N.C. Ct. App. 1993) (reversing grant of summary judgment in favor of employer and finding

13 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

B. How Invention Assignment Contracts Favor the Employer

By and large, invention assignment contracts and related state statutes favor the employer over

the employee, even though the text of some such statutes appears, at first glance, to be designed

to protect employees. Generally speaking, an effective invention assignment to the employer

occurs automatically, with no further steps required, and applies to inventions that the employee

has not yet conceived.

In some jurisdictions, the contract can be effective even if the employer

requires the employee to sign it after the employee has commenced employment.

triable issues of fact as to whether employee with no invention assignment contract was hired to

invent in connection with tobacco-related patent); California E. Lab., Inc. v. Gould, 896 F.2d

400, 402-03 (9th Cir. 1990) (defining shop right concept and finding that right transferred to

successor entity); Aetna-Standard Eng’g Co. v. Rowland, 493 A.2d 1375, 1381-82 (Pa. Super.

Ct. 1985) (employee with no written contract was not hired to invent and thus owned no

assignment duty to employer of invention, but employer had shop right license because its

resources were used in development); Mechmetals Corp. v. Telex Comput. Prods., Inc., 709 F.2d

1287, 1292-94 (9th Cir. 1983) (finding no shop right where company CEO had worked with two

others to create invention, and company paid for materials and machine time CEO used when

working on invention; existence of that contract and CEO’s status militated against finding shop

right); Vigitron, Inc. v. Ferguson, 419 A.2d 1115, 1117-18 (N.H. 1980) (employer owned

invention because employee was hired to invent).

An invention assignment agreement with the phrase “hereby assign” (or similar language)

operates to automatically vest a covered invention with the employer at the moment it is created

by the employee. No further action – that is, no formal act of assignment by the employee – is

required for the automatic invention assignment to be effective. See Roche, 563 U.S. at 785-93

(noting historical rule that employee-inventors maintain ownership of their inventions absent an

agreement with the employer; university did not own invention where agreement contained “will

assign” language, separate agreement with private company had “hereby assign” language, and

Bayh-Dole Act did not change the ordinary rules of employee invention assignment contracts);

Advanced Video Techs. LLC v. HTC Corp., 879 F.3d 1314, 1317-18 (Fed. Cir 2018) (invention

assignment agreement failed where it stated only that employee “will assign” rights, which is not

a present conveyance of future conceptions); St. Clair Intellectual Prop. Consultants, Inc. v.

Palm, Inc., No. 06-404-JJF-LPS, 2009 U.S. Dist. LEXIS 37512, *34-35 (D. Del. May 4, 2009)

(finding that language in invention assignment agreements did not create a present conveyance

of future rights); Freedom Wireless, Inc. v. Boston Comm. Grp., Inc., 220 F. Supp. 2d 16, 19 (D.

Mass. 2002) (“In order for a pre-invention assignment contract to create a present assignment of

an expectant interest in an invention that automatically vests by operation of law into an actual

assignment upon conception, the contract must contain words of present conveyance and must

require ‘no further act once an invention [comes] into being.’” (citation omitted) (contrasting

contracts that use phrases like “does hereby grant” and “hereby does assign” with a contract that

required the inventor to disclose the invention and perform acts necessary to establish

ownership); Imatec, Ltd. v. Apple Comput., Inc., 81 F. Supp. 2d 471, 482 (S.D.N.Y. 2000) (“‘I

agree to assign and hereby do assign’ . . . constituted a present assignment . . . of future

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 14

Expansive invention assignment statutes and agreements pose risks for employees who create

outside-the-workplace developments, often with an eye towards forming a new company after

resigning. Even if we assume good faith, with no use of employer trade secrets, time, or

equipment, the employee faces many risks, and lines are not clearly drawn.

Part of the complication stems from changes in the workplace. When state invention assignment

statutes were enacted in the 1970s and 1980s, perhaps it was easier to imagine a bright-line

separation between the workplace and “nights and weekends” in an employee’s garage. Without

the internet, employees typically did not work from home, much less on employee-owned

phones and laptops. Moreover, it may then have been easier to determine with certainty what

“related to” the employer’s business and what did not. Fewer companies were large multinational

entities, with unrelated departments and operations of which an employee might be unaware.

Though the scarce case law is hardly determinative on these questions, changes in modes of

employment and the scope of companies’ operations may work to the detriment of employees

who create new material on the side.

For similar reasons, employers may be able to argue that working hours – and thus what

constitutes the employer’s time – are elastic, even 24/7, if employees typically answer email at

home or on weekends. In one case that focused primarily on fiduciary duty but also involved an

invention assignment contract, a court which issued a preliminary injunction was amenable to the

notion that employer time meant more than ordinary working hours where employees often put

in long days.

It remains to be seen how far this will go, however, as it seems that no court has

yet analyzed whether a statute which appears to divide employer time and off-hours could be

rendered meaningless if the employer is permitted to define its time as “24/7/365.”

inventions.”); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1580 (Fed. Cir. 1991)

(consulting agreement with phrase “will be assigned” “does not rise to the level of a present

assignment of an existing invention, effective to transfer all legal and equitable rights therein”);

Filmtec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1573 (Fed. Cir. 1991) (invention assignment

contract that used the phrase “agrees to grant and does hereby grant” was not merely an

agreement to grant future rights, but expressly granted “rights in any future invention”); Treu v.

Garrett Corp., 70 Cal. Rptr. 284, 287 (Ct. App. 1968) (where inventor had an assignment clause

with his employer, the inventor’s ownership “was a fleeting thing which he had bargained away

even before it became a reality . . . the instant the improvement was invented it became the

exclusive property of [employer] . . . [plaintiff] had and could have no interest in the

invention.”).

See, e.g., Preston v. Marathon Oil Co., 277 P.3d 81, 87-88 (Wyo. 2012) (invention

assignment agreement valid when entered into after at-will employment began); Eaton Corp. v.

Giere, 971 F.2d 136, 140 (8th Cir. 1992) (both earlier and later invention assignment contracts

were valid); Mosser Indus., Inc. v. Hagar, 200 U.S.P.Q. (BNA) 608, 610, 616 (Pa. Ct. Com. Pl.

Jan. 11, 1978) (employee signed second invention assignment contract for one dollar); Grove v.

Grove Valve & Regulator Co., 84 Cal. Rptr. 300, 303 (Ct. App. 1970) (employee’s valid

invention assignment contract was “backdated” by more than a year).

See Iconix, Inc. v. Tokuda, 457 F. Supp. 2d 969, 989, 992 (N.D. Cal. 2006).

15 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

A similar interpretive issue arises with the definition of the employer’s resources. While

employees of technology companies in 1980 or 1990 used office workstations too unwieldy to

take home, employees today commonly use company-issued laptops and mobile devices.

Confusing the issues further, many companies permit dual use. For example, employees may use

company-issued devices for personal use (or vice-versa), subject to codes of ethics or other

workplace guidelines. If an employee creates an unrelated invention for a future venture on a

weekend, but uses a dual use company-issued laptop to do so, can the employer claim

ownership? If an employee creates a new idea for a future venture on a dual-use company-owned

mobile phone, can the employer claim ownership? The answer again is unclear, as courts do not

appear to have yet analyzed this question.

The ambiguity of terms that appear in invention assignment statutes and contracts – such as

terms that vest ownership in the employer when the employee’s creation relates to the

employer’s business or research or when it results from the employee’s work – also leads to

interpretive difficulties.

These terms notably alter the common law, under which an employee

must be “hired to invent” in order for the employer to own the creation. Under these terms, even

the receptionist would be subject to employer ownership if his or her outside-the-workplace

creations could be said to relate in some fashion to the employer’s business.

More importantly, it remains unclear what phrases like “relates to” or “results from” mean in the

everyday workplace. For example, what happens if an employee in good faith creates something

offsite, intending to use it for a future business, but unbeknownst to the employee the company

has been dabbling in something similar at a different office on the other side of the country? In

other words, are the rules to be interpreted in a manner that takes the employee’s notice of the

scope of the employer’s business into account? Does an employee’s good faith intent matter?

Thus far, no reported case has addressed this question.

The closest may be a 2007 decision from the Northern District of California which ruled in favor

of the employer where an employee argued that he should own his invention because his own

department’s business did not encompass the work. The court, however, found that California’s

invention assignment statute did not contain terms limiting it to the particular department in

which the employee works.

That said, it appears that the employee was on notice that his or her

By analogy, a federal court in Ohio declined to find that a group of departing employees

violated their duties of loyalty by making preparations to compete before leaving where, among

other things, the employer’s evidence that they had used its resources was limited to a de minimis

claim that one of them spoke to an insurer about the planned new venture “on his business cell

phone.” See Fitness Experience, Inc. v. TFC Fitness Equip, Inc., 355 F. Supp. 2d 877, 892-93

(N.D. Ohio 2004) (employees who planned new company and met with attorneys, insurers, and

realtors granted summary judgment). The same result might apply for similar de minimis

infractions in the invention assignment context.

E.g., Cᴀʟ. Lᴀʙ. Cᴏᴅᴇ § 2870 (West 1979).

See Cadence Design Sys., Inc. v. Bhandari, No. C 07-00823 MHP, 2007 U.S. Dist. LEXIS

83078, at *21-23 (N.D. Cal. Nov. 8, 2007) (explaining scope of invention assignment in detail

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 16

invention related to the employer’s business,

and thus the question of whether the statute is to

be interpreted to reflect the employee’s notice or state of mind is not at issue.

As explained below, the work for hire rules do explicitly consider the employee’s state of mind,

setting up a potential conflict with the law of invention assignment contracts on these issues.

Further complicating the problems with the interpretation of invention assignment contracts,

some companies define themselves in employment agreements to include their affiliates;

different entities that are separately incorporated and separately managed. It is unclear whether

an invention assignment statute or agreement could divest an employee of an outside-the-

workplace invention in a situation where the employer contends that the invention relates only to

the business of a differently-incorporated affiliate entity.

The expansive wording of invention assignment contracts and statutes is not the only difficulty

facing employees who create offsite work product. Some courts have held that even where an

employee notifies the employer about a development and the employer verbally disclaims any

interest in it, the employer can later retract that apparent waiver. The reasoning is that since the

invention assignment rules automatically transfer ownership at the moment of creation, if the

employer owns the invention, there is nothing that can be verbally bargained over.

Because this

sort of thinking is unlikely to occur to non-lawyers, this can pose an unfavorable trap for

employees, to say the least.

Taking the concept of employer ownership to its extreme, some employers attempt to obtain

ownership of developments created by former employees entirely after the employee has left the

job. Known as “holdover” or “trailer” clauses, these terms typically assert ownership of

inventions for a set period after the employee’s departure, or purport to establish a presumption

of ownership. Some courts have rejected such clauses, at least where the former employee has

and rejecting argument that scope of assignment extends only to specific department in which the

employee works).

An attorney had even warned the employee on this point. See id. at *21-22.

While there is little case law on the question, courts have rejected employees’ assertions

that company managers or other employees waived or otherwise acquiesced to their personal use

of inventions created during employment on two grounds: (a) because an invention automatically

vests in the employer at the moment of creation, before the time of any claimed waiver; and/or

(b) because the employee did not completely or fully disclose every facet of the invention to the

employer, the employer could not have waived an interest in something it did not know

everything about. See, e.g., DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284,

1289-90 (Fed. Cir. 2008) (employee’s arguments of waiver and estoppel based on manager’s

disinterest in idea were irrelevant because contract gave rise to automatic assignment at moment

of creation); Iconix, 457 F. Supp. 2d at 986-87 (employee’s claim that manager and general

counsel had expressed disinterest in the idea did not prevent invention assignment where idea

was never fully disclosed). See also Eaton Corp., 971 F.2d at 137-38 (employee told employer

just before his resignation “of his plans to develop and market his own competitive device” but

invention vested in employer under invention assignment contract).

17 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

not misappropriated the former employer’s trade secrets, or has narrowed their potential

applicability.

But in 2012, the South Carolina Supreme Court found a broad holdover clause

enforceable under the law of that state.

The court’s reasoning was similar to those of courts

which enforce post-employment non-competition covenants. It also failed to analyze the case of

former employees working in good faith to launch a new venture. The threat posed by holdover

See Applied Materials, Inc. v. Advanced Micro-Fabrication Equip. (Shanghai) Co., 630 F.

Supp. 2d 1084, 1089-1091 (N.D. Cal. 2009) (voiding a clause under California law that created a

purportedly rebuttable presumption that the employer owned inventions for one year after the

employee left, even where no trade secrets were misappropriated); Ingersoll-Rand Co. v.

Ciavatta, 542 A.2d 879, 890-95 (N.J. 1988) (applying a reasonableness analysis to a post-

employment holdover invention assignment clause; finding that such covenants might be

enforceable beyond “trade secrets and confidential information” to include some additional,

poorly-defined category of “highly specialized, current information not generally known in the

industry” that appears indistinguishable from contemporary definitions of what trade secret law

covers); Fed. Screw Works v. Interface Sys., Inc., 569 F. Supp. 1562, 1564 (E.D. Mich. 1983)

(agreement which required employees to assign all inventions for an indefinite time period

relating to the employer’s field of activity or “contemplated field of activity” found

unenforceable); Armorlite Lens Co. v. Campbell, 340 F. Supp. 273, 275 (S.D. Cal. 1972)

(finding clause in employee invention assignment agreement which required assignment of new

ideas and concepts for one year after employment ended was unenforceable unless such

inventions used the trade secrets of the former employer); Winston Research Corp. v. Minn.

Mining & Mfg. Co., 350 F.2d 134, 145-46 (9th Cir. 1965) (where employer’s contract required

invention assignment of post-employment inventions that were “based upon” its confidential

information, court affirmed rulings where such inventions were premised on former employer’s

trade secrets, and thus owned by employer, or where no trade secrets were used); De Long Corp.

v. Lucas, 176 F. Supp. 104, 127-28 (S.D.N.Y. 1959) (where settlement agreement between

former employer and former employee only assigned rights to inventions developed during

employment, and where evidence was that new inventions post-dated employment, former

employee owed no assignment obligation), aff’d, 278 F.2d 804 (2d Cir. 1960); Guth v. Minn.

Mining & Mfg. Co., 72 F.2d 385, 388 (7th Cir. 1934) (invention assignment agreement without

time limitation was “contrary to public policy”); cf. Yield Dynamics, Inc. v. TEA Sys. Corp., 66

Cal. Rptr. 3d. 1, 26 (Ct. App. 2007) (where employer’s invention assignment contract created a

one-year, post-employment holdover stating that there was a rebuttable presumption that

inventions conceived within one year of leaving are owned by the employer, and that inventions

during that time must be disclosed, court did not address legality of the clause and affirmed trial

court on grounds that employee disclosed a post-employment development to the former

employer, which did not request assignment).

See Milliken & Co. v. Morin, 731 S.E.2d 288, 295 (S.C. 2012) (finding a one-year

holdover clause enforceable even though it covered inventions created post-employment and

without use of the employer’s trade secrets).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 18

clauses to employees who resign and create new intellectual property for the first time after

leaving is obvious.

At the same time, courts have generally rejected employment contracts which purport to require

employees to assign inventions created before starting the new job.

However, the employee’s

incorporation of pre-existing work product into intellectual property created during the period of

employment generally will not prevent assignment of that new work to the employer, assuming

the conditions for such assignment exist.

Finally, if an employee signs two invention assignment contracts, the first-in-time has priority.

This means that if an employee has signed a valid invention assignment contract with a current

employer, he or she cannot avoid that agreement by signing a new, second-in-time invention

assignment contract in favor of a new start-up venture. Thus, creating an outside-the-workplace

invention and assigning it under a new agreement to a new venture would not transfer ownership

to the new venture if the prior first-in-time assignment agreement applies to vest the employer

with ownership.

For a well-written student note critiquing holdover clauses, see Marc B. Hershovitz, Note,

Unhitching the Trailer Clause: The Rights of Inventive Employees and Their Employers, 3 J.

INTELL. PROP. L. 187, 206-12 (1995).

See Feeney v. Transition Automation, Inc., No. 06-11677, 2008 WL 190766, at *17-19 (D.

Mass. Jan. 9, 2008) (where individual disclosed invention before becoming employee and

signing invention assignment contract, court interpreted language of contract to vest ownership

with individual, not employer); Voith Hydro, Inc. v. Hydro W. Group, Inc., No. C–96–1170 SC,

1997 WL 154400, at *6 (N.D. Cal. Mar. 26, 1997) (although company had a valid employee

invention assignment with individual, company did not own invention that employee had

conceived and disclosed before becoming an employee of the company); Bailey v. Chattem, Inc.,

684 F.2d 386, 391 (6th Cir. 1982) (employer did not own employee’s idea that “was complete

prior to the time he began to work for” the employer, and thus prior to invention assignment

agreement); Fox v. Kingsland, 81 F. Supp. 433, 437-38 (D.D.C. 1948) (where inventor was

employed by Patent Office and also the Signal Corps, he retained ownership despite written

agreement with the Signal Corps because invention pre-dated that employment).

The incorporation of pre-existing material does not defeat an invention assignment of the

new combination as a whole. See, e.g., ViChip Corp. v. Lee, 438 F. Supp. 2d 1087, 1095 (N.D.

Cal. 2006) (granting summary judgment and rejecting employee’s argument that some of the

technology in the invention was “preexisting”; employee failed to identify such material or

explain how it could be “carved out from” the overall invention that was subject to his

employment agreement); Mosser Indus., Inc. v. Hagar, 200 U.S.P.Q. (BNA) 608, 613-14 (Pa. Ct.

Com. Pl. Jan. 11, 1978) (granting injunction for employer; even if employee thought up

“individual elements” of his creation before he joined the employer, his “combination of those

elements into a working prototype occurred during” his employment, and thus the invention

assignment clause applied to that “combination”).

See, e.g., Imatec, Ltd. v. Apple Comput., Inc., 81 F. Supp. 2d 471, 482 (S.D.N.Y. 2000)

(prior employer had invention assignment contract which covered invention, and thus former

19 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

C. The Case Law on Invention Assignment Contracts is One-Sided

Overall, these rules tend to favor the employer where an employee creates an outside-the-

workplace invention. Where exactly an invention stops “relating to” or “resulting from” the

company’s business or the employee’s work is not clear. That ambiguity empowers employers

over employees. Adding further ambiguity about what constitutes use of the employer’s time or

equipment, and the open question whether the employee’s personal notice of the employer’s

activities matter, the statutes pose a minefield for offsite creations. Oral permissions may not

suffice, undermining above-board efforts to be transparent. And in the most restrictive

jurisdictions, former employers may even be able to obtain ownership of intellectual property

conceived and developed entirely after the employee has quit and left.

Given the reach of state statutes and the manner in which these agreements override the common

law “hired to invent” exception to broaden the scope of employer ownership, it is not surprising

that the available case law strongly favors employers in disputes with employees, and in fact is

nearly one-sided. Employees rarely prevail.

employee had nothing to assign to third party and third party lacked standing to sue over patent

at issue); Filmtec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1573-74 (Fed. Cir. 1991) (stating

same rule and remanding for factual findings as to whether company had actual or “inquiry”

notice of a prior invention assignment to a former employer or a third party and thus may not

have been bona fide purchaser); Thompson v. Automatic Fire Prot. Co., 211 F. 120, 121 (2d Cir.

1914) (where inventor already had assigned invention to plaintiff, and where defendants knew of

that assignment, assignment to defendants was invalid: “It seems to us that a business man of

reasonable care and prudence would, under these circumstances, before putting his money into

an enterprise, have gone to [plaintiff] and asked him if he was making any claim to this invention

of [inventor] and, if he said he was, would have asked him what was the nature of his claim, so

that the inquirer might advise himself whether he could safely purchase.”).

See Venture Corp. v. Barrett, No. 5:13-cv-03384-PSG, 2015 U.S. Dist. LEXIS 165809, at

*13-14 (N.D. Cal. Dec. 9, 2015) (affirming jury finding that employee’s invention belonged to

employer because it was created using the employer’s time or resources); Blackbird Techs., Inc.

v. Joshi, No. 5:15-cv-04272-EJD, 2015 U.S. Dist. LEXIS 136505, at *24 n.6 (N.D. Cal. Oct. 6,

2015) (issuing preliminary injunction under duty of loyalty theory against employee who started

competitive business while employed; terms of injunction barred use of inventions covered by

invention assignment agreement); Preston v Marathon Oil Co., 684 F.3d 1276, 1359-60 (Fed.

Cir. 2012) (invention assignment agreement valid and assigned rights in invention to employer);

NovelAire Techs., LLC v. Harrison, 50 So. 3d 913, 919-21 (La. Ct. App. 2010) (affirming

finding that employee violated invention assignment agreement by failing to disclose invention

he created and took to new venture after departing); Iconix, Inc. v. Tokuda, 457 F. Supp. 2d 969,

989-92 (N.D. Cal. 2006) (issuing preliminary injunction over social media tool that related to

company’s advertising strategy plan); Regents of the Univ. of N.M. v. Knight, 321 F.3d 1111,

1118 (Fed. Cir. 2003) (affirming finding that university patent policy vested ownership in

invention in institution); Fenn v. Yale Univ., 283 F. Supp. 2d 615, 629-30 (D. Conn. 2003)

(academic bound by university’s patent assignment policies, despite policy amendments since he

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 20

Even a rare exception – a remand ruling in favor of a departing employee – rests on dubious

conclusions. In the well-publicized Mattel v. MGA battle over ownership of doll designs where a

departing employee had ideas and did at least some preliminary work before resigning, the Ninth

Circuit found fault with the employer’s position because its invention assignment contract lacked

the word “ideas” in its recitation of what the contract covered.

That ruling comes across as the

agreed to it, and thus university owned patent he had licensed to a third party); Univ. of W. Va.

v. Van Voorhies, 278 F.3d 1288, 1298 (Fed. Cir. 2002) (academic bound to assign patent under

university’s patent policy); Waterjet Tech., Inc. v. Flow Int’l Corp., 996 P.2d 598, 601-02

(Wash. 2000) (where former employee refused to assign rights over patent to workplace

invention, court found notice to employee satisfied Washington’s invention assignment statute

such that invention assignment contract was enforceable to vest ownership in employer); Vt.

Microsys., Inc. v. Autodesk, Inc., 88 F.3d 142, 150-51 (2d Cir. 1996) (affirming ruling that

defendant, who started as intern and later became employee and signed an invention assignment

agreement, had no interest in software created for the company); Eaton Corp. v. Giere, 971 F.2d

136, 140 (8th Cir. 1992) (granting summary judgment in favor of employer where employee had

breached invention assignment agreement by creating a product within employer’s “actual or

demonstrably anticipated research and development,” even though employee’s invention related

to a market which employer had “not yet been able to crack”); Cubic Corp. v. Marty, 229 Cal.

Rptr. 828, 835 (Ct. App. 1986) (affirming judgment for employer where assignment provision

was for “inventions which relate to the ‘actual’ or ‘demonstrably anticipated’ business of the

employer); Goldwasser v. Smith Corona Corp., 817 F. Supp. 263, 276 (D. Conn. 1993) (entering

summary judgment for IBM, noting that employee’s invention or idea which “involve[d] the

entry of text into a computer relates to IBM’s ‘actual or anticipated business’”); Gen. Signal

Corp. v. Primary Flow Signal, Inc., No. 85-0471B, 1987 WL 147798, at *4 (D.R.I. July 27,

1987) (granting employer ownership of invention where employee was subject to invention

assignment agreement, and claimed to have come up with new ideas just five days after leaving

job; court found employee’s account “difficult to believe”); Syntex Ophthalmics, Inc. v.

Tsuetaki, 701 F.2d 677, 682 (7th Cir. 1983) (affirming finding in favor of employer on invention

assignment dispute given “the inherent improbability” of employee’s “story that he conceived of

the [invention] four days after he left” his job); Andreaggi v. Relis, 408 A.2d 455, 460 (N.J.

Super. Ct. Ch. Div. 1979) (invention related to employee’s work and thus fell within invention

assignment agreement); Goodyear Tire & Rubber Co. v. Miller, 22 F.2d 353, 354 (9th Cir. 1927)

(where defendant signed an employment contract in which he agreed expressly to assign title to

any inventions that related to “methods, processes, or apparatus concerned with the production of

any character of goods or materials sold or used” or “any character of goods or materials sold or

used” by Goodyear, employer owned invention that fell within general range of what employee

was hired to do).

See Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d 904, 909-12 (9th Cir 2010) (vacating

constructive trust for former employer because invention assignment agreement did not contain

the word “ideas” and remanding for consideration of extrinsic evidence; court notably did not

construe California Labor Code section 2870 except for a passing reference in a footnote). One

student commentator found fault with the ruling, but erroneously conflated California’s invention

21 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

product of incomplete analysis given that the contract seemingly included synonyms (such as

“developments”) and because the court did not analyze the terms of California’s invention

assignment statute.

All told, and excluding cases about post-employment “holdover” clauses, there are many cases

where the employer (whether a private company or a university) prevailed in an invention

assignment contract dispute with an employee.

By contrast, only a few have found in favor of

an employee.

assignment statute with the work for hire doctrine. See Connor Boyd, Note, The Bratz Trap:

Ownership and Infringement at the Nexus of Copyright and Employment Law, 45 U.C. DAVIS L.

REV. 221, 237, 245 (2011) (asserting that section 2870 “refined” the work for hire doctrine,

assuming that a state statute could alter the federal Copyright Act and that its coverage was not

instead for trade secrets and patentable inventions).

One court denied (in whole or in part) cross-motions for summary judgment where there

were disputed facts regarding an employee’s development of source code on his own time, for an

unrelated side business, but that the employer contended contained “similarities” with its own

source code. See Enreach Tech., Inc. v. Embedded Internet Sols., Inc., 403 F. Supp. 2d 968, 974-

75 (N.D. Cal. 2005). See also Rothschild v. Cree, Inc., 711 F. Supp. 2d 173, 182-83 (D. Mass.

2010) (finding fact issues on jurisdictional matters as to individual’s standing to sue for patent

infringement where it was unclear whether individual had developed key patent ideas while

under another company’s invention assignment agreement or afterwards).

See cases cited supra notes 7, 34, 36. As with any attempt to count holdings from reported

cases, caveats are in order. The LEXIS and Westlaw databases do not pick up every ruling in

every case, especially those from state trial courts. Some rulings in trade secret cases may be

under seal, so that details are not viewable to the public. Appellate rulings matter more than trial

court rulings, but the degree of careful analysis varies from case to case. Reported cases may or

may not reflect typical fact patterns. Many disputes settle without litigation, or settle before a

court issues a ruling on issues of substantive law. As a result, apparent trends in case law can be

somewhat arbitrary, as they depend on what lawsuits become easily available to researchers.

Of the three, one remanded on a rather unique contract interpretation, one is unpublished,

and one arose from a time period before California enacted its current invention assignment

statute. The same outcome under today’s statute seems unlikely. See Mattel, 616 F.3d at 909-12;

Applera Corp. v. Illumina, Inc., 375 Fed. App’x. 12, 17-18 (Fed. Cir. 2010) (in a case decided

under an older version of California’s invention assignment statute, the court affirmed a finding

that employee-attorney’s invention did not “result from” work for the plaintiff); NeoNetworks,

Inc. v. Cree, A07-0729, 2008 Minn. App. Unpub. LEXIS 565, at *15 (Ct. App. May 20, 2008)

(affirming dismissal of claims against former employees and costs award in their favor after

failed ex-employers causes of action, including breach of contract over invention assignment,

were rejected where defendants began project after company failed and did not use company

resources).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 22

But as discussed below, a different regime governs when employees create copyrightable works

– with different considerations, different outcomes, and potential direct conflicts with the law of

invention assignment agreements.

III

THE WORK FOR HIRE DOCTRINE AND EMPLOYEE-EMPLOYER CONFLICTS

A. Work for Hire Law and the Restatement of Agency

This article proposes that where an employee creates copyrightable material, the test for

allocating ownership of that material differs from the invention assignment tests for allocating

ownership of trade secrets and patentable inventions described above. We start with an analysis

of modern work for hire law, developed following a major Supreme Court decision in 1989,

Community for Creative Non-Violence v. Reid.

The law of employee invention assignment contracts is pervasive, and encompasses most of the

creative work product employees may generate on the job – whether trade secrets or inventions –

that result in issued patents. However, it does not cover everything, and thus a separate, but

seemingly similar body of law fills the gap. For employee creations that are expressive – and that

meet the standards for copyright protection – the work for hire doctrine allocates ownership

between employers and employees, just as the interplay of contract wording and (in some states)

legislative enactments allocates ownership of potential trade secrets and patentable inventions.

The work for hire doctrine allocates ownership of copyrightable works in a manner that is more

favorable to the employee, posing a direct conflict with the law of invention assignment

contracts where an employee creates something that is potentially both copyrightable and a trade

secret.

The work for hire doctrine is partly a matter of statute, partly a matter of contract law, and partly

a matter of the common law of agency. Generally speaking, a copyrightable work created by an

employee within the scope of his or her employment belongs, at creation, to the employer:

A “work made for hire” is (1) a work prepared by an employee within the scope

of his or her employment; or (2) [specific categories of works not applicable to

this essay].

In the case of a work made for hire, the employer or other person for whom the

work was prepared is considered the author for purposes of this title, and, unless

the parties have expressly agreed otherwise in a written instrument signed by

them, owns all of the rights comprised in the copyright.

Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 743 (1989)

23 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

See 17 U.S.C. §§ 101, 201(b) (2012).

The work for hire doctrine does not extend to

independent contractors, however, and thus a copyrightable work created by an independent

contractor belongs to the contractor, absent a contract saying otherwise.

In determining who is an employee and who is not, courts are to apply the federal common law

of agency, rather than the employment law of particular states.

That question is solved by

analyzing a large number of factors.

Disputes over whether a person is a contractor or an

As the text of the statute indicates, no contract is required for a work for hire to exist.

Nonetheless, as with the law of employee invention assignments, companies generally insert

work for hire assignment terms into standard-form employment contracts, usually if not always

next to the terms regarding invention assignment.

See Reid, 490 U.S. at 743 (key case on the work for hire doctrine); JustMed, Inc. v. Byce,

600 F.3d 1118, 1128 (9th Cir. 2010) (affirming finding that software programmer was employee,

giving company ownership of software as work for hire).

Id. at 750-51 (“To determine whether a work is for hire under the Act, a court first should

ascertain, using principles of the general common law of agency, whether the work was prepared

by an employee or an independent contractor.”).

Whether someone is an employee or an independent contractor for purposes of Copyright

Act analysis involves the weighing of numerous factors. Reid lists twelve, none of which are

“determinative”: (1) the hiring party’s right to control the manner and means by which the

product is accomplished; (2) the skill required; (3) the source of instrumentalities and tools; (4)

the location of the work; (5) the duration of the relationship between the parties; (6) whether the

hiring party has the right to assign additional projects to the hired party; (7) the extent of the

hired party’s discretion over when and how long to work; (8) the method of payment; (9) the

hired party’s role in hiring and paying assistants; (10) whether the work is part of the regular

business of the hiring party; (11) whether the hiring party is a business; (12) the provision of

employee benefits and the tax treatment of the hired party. See id. at 751-52. Some courts have

suggested that the tax/benefits classification of the author is the most important factor, or at least

a disproportionately important factor. See Hi-Tech Video Prods., Inc. v. Capital Cities/ABC,

Inc., 58 F.3d 1093, 1097 (6th Cir. 1995) (factor is a “strong indication of a worker’s employment

status”); Kirk v. Harter, 188 F.3d 1005, 1008 (8th Cir. 1999) (finding factor important where

hiring party reported author to IRS as an independent contractor); Aymes v. Bonelli, 980 F.2d

857, 862-63 (2d Cir. 1992) (failure to pay taxes and benefits “constitute virtual admissions of

[author’s] status by [hiring party] himself;” citing numerous post-Reid cases and saying “every

case since Reid that has applied the test has found the hired party to be an independent contractor

where the hiring party failed to extend benefits or pay social security taxes.”) (citing cases);

Numbers Licensing, LLC v. bVisual USA, Inc., 643 F. Supp, 2d 1245, 1251-52 (E.D. Wash.

2009) (where individual had his own consulting entity and company contracted with that entity,

and where entity was responsible for individual’s “payroll obligations, tax obligations, and

employee benefits,” those and other factors led to court’s conclusion that individual was

independent contractor and software was not a work for hire). One court, however, rejected the

“usually dispositive” tax/benefits factor where the author worked full-time, was paid weekly,

believed he had a long-term relationship, was shown the hiring party’s source code, worked with

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 24

employee are common, and the case law on that question is extensive. However, where the

individual at issue starts as a contractor and later becomes an employee, the question of whether

a work for hire exists is further muddled.

For our purposes, these disputes are peripheral. What matters instead is who owns the

copyrightable material created by an employee when an employment relationship exists. As the

party claiming ownership under the work for hire doctrine, the sole question is whether the

author created the work within the scope of his or her employment:

A “work made for hire” is . . . a work prepared by an employee within the scope

of his or her employment.

the hiring party’s equipment and accessed the hiring party’s servers from home, telecommuted

but also worked twice a week at the hiring party’s facility for at least some period, assisted with

other assignments, received assistance in software programming from the hiring party, had

access to the hiring party’s office and equipment, and met a third party as a representative of the

hiring party. See Sasnett v. Convergent Media Sys., Inc., No. 95-12262-NG, 1997 WL

33142149, at *9 (D. Mass. Aug. 29, 1997) (on preliminary injunction request, finding that

plaintiffs were likely to succeed on the merits).

Courts have identified other possible factors beyond those set forth in Reid. A possible

additional factor could be whether the corporation existed at the time of creation. See Billy-Bob

Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 591 (7th Cir. 2003) (doctrine did not apply where,

among other things, “the corporation did not exist when the [works] were authored”; company

incorporated the year after creation of works). Another possible additional factor is whether the

author worked for others at the same time. See Kirk, 188 F.3d at 1008 (“[T]hroughout his six-

year relationship with [hiring party], [author] continued to engage in computer consulting with

other companies, a factor suggesting that he was an independent contractor.”); Aymes, 980 F.2d

at 864 (finding it probative that author “did occasional work for others at the same time” despite

working for two years for hiring party); Alcatel USA, Inc. v. Cisco Sys., Inc., 239 F. Supp. 2d

645, 654 (E.D. Tex. 2002) (noting that author “was simultaneously working as an independent

contractor for two other companies”). Yet another possible factor is the hiring party’s own

perceptions of whether the author was an employee or not. See Hi-Tech Video Prods., Inc., 58

F.3d at 1099 (fact that hiring party did not perceive assistants as employees weighed in favor of

finding them to be independent contractors); see also Alcatel USA, 239 F. Supp. 2d at 654

(finding it significant that hiring party had called author an independent contractor in a prior

lawsuit before time “when it finally became advantageous for [hiring party] to treat [author] as

its employee in order for it to assert ownership of [author’s] creations”).

See Massingill v. Stream, Ltd., No. 3:08-cv-0091-M, 2009 WL 3163549, at *5 (N.D. Tex.

Oct. 1, 2009) (company’s motion for summary judgment on ownership of software program

denied; fact issues remained where individual started work on software as contractor, later

became employee, and whether the work “continued to be developed during his employment

with [company] such that it would constitute a ‘work for hire’ under the Copyright Act.”).

17 U.S.C. § 101 (2012).

25 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

Much like the law of invention assignment contracts, an employer’s agreement with an employee

to assign works for hire is not the end of the story. A penumbra of case law defines what “scope

of his or her employment” means, and in effect creates exceptions to the presumption of

employer ownership.

Thus, while employment contracts ubiquitously recite that works for hire

belong to the employer, the assignment is not monolithic.

As Nimmer puts it, “Under the current Act, even if a work is prepared by an employee, if it

is not prepared ‘within the scope of his or her employment,’ it is not regarded as a ‘work made

for hire.’ Therefore, an agreement between employer and employee whereby works prepared by

the employee that are not prepared within the scope of employment are nonetheless deemed to be

‘works made for hire,’ will not in itself convert such works into the ‘for hire’ category.” 1

MELVILLE B. NIMMER AND DAVID NIMMER, NIMMER ON COPYRIGHT § 5.03[B][1][b][ii]

(Matthew Bender, Rev. Ed. 2018).

I have found no empirical study of employment contract terms assigning works made for

hire. That said, many samples are publicly available. My own anecdotal experience, based on

viewing thousands of employment agreements in Silicon Valley and elsewhere, drafted by a

wide variety of law firms, suggests that most recite that works for hire in the scope of

employment are assigned – that is, the typical agreement follows the text of the Copyright Act. A

very typical sample, pulled from a website which collects such standard terms, reads: “Employee

acknowledges that all original works of authorship which are made by him (solely or jointly with

others) within the scope of his employment and which are protectable by copyright are works

made for hire, pursuant to the United States Copyright Act (17 U.S.C. SS 101 et seq.), and are

solely the property of the Company.” See LAW INSIDER, Works Made for Hire Sample Clauses,

https://www.lawinsider.com/clause/works-made-for-hire (last visited Oct. 17, 2018).

Two other points about such contracts are worth noting. First, an employer and an employee

can negotiate a different structure by contract – such as a royalty-based scheme – though it seems

unlikely that a form contract could undercut rights granted by the Copyright Act through the

scope of employment test any more than an invention assignment contract could get around state

statutory limits on the scope of such agreements. See generally Comput. Data Sys., Inc. v.

Kleinberg, 759 F. Supp. 10, 13-14 (D.D.C. 1990) (triable issue of fact on scope of employment

because contract stated that if employee developed certain computer software and agreed to

transfer it to employer, he would get a royalty to be negotiated at the time).

Second, as with any matter of employment contracts, questions of timing matter. Some courts

have taken a position on the question whether, in general, a post-creation writing can give a

hiring party work for hire rights. Because the statute’s text seems to indicate that ownership

starts from the time of creation, the Seventh Circuit held in 1992 that there cannot be a work for

hire based on a written agreement unless the writing predates the creation of the work. See

Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 413 (7th Cir. 1992) (basing its rule on

the need to have certainty). By contrast, the Second Circuit rejected this approach and held that it

is possible to have a work for hire based on a post-creation written agreement, so long as that

agreement evidences a prior agreement before the time of creation. See Playboy Enters., Inc. v.

Dumas, 53 F.3d 549, 559 (2d Cir. 1995) (noting that the Nimmer treatise disagreed with Schiller

and holding that “the writing requirement . . . can be met by a writing executed after the work is

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 26

Every court to address the “scope of employment” issue since the Supreme Court addressed

work for hire law in the 1989 Reid decision has applied a three-part test based on section 228 of

the Restatement (Second) of Agency: “Conduct of a servant is within the scope of employment

if, but only if: (a) it is of the kind he is employed to perform; (b) it occurs substantially within the

authorized time and space limits; (c) it is actuated, at least in part, by a purpose to serve the

master.”

This reference to the Restatement is typically perfunctory, as courts do not cite other

sections from the same chapter.

Supposedly, all three tests must be met for there to be a work for hire, meaning that the test is

conjunctive, not disjunctive.

But at the same time, courts seem to place the least emphasis on

the second factor and will find a work for hire if the other two factors are met and at least some

created, if the writing confirms a prior agreement, either explicit or implicit, made before the

creation of the work”; remanding on that factual question). See also Compaq Comput. Corp. v.

Ergonome Inc., 210 F. Supp. 2d 839, 843-45 (S.D. Tex. 2001) (following Playboy, holding that

test requires showing that the parties “understood at the time the [works] were created that the

works were made for hire,” and finding test met where written agreement made express

reference to work done the year before; written agreement predated author’s subsequent

assignment to another company by several years); Kasten v. Jerrytone, No. 02-421, 2004 WL

1857680, at *6 (E.D. La. Aug. 16, 2004) (noting Playboy rule, finding that agreement at issue

did not mention previous works, only future works, but separately holding that contract was

modified by acceptance of royalties for pre-agreement works).

RESTATEMENT (SECOND) OF AGENCY § 228 (Aᴍ. Lᴀᴡ Iɴsᴛ. 1958).

Although rarely cited by the courts, the Restatement (Second) of Agency has ten sections

regarding “scope of employment.” For the most part, the focus of these sections is on whether

the employer will be liable for tortious or illegal acts by an employee. As a result, many of the

annotated cases address such matters as joy rides in the company car and assaults by employees,

with little value for work for hire disputes. That said, section 229, “Kind of Conduct Within

Scope of Employment,” details factors that might assist courts in work for hire disputes, such as

“whether or not the act is one commonly done by such servants,” “the time, place and purpose of

the act,” and “the similarity in quality of the act done to the act authorized.” Sections 235 and

236, in turn, address the third factor of the employee’s purpose, or intentions. Section 235 states

“An act of a servant is not within the scope of employment if it is done with no intention to

perform it as a part of or incident to a service on account of which he is employed.” The

comment says “It is the state of the servant’s mind which is material.” Section 236 states

“Conduct may be within the scope of employment, although done in part to serve the purposes of

the servant or a third person.” That is consistent with the case law cited above. Id. §§ 228-237.

See Genzmer v. Pub. Health Tr. of Miami-Dade Cty., 219 F. Supp. 2d 1275, 1280 (S.D.

Fla. 2002) (stating rule: “Courts interpret this test as conjunctive. That is, the party attempting to

establish that the work was made for hire must establish all three elements.”); Moonstruck

Design, LLC v. Metz, No. 02 CIV. 4025(RWS), 2002 WL 1822927, at *3 (S.D.N.Y. 2002)

(stating rule); Quinn v. City of Detroit, 988 F. Supp. 1044, 1052 (E.D. Mich. 1997) (same);

Roeslin v. District of Columbia, 921 F. Supp. 793, 798 (D.D.C. 1995) (same); City of Newark v.

Beasley, 883 F. Supp. 3, 8 (D.N.J. 1995) (same).

27 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

of the creative work was done at the employer’s facility and during work hours – or in some

cases none at all.

Further, like invention assignment law, courts may be open to an expansive

interpretation of employer time where a company has a more 24/7 working culture.

Perhaps because the work for hire scope of employment test presents a more balanced allocation

of interests compared to the tests under a typical employee invention assignment contract, case

law outcomes appear less one-sided. Putting aside inconclusive rulings, I have found around the

same number of work for hire cases where the employer prevailed as to ownership of the work

(at least as to injunctive relief)

as those where the employee prevailed.

See Avtec Sys. v. Peiffer, 21 F.3d 568, 571 (4th Cir. 1994) (noting that if first factor is met,

courts will not favor employee just because work was done off-site); McKenna v. Lee, 318 F.

Supp. 2d 296, 301 (E.D.N.C. 2002) (same; prisoner did work in his cell, but license plate design

was what he was hired to do); Martin v. City of Indianapolis, 982 F. Supp. 625, 634 (S.D. Ind.

1997) (noting that you can’t avoid the work for hire doctrine by doing the work off-site), aff’d,

192 F.3d 608 (7th Cir. 1999); Marshall v. Miles Labs., Inc., 647 F. Supp. 1326, 1331 (N.D. Ind.

1986) (pre-Reid case; article held to be work for hire even though employee did much work

away from the employer’s facility because work related to the things plaintiff was hired to do,

and because it was based on research done by another employee for employer); Miller v. CP

Chems., 808 F. Supp. 1238, 1243 (D.S.C. 1992) (employee worked off-site on software but “[o]n

the other hand, the work was performed during the time period in which he was employed by

[employer].”).

See, e.g., U.S. Auto Parts Network, Inc. v. Parts Geek, LLC, 692 F.3d 1009, 1018-19 (9th

Cir. 2012) (remanding where there was a triable issue of fact as to whether portion of software

written when programmer was an employee was within his scope of employment, where among

other things he “lived rent-free in a house that doubled” as a company office and did not

“strictly” differentiate between work and personal hours, so that his work was “within authorized

work hours and space limits.”).

As of May 2018 when this research was completed, these cases are: Genzmer, 219 F. Supp.

2d at 1275; Molinelli- Freytes v. Univ. of P.R., No. 09-1655(DRD), 2012 U.S. Dist. LEXIS

143262 (D.P.R. Sept. 30, 2012); Fleurimond v. N.Y. Univ., 876 F. Supp. 2d 190 (E.D.N.Y.

2012); Le v. City of Wilmington, 736 F. Supp. 2d 842 (D. Del. 2010); Rouse v. Walter &

Assocs., LLC, 513 F. Supp. 2d 1041 (S.D. Iowa 2007); McKenna, 318 F. Supp. 2d at 296;

Miller, 808 F. Supp. at 1238; Vanderhurst v. Colorado Mountain Coll. Dist., 16 F. Supp. 2d

1297, 1307 (D. Col. 1998); Lewis v. Activision Blizzard, Inc., No. C 12-1096 CW, 2013 U.S.

Dist. LEXIS 149784 at *1 (N.D. Cal. Oct. 17, 2013); and Sterpetti v. E-Brands Acquisition,

LLC, No. 6:04-cv-1843-Orl-31DAB, 2006 U.S. Dist. LEXIS 21407 at *1 (M.D. Fla. Apr. 20,

2006).

These are: Avtec, 21 F.3d at 568; Moonstruck, 2002 WL 1822927 at *1; TAP Worldwide,

LLC v. Becker, No. CV 10-04903 DMG (JCx), 2010 WL 2757354, at *1 (C.D. Cal. July 12,

2010); PFS Dist. Co. v. Raduechel, 332 F. Supp. 2d 1236 (S.D. Iowa 2004), Roeslin, 921 F.

Supp. at 793; Quinn, 988 F. Supp. at 1044; Food Lion, Inc. v. Capital Cities/ABC, Inc., 946 F.

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 28

Scholarly writing about the work for hire doctrine has mostly centered on a question that

precedes the topic of this article – whether the author is an independent contractor or an

employee in the first place.

That focus is no surprise, as there is a prominent Supreme Court

Supp. 420 (M.D.N.C. 1996); Beasley, 883 F. Supp. at 3; Cannon Grp., Inc. v. Better Bags, Inc.,

250 F. Supp. 2d 893, 901 (S.D. Ohio 2003); and Martin, 982 F. Supp. at 625.

See Ryan Vacca, Work Made for Hire – Analyzing the Multifactor Balancing Test, 42 FLA.

ST. U. L. REV. 197 (2014) (thorough history and analysis of case law after Reid on employee

versus contractor analysis); Llewellyn Joseph Gibbons, Love’s Labor’s Lost: Marry for Love,

(addressing work for hire in the community property context); Jon M. Garon & Elaine D. Ziff,

The Work Made for Hire Doctrine Revisited: Startup and Technology Employee and the Use of

Contracts in a Hiring Relationship, 12 MINN. J.L. SCI. & TECH. 489, 505-09 (2011) (addressing

work for hire agreements and asserting in passing that, as to California’s invention assignment

statute, “[t]he two exceptions in section 2870 reasonably approximate the ‘scope of employment’

prong of the work for hire doctrine, as applied to the state law of assignment of employee work

product”); Assaf Jacob, Tort Made for Hire – Reconsidering the CCNV Case, 11 YALE J.L. &

TECH. 96, 143-144 (2009) (touching on the scope of employment test, but primarily focusing on

whether agency law provides the best fit for assessing employee/contractor status); Deborah

Tussey, What Ifs and Other Alternative Intellectual Property and Cyberlaw Story: What If

Employees Owned Their Copyrights?, 2008 MICH. ST. L. REV. 233, 242 (2008) (“In short, if

Congress had not adopted the work for hire doctrine during the early years of corporatization of

the copyright industries, it probably would have had to invent an alternative legal structure to

handle the licensing of collaborative works in the later years of the copyright terms of those

works.”); Vai Io Lo, Employee Inventions and Works for Hire in Japan: A Comparative Study

Against the U.S., Chinese, and German Systems, 16 TEMP. INT’L & COMP. L.J. 279, 305-06

(2002) (noting, in survey, that Japanese law requires “reasonable compensation if the employee

assigns the right to obtain a patent, the patent right, or grant an exclusive license to the

employer.”); Carolyn M. Salzmann, Comment, You Commissioned It, You Bought It, But Do You

Own It? The Work for Hire: Why Is Something So Simple, So Complicated?, 31 U. TOL. L. REV.

497 (2000) (focusing on a writing requirement for work for hire in order to clarify ownership);

Colleen Creamer Fielkow, Note, Clashing Rights Under United States Copyright Law:

Harmonizing an Employer’s Economic Right with the Artist-Employee’s Moral Rights in a Work

Made for Hire, 7 DEPAUL-LCA J. ART & ENT. L. 218, 220 (1997) (reviewing potential conflicts

between work for hire and employee-authors’ moral-rights); Shannon M. Nolley, Note, The

Work for Hire Doctrine and the Second Circuit’s Decision in Carter v. Helmsley-Spear, 7

DᴇPᴀᴜʟ-LCA J. Aʀᴛ. & Eɴᴛ. L. 103, 128 (1996) (examining the independent contractor vs.

employee aspects of work for hire); Jennifer Sutherland Lubinski, Note, The Work for Hire

Doctrine under Community for Creative Non-Violence v. Reid: An Artist’s Fair Weather

Friend, 46 CATH. U. L. REV. 119, 125 (1996) (arguing for revamp of Reid test to better benefit

artists and incentivize creation of more works); Alan Hyde & Christopher W. Hager, Promoting

the Copyright Act’s Creator-Favoring Presumption: “Works Made for Hire” Under Aymes v.

Bonelli & Avtec Systems, Inc. v. Peiffer, 71 DENV. U. L. REV. 693, 716-717 (1994) (primarily

29 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

ruling (Reid) on that issue. Moreover, the rise of the so-called “gig economy,” where companies

treat workers as independent contractors rather than employees, may also explain why many

focus on the rights of contractors versus those who hire them. By contrast, commentary on the

scope of employment test has been meager, with some exceptions noted below. The same is true

in the leading treatise on copyright law.

That said, several articles provide useful background for the issues analyzed here. A student note

comes perhaps closest to the issues presented here, by contrasting copyright and patent rights in

employee-created software.

Another commentator, in a detailed overview of the allocation of

ownership interests in works created by employees, advocates for “an interpretive rule operating

in favor of the employee” given that “[e]mployers are likely to attempt broad and vague

definitions of the job description” in order to satisfy the first factor of the scope of employment

test.

Finally, a definitive history of the work for hire concept and the transition to employer

examining employee versus contractor case law and approving the concept that absent a written

agreement, authors may often own their creations); Anne Marie Hill, Note, The “Work for Hire”

Definition in the Copyright Act of 1976: Conflict Over Specially Ordered or Commissioned

Works, 74 CORNELL L. REV. 559, 564-66 (1989) (early work assessing pre-Reid case law); Jon L.

Roberts, Work Made for Hire: The Fiction, the Reality, and the Impact Upon Software

Development, 1 HARV. J. L. & TECH. 97, 128 (1988) (addressing early employee versus

contractor case law); Rochelle Cooper Dreyfus, The Creative Employee and the Copyright Act of

1976, 54 U. CHI. L. REV. 590, 638-47 (1987) (examining work for hire law primarily in the

context of academic versus university control over scholarly output).

That treatise provides a general summary, with only a few case citations on “scope of

employment” disputes, outside of a long section of disputes between universities and academics.

See 1 MELVILLE B. NIMMER AND DAVID NIMMER, NIMMER ON COPYRIGHT §§ 5.03[B][1][b][i]-

[ii] (Matthew Bender, Rev. Ed. 2018).

David Loretto, Note, Employee Patents on Computer-Implemented Inventions: The

Conundrum of Separate Ownership of Patent and Copyright, 23 CARDOZO L. REV. 705, 711

n.35, 727-28 (2002) (noting possibility of conflicting rights in software covered by copyright and

trade secret law and primarily addressing potential conflicts between business-method patents (as

patent law stood at that time), employer shop rights, and copyright law). See also Joshua L.

Simmons, Inventions Made for Hire, 2 N.Y.U. J. OF INTELL. PROP. & ENT. L. 1, 46 (2012)

(comparing development of work for hire doctrine to incremental development of patent-related

concepts like the hired-to-invent doctrine and the shop right doctrine, and arguing that patent law

should cease requiring written inventor assignments and instead adopt an umbrella ownership

doctrine like work for hire).

Michael D. Birnhack, Who Owns Bratz? The Integration of Copyright and Employment

Law, 20 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 95, 152-53, 157-59, 162 (2009) (seeking

“the most efficient and fair rule of initial allocation of copyright in works created by authors in

the workplace”).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 30

ownership of employee work product sheds light on the origins of the conundrum this essay

addresses.

B. The Scope of Employment Case Law is More Balanced

The manner in which courts have analyzed the three-part scope of employment test in work for

hire disputes is noticeably different from the analysis seen in invention assignment disputes. As

described in the cases summarized here, courts tend to focus most on the first and third factors of

that test. And in contrast to invention assignment agreement law, employees prevail more often

because the three factors are more employee-friendly.

Case Law on Factor One (Hired to Perform): So long as the employee’s job description/job

duties are of the same general category as the copyrightable work, employers tend to win on the

first factor – even if the work is only incidentally related to the employee’s job duties. The

employer’s provision of guidance and supervision to the employee weighs in the employer’s

favor as well.

At the same time (and even if the work might be incidentally related to the scope

See Catherine L. Fisk, Authors at Work: The Origins of the Work-for-Hire Doctrine, 15

YALE J.L. & HUMAN. 1 (2003) (covering the nineteenth century, the creation of the work for hire

doctrine under the 1909 Copyright Act, and modern developments).

For cases where the employer wins on factor one, see Lewis v. Activision Blizzard, Inc.,

No. C 12-1096 CW, 2013 U.S. Dist. LEXIS 149784, at *10 (N.D. Cal. Oct. 17, 2013) (where

employer and former employee clashed over employee’s voice recording used in video games,

first factor favored employer where employee handbook listed creation of game content as a job

role); Molinelli-Freytes v. Univ. of P.R., No. :09-1655(DRD), 2012 U.S. Dist. LEXIS 143262, at

*32-37 (D.P.R. Sept. 30, 2012) (granting summary judgment to employer over faculty member’s

proposal for a graduate program; even though employee worked on vacations and holidays, that

second factor mattered less where work was clearly of the type employee was hired to perform);

Fleurimond v. N.Y. Univ., 876 F. Supp. 2d 190, 201-09 (E.D.N.Y. 2012) (granting summary

judgment to employer, which met all three factors as to employee who created graphic design

while employed to create such things, where she was expected to perform her job in part at home

using her own equipment, and where “no reasonable juror could find that she was not motivated

in large part to serve the interests of NYU.”); Rouse v. Walter & Assocs., LLC, 513 F. Supp. 2d

1041, 1056-60 (S.D. Iowa 2007) (applying three-part test; on tangled fact pattern where

professors argued that software program created in the course of sponsored university research

was not a work for hire, court rejected argument because, among other things, the software

development was within the duties they were “hired to perform,” the software “was developed

and tested on [university] computers” even if some work was done at home, and professors

“were motivated at least in part” to further university research when creating the work); Sterpetti

v. E-Brands Acquisition, LLC, No. 6:04-cv-1843-Orl-31DAB, 2006 U.S. Dist. LEXIS 21407, at

*20-22 (M.D. Fla. Apr. 20, 2006) (where parties disputed ownership of pasta-making manual,

employer prevailed on first factor because it asked the employee to create the manual and

provided feedback, showing its creation was part of employee’s job duties); Genzmer v. Pub.

Health Tr., 219 F. Supp. 2d 1275, 1281 (S.D. Fla. 2002) (employee hired as a doctor, but in fact

his required research “included the drafting of computer programs” and job description was

31 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

of employment) the employer’s disclaimer of the work is highly relevant, in contrast to the law

of invention assignment contracts.

Conversely, if the employee is hired to do tasks in categories

unrelated to the copyrightable work, the employee tends to prevail on the first scope of

employment factor.

broad enough to cover “the development of the computer program at issue”; in addition,

employee’s supervisor gave him “guidance and praise” for the software); Avtec Sys., Inc. v.

Peiffer, No. 92-463-A, 1994 WL 791188, at *3-4 (E.D. Va. 1994) (employer won first factor in

software case because employee’s job description including writing programs and implementing

computer simulation, and because at his employment, employee had generated similar software,

and because employer had been able to use the work to “win a contract”), aff’d, No. 94-2364,

1995 WL 541610, at *1 (4th Cir. Sept. 13, 1995); Miller v. CP Chems., Inc., 808 F. Supp. 1238,

1243 (D.S.C. 1992) (employee who wrote software was “not hired primarily for the development

of computer programs,” but “the development of the computer programs was at least incidental

to his job responsibilities because it was ‘within the ultimate objective of the principal and an act

which it is not unlikely that a servant might do.’”) (quoting RESTATEMENT (SECOND) OF AGENCY

§ 229 cmt. b (Aᴍ. Lᴀᴡ INST. 1958)).

See Roeslin v. District of Columbia, 921 F. Supp. 793, 798 (D.D.C. 1995) (“It is unfair for

the District to now claim that an activity it discouraged – developing the system – was within the

scope of plaintiff’s employment.”).

For cases where the employee wins on factor one, see TAP Worldwide, LLC v. Becker,

No. CV 10-04903 DMG (JCx), 2010 WL 2757354, at *3-4 (C.D. Cal. July 12, 2010) (export

manager of parts manufacturer, which did not develop or sell software, created software to

expedite export shipments, usable by any company for a monthly fee; finding in favor of

employee when employer moved for preliminary injunction because “[c]reating software was not

within the scope of his job and no one else at the company was tasked with anything similar,”

employee identified a business need not specific to his employer “but in the business world

generally,” and created it “on his own time, not during working hours”; employer did not even

learn about software until it terminated the employee); Pavlica v. Behr, 397 F. Supp. 2d 519, 525

(S.D.N.Y. 2005) (finding triable issue of fact for trial where high school teacher created a

program to train high school students to conduct scientific research where teacher did so without

prompting or direction from school, and where his intent was a model useful for any high

school); Moonstruck Design, LLC v. Metz, 02 Civ. 4025 (RWS), 2002 U.S. Dist. LEXIS 14583,

at *12-13 (S.D.N.Y. Aug. 12, 2002) (denying motion for preliminary injunction where former

employer failed to meet any of the three tests; jewelry designer was not an employee at the time

of creation, was hired only in a sales capacity, did not create the design during working hours,

and was motivated by desire to honor his wife and other cancer survivors); PFS Dist. Co. v.

Raduechel, 332 F. Supp. 2d 1236, 1248 (S.D. Iowa 2004) (employee was truck driver, not a

software developer, so this factor favored employee); Martin v. City of Indianapolis, 982 F.

Supp. 625, 633-34 (S.D. Ind. 1997) (going a little against the grain of some other cases cited

here, finding that employee won on first factor because only a little of his work for employer

involved ornamental metal work, but also because he demanded his own fee paid directly to him

for artistic work, and his work on sculpture in question differed significantly from his “normal

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 32

Case Law on Factor Two (Employer’s Time and Space): Much of the case law on the second

scope of employment factor focuses on whether or not the work was done at the employer’s

facility, though the test as worded is broader than that inquiry. The focus is where the work was

created, not where it was later used.

If job duties necessarily include working off-site, the fact

that an employee creates the work at home may still favor the employer.

However, in many

cases, the employee’s work off-site means that the employee wins this factor.

course of work”), aff’d, 192 F.3d 608 (7th Cir. 1999); Roeslin, 921 F. Supp. at 798 (employee

hired as labor economist, not software programmer and was discouraged from pursuing project);

City of Newark v. Beasley, 883 F. Supp. 3, 8 (D.N.J. 1995) (employee was police officer, but

work on classroom training materials to teach young people not to steal cars was unknown to

employer, and employee learned nothing from employer that assisted in project, so factor

favored employee); Quinn v. City of Detroit, 988 F. Supp. 1044, 1051 (E.D. Mich. 1997)

(employee was an attorney, not a programmer, employer never requested the work).

See Quinn, 988 F. Supp. at 1051 (software created at home but later installed at work).

See Fleurimond, 876 F. Supp. 2d at 201-09 (granting summary judgment to employer,

which met all three factors as to employee who created graphic design while employed to create

such things, where she was expected to perform her job in part at home using her own

equipment, and where “no reasonable juror could find that she was not motivated in large part to

serve the interests of NYU.”); Rouse, 513 F. Supp. 2d at 1056-57 (applying three-part test; on

tangled fact pattern where professors argued that software program created in the course of

sponsored university research was not a work for hire, court rejected argument because, among

other things, the software development was within the duties they were “hired to perform,” the

software “was developed and tested on [university] computers” even if some work was done at

home, and professors “were motivated at least in part” to further university research when

creating the work); Sterpetti, 2006 U.S. Dist. LEXIS 21407, at *27-28 (employee created pasta-

making manual offsite, but at employer’s direction, so employer prevailed on second factor);

Genzmer, 219 F. Supp. 2d at 1282 (employee was involved in research and thus would not have

been at clinic seeing patients; “it follows that he would not have developed the software” at the

employer’s facility).

See Moonstruck Design, 2002 U.S. Dist. LEXIS 14583, at *12-13 (S.D.N.Y. Aug. 12,

2002) (denying motion for preliminary injunction where former employer failed to meet any of

the three tests; jewelry designer was not an employee at the time of creation, was hired only in a

sales capacity in any event, did not create the design during working hours, and was motivated

by desire to honor his wife and other cancer survivors); Raduechel, 332 F. Supp. 2d at 1248

(software work done at home with employee’s own equipment and software licensed to other

companies; employee did later modify software for use at employer but factor favored

employee); Martin, 982 F. Supp. at 634 (off-site and on own time); Roeslin, 921 F. Supp. at 798

(employee created software in 3000 hours of work at home, fact that he later used it at work

immaterial); Beasley, 883 F. Supp. at 8 (police officer created anti-car theft training materials

solely off-site, and thus factor favored employee); Avtec, No. 94-2364, 1994 WL 791188, at *4-5

(employee created software at home and with own equipment, even though he later used it at

work).

33 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

That said, prevailing on the second factor may not favor the employee overall if the work was

done during the time the employee was employed. Courts may not find the second factor

determinative if the employer has prevailed on the first and third factors.

Case Law on Factor Three (Employee’s Purpose): Sometimes there are cases where the

employee did not seek to benefit the employer, beyond any doubt.

And sometimes the

employee’s copyrightable work is developed in tandem with work done for the employer, so that

it cannot reasonably be anything other than a work for hire.

However, most cases are closer. Many involve a situation where an employee created something

at home, used it at work but also for other purposes, and was motivated by both personal motives

and a desire to help the employer. As noted above, the second factor can be discounted if the

other factors are in the employer’s favor. That makes sense, as otherwise an employee could

create something at home and automatically get ownership of it, no matter how closely it relates

to his or her job role.

So where do courts draw the line when the employee may have had mixed motives? In general,

the motivation to assist the employer need only be partial; it need not be the sole motivation. The

employee must be at least “appreciably” motivated by a desire to serve the employer’s goals.

But what does this mean? Greater than a 50 percent motivation to serve those goals? Something

See, e.g., Miller v. CP Chems., Inc., 808 F. Supp. 1238, 1243 (D.S.C. 1992) (“On the other

hand, the work was performed during the time period in which he was employed by

[employer].”).

See Food Lion, Inc. v. Capital Cities/ABC, Inc., 946 F. Supp. 420, 421-22 (M.D.N.C.

1996) (journalists working as undercover employees made secret tapes of employer’s working

conditions, employer tried to claim the tapes as works for hire to suppress them; the court

rejecting this stratagem as not meeting any “reasonable interpretation of scope of employment”).

See Lewis v. Activision Blizzard, Inc., No. C 12-1096 CW, 2013 U.S. Dist. LEXIS

149784, at *13-14 (N.D. Cal. Oct. 17, 2013) (employer easily prevailed where employee created

sound recording at employer’s request, for employer’s purposes, and under employer’s

supervision); Quinn, 988 F. Supp. at 1052; Miller, 808 F. Supp. at 1243-44 (employee’s software

was “created to simplify [employee’s] job and to eliminate errors,” employer asked employee to

develop similar software for other company products, and all software related specifically to a

product made by the employer).

See Avtec Sys., Inc. v. Peiffer, 21 F.3d 568, 572 (4th Cir. 1994) (as to the third scope of

employment factor, the employer must show that the employee “was at least ‘appreciably’

motivated by a desire to further its corporate goals[.]”) (citing RESTATEMENT (SECOND) OF

AGENCY § 226 cmt. b (Aᴍ. Lᴀᴡ INST. 1958)) (“The fact that the predominant motive of the servant

is to benefit himself or a third person does not prevent the act from being within the scope of

employment. If the purpose of serving the master's business actuates the servant to any

appreciable extent, the master is subject to liability[.]”)).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 34

else? The cases do not nail it down with precision. Both the employer

and the employee

can

prevail on this factor.

For cases where the employer wins on factor three, see Fleurimond v. N.Y. Univ., 876 F.

Supp. 2d 190, 201-09 (E.D.N.Y. 2012) (granting summary judgment to employer, which met all

three factors as to employee who created graphic design while employed to create such things,

where she was expected to perform her job in part at home using her own equipment, and where

“no reasonable juror could find that she was not motivated in large part to serve the interests of

NYU.”); Le v. City of Wilmington, 736 F. Supp. 2d 842, 845-51 (D. Del. 2010) (on summary

judgment by employer, municipal employee hired as Information Analyst who created an

“Instant Ticketing” program for a city department of licensing and inspections to use in lieu of

paper tickets did not own the software, even though he wrote the software “essentially

exclusively on his own time, on his own computer at home,” because his purpose was “to

facilitate the City’s business of issuing tickets,” and did so at the direction of a supervisor,

received input from other employees, and used code previously used for city-owned software);

Rouse v. Walter & Assocs., LLC, 513 F. Supp. 2d 1041, 1056-57 (S.D. Iowa 2007) (applying

three-part test; on tangled fact pattern where professors argued that software program created in

the course of sponsored university research was not a work for hire, court rejected argument

because, among other things, the software development was within the duties they were “hired to

perform,” the software “was developed and tested on [university] computers” even if some work

was done at home, and professors “were motivated at least in part” to further university research

when creating the work); Sterpetti v. E-Brands Acquisition, LLC, No. 6:04-cv-1843-Orl-31DAB,

2006 U.S. Dist. LEXIS 21407, at *18-19 (M.D. Fla. Apr. 20, 2006) (employee’s ideas about

“gaining personal benefit” from creation of pasta-making manual insufficient where he clearly

created manual at employer’s behest, showing at least a partial motivation to server the

employer’s interests); Genzmer v. Pub. Health Tr., 219 F. Supp. 2d 1275, 1283 (S.D. Fla. 2002)

(employee claimed vague personal reasons, but evidence showed that he “tailored” software to

“fit [employer’s] needs”).

For cases where the employee wins on factor three, see Moonstruck Design, LLC v. Metz,

02 Civ. 4025 (RWS), 2002 U.S. Dist. LEXIS 14583, at *12-13 (S.D.N.Y. Aug. 12, 2002)

(denying motion for preliminary injunction where former employer failed to meet any of the

three tests; jewelry designer was not an employee at the time of creation, was hired only in a

sales capacity in any event, did not create the design during working hours, and was motivated

by desire to honor his wife and other cancer survivors); Avtec, 21 F.3d at 572 (“appreciably”

standard); Avtec Sys., Inc. v. Peiffer, No. 92-463-A, 1994 WL 791188, at *6 (E.D. Va. 1994)

(applying test, programmer created work off-site and later used it at work, but his conduct was

consistent with a belief that he was the owner, and employer’s bonus payment could have been

made “as a reward for [employee’s] willingness to utilize his own property for the benefit of his

employer”); PFS Dist. Co. v. Raduechel, 332 F. Supp. 2d 1236, 1248-49 (S.D. Iowa 2004)

(where employee had previously licensed software to other companies and then modified it to

work with employer’s system, not enough to favor employer on third factor); Roeslin v. District

of Columbia, 921 F. Supp. 793, 798 (D.D.C. 1995) (court found evidence that employee was

primarily creating software for self-motivation and to create job opportunities for himself, so fact

35 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

Some courts, such as the Beasley and Roeslin cases cited below, suggest that looking at the

employee’s subjective beliefs is one approach to analyzing the third scope of employment factor.

One court made this approach the dispositive test. In Martin v. City of Indianapolis, the court,

relying on the Restatement (Second) of Agency section 235, comment (a), stated that “[t]he state

of mind of the employee is the material determination; the court may consider the employee’s

actions or other manifestations only as evidence of the employee’s state of mind.”

Under that

sort of analysis, the employee won easily, because he claimed that his sculpture was a personal

project, that he did not get paid for it, spent a lot of time on it, worked on it in his free time,

signed an agreement calling himself the “owner” of it, and was, apart from his work for the

employer, “a serious, independent artist who uses stainless steel as a medium.” Focusing on the

employer’s potential economic motivations, the court noted that the work was not created in

order for the employer to get a commercial benefit, as it never sold the work to a customer.

Another way to consider the question is to look to whether the employee was doing the work for

a third party at the time – as doing the work for someone else is surely relevant to whether the

work was done “appreciably” for the employer. In one case, the work in question (a bag design)

was of the type the employee was hired to do, and the first factor favored the employer.

However, the work was not a work for hire, because the employee created the design for a third

party, assigned it to that third party, and was paid directly by the third party. Thus, the design

was not “actuated by a purpose to serve [the employer’s] interest.”

Overall, an employer can win on the first factor but still lose the third, and the focus – however a

court words it – appears to be whether some significant percentage of the employee’s subjective

motive was to help the employer, focusing on the time the work was created.

Because the law

that software also benefited his employee immaterial); City of Newark v. Beasley, 883 F. Supp.

3, 9 (D.N.J. 1995) (police officer intended that many cities, not just his own, might purchase his

training materials; even though he believed his employer might be one customer for his work,

that was not enough).

See Martin v. City of Indianapolis, 982 F. Supp. 625, 634-35 (S.D. Ind. 1997), aff’d, 192

F.3d 608 (7th Cir. 1999).

See id.

See Cannon Grp., Inc. v. Better Bags, Inc., 250 F. Supp. 2d 893, 901 (S.D. Ohio 2003).

This case is atypical, however, as the employer was not a party. The party holding the

assignment was the cross-plaintiff in an infringement case, and the cross-defendant was trying to

undermine the cross-plaintiff’s copyright registration. There was nothing in the case about

whether the employee had been permitted to do the work for the third party while employed, and

the court appeared to be moving hastily to shut down the cross-defendant’s strained attempt to

defeat the cross-plaintiff’s copyright. The employer was not present to argue its own case for a

work for hire. In other words, courts may be less exacting when an accused third party infringer

tries to invalidate the copyright on some technicality.

Some courts, of course, find the evidence in conflict, and hold that a trial is necessary. E.g.,

Koenig v. Dowdy, No. 5:15-CV-00347-RN, 2017 U.S. Dist. LEXIS 163850, at *19 (E.D.N.C.

Sept. 28, 2017) (denying motion for summary judgment as to copyright ownership where, among

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 36

of invention assignment contracts does not expressly consider the employee’s intent when

creating intellectual property, this consideration of the employee’s state of mind is quite different

from the analyses seen under that body of law.

IS WORK FOR HIRE LAW INCONSISTENT WITH INVENTION ASSIGNMENT LAW?

This review of the work for hire doctrine and the law of invention assignment agreements shows

why there is seemingly a direct conflict between them. Where an employee creates something

that is both copyrightable and that could be an employer-assigned trade secret, the outcome of an

ownership dispute could differ.

Unlike trade secrets and patent rights, trade secrets and copyrightable works are categories of

intellectual property that can exist concurrently in the same work. Indeed, because the Copyright

Act does not preempt state trade secret law, courts deem that confidentiality requirements

sufficiently distinguish a state law trade secret cause of action from a copyright infringement

cause of action. A plaintiff with ownership rights under both can theoretically pursue both causes

of action against a defendant regarding the same work.

Thus, it follows that when an employee creates new work, that work might constitute the

employer’s trade secret – if it meets the conditions for automatic invention assignment under the

employment agreement – and it also might constitute the employer’s work for hire – again, if the

conditions for the scope of employment test are satisfied. In many cases, especially for routine

situations where the employee creates work for the employer in the ordinary course of business,

both tests will easily be satisfied, and nobody would imagine otherwise.

However, on the margins, where employees create work outside the workplace and for outside

purposes, the two tests can dictate different results as to the same work by the same employee.

To begin with, the invention assignment analysis is disjunctive – the employer need only satisfy

other things, third work for hire factor was subject to disputed evidence over an architectural

house plan created by an employee/architect); Bell v. Maloney, No. 1:16-cv-01193-RLY-DML,

2017 U.S. Dist. LEXIS 111867, at *4-5 (S.D. Ind. July 19, 2017) (triable issues of fact on all

three factors where attorney took photo that was used on law firm’s website and parties disputed

ownership).

Federal courts agree that trade secret causes of action are not copyright-preempted. E.g.,

GlobeRanger Corp. v. Software AG USA, Inc., 836 F.3d 477 (5th Cir. 2016) (collecting cases

from other circuits and joining them). Notably, with the May 2016 enactment of the federal

Defend Trade Secret Act, no preemption analysis is necessary as to a cause of action for trade

secret misappropriation brought under federal law. See generally Defend Trade Secrets Act of

2016, Pub. L. No. 114-153, 18 U.S.C. §§ 1831-1839, 130 Stat. 376.

For example, in the well-known California case, Cubic Corp. v. Marty, 229 Cal. Rptr. 828,

(Ct. App. 1986), the employee’s work product in dispute included a “manuscript describing his

invention,” which surely would have been a work for hire under the facts, where the employer

easily prevailed under its invention assignment contract. Id. at 830.

37 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

one of the conditions for ownership, such as demonstrating that its equipment was used. By

contrast, the work for hire analysis is conjunctive – the employer must show all three factors, or

at least such a strong showing on the first and third that the second is discounted.

Second, the invention assignment analysis is agnostic to an employee’s job role. If the

receptionist writes software that relates to the employer’s business, and if the receptionist signed

an invention assignment contract, the employer owns the work even if the receptionist

programmed it during off-hours and away from the office. The invention assignment contract

thus reaches beyond the common law “hired to invent” test for employee ownership, as

discussed above. Again, by contrast, the work for hire scope of employment test looks to the

employee’s job role as the first factor of the analysis, thereby providing a narrower path to

employer ownership.

Perhaps most importantly, the invention assignment analysis is agnostic to the employee’s

motive or intent. Even if an employee creates an off-site work in anticipation of a new job or

creating a new company, that motive is not relevant if the work is found to relate to the

employer’s business or relate to its demonstrably anticipated research and development.

But as

discussed above, the third factor of the work for hire scope of employment test significantly

considers the employee’s motive.

With these differences in mind, there are many decisions where the outcome might have differed

depending on which of the two doctrines the court focused on (or perhaps more accurately, the

doctrine the employer focused on when bringing the lawsuit).

One example where a conflict might have arisen had the court spent more time on the employer’s

invention assignment claim was a 2004 ruling from the Southern District of Iowa, PFS

Distribution Co. v. Raduechel. There, the employee was a truck driver for a poultry plant. A self-

taught programmer, he created software at home for an order entry system. The employee

licensed his software to two unrelated businesses and later created a version for use by his

employer, brought it on site and installed it, and tailored it for the employer’s business.

After the company was acquired and cut salaries, the employee and a co-worker planned a mass

departure for a new venture, engaging in significant misconduct that led to a preliminary

injunction.

However, the employer’s claim to ownership of the truck driver’s order entry

software faltered because the court agreed that the employee owned the work under the work for

hire doctrine. He was not hired to program, he created the work at home and even licensed it to

others before bringing it to work, and his purpose in creating it was not to serve the employer.

E.g., Cᴀʟ. Lᴀʙ. Cᴏᴅᴇ §§ 2870-72 (West 1979). As noted, however, it remains unclear

whether an employer could meet these tests where the employee had no notice of related work by

a large, far-flung employer.

PFS Dist. Co. v. Raduechel, 332 F. Supp. 2d 1236, 1240 (S.D. Iowa 2004).

See id. at 1240-43, 1246-47, 1251-53.

See id. at 1247-49.

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 38

Raduechel is possibly the only case where a court considered a work for hire dispute alongside a

claim for breach of an invention assignment contract. Had the court spent more time analyzing

the latter, it might have recognized a potential conflict. After all, the employee’s software surely

related to the employer’s business, and at least a version of it was modified for use at the

employer’s facility and presumably on its equipment. Under the employer-friendly regime of

invention assignment law, perhaps the court might have found that the employer owned at least a

portion of the work. However, the court appears to have brushed off the employer’s invention

assignment cause of action, having already decided the work for hire issue and quickly

concluding that the result was the same under the employer’s contract claim.

Another case illustrating the potential conflict is a 2010 ruling from the Central District of

California, TAP Worldwide, LLC v. Becker. There, the employer sold “off-road parts and

accessories.” The employee prevailed in a work for hire dispute over ownership of a software

program he wrote to expedite the processing of export shipments.

He had created the work on

his own time, and based on his own “market research,” without using the employer’s

equipment.

The employer sought ownership and an order requiring the former employee to

“restore access” to the software, but lost on all three work for hire scope of employment

factors.

Would the result have been the same if the employer had sued for breach of an

invention assignment agreement? In California, it would need only show that the work related to

its business, and not that the employee was hired to create that type of work, or that the employee

was motivated by a purpose to serve the master.

Perhaps the case that comes closest to demonstrating the conflict between the work for hire

doctrine and invention assignment law is a 1994 Fourth Circuit case where an employee’s

ownership of the copyright in a work precluded the employer’s dueling claim to trade secret

rights in the same information. In Avtec Systems, Inc. v. Peiffer, the employer provided

simulations of orbital patterns to the federal government. The employee, whose job duties

included computer simulations for satellite orbits, wrote a software program for that purpose, but

did so on his own time. The company used the program as a marketing tool, and other employees

suggested modifications. However, the employee later licensed the program to a third party.

See id. at 1249. The court spent all of five sentences on the invention assignment claim,

and found that “[d]ue to the insufficiency of the evidence to establish the database software as a

‘work for hire,’ or otherwise rightfully owned by plaintiffs, the Court declines to award

injunctive relief that ordinarily might be warranted by this claim.”

TAP Worldwide, LLC v. Becker, No. CV 10-04903 DMG (JCx), 2010 WL 2757354, at *1

(C.D. Cal. July 12, 2010).

See id. at *1, 3.

See id. at *4-5.

See Cᴀʟ. Lᴀʙ. Cᴏᴅᴇ § 2870 (West 1979).

This factual summary is taken from the Fourth Circuit’s first appellate ruling in the case.

Avtec Sys., Inc. v. Peiffer, 21 F.3d 568, 569-70 (4th Cir. 1993). See also Avtec Sys., Inc. v.

Peiffer, 805 F. Supp. 1312, 1315-17 (E.D. Va. 1992).

39 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

After a confusing bench trial ruling where the lower court found that the employee owned the

Fourth Circuit remanded for clearer findings on the work for hire question. Crucially, the court

rejected the notion that an employee’s copyright ownership could be undermined by an

employer’s trade secret claim to the same information. Noting that copyright ownership confers a

right of publication and distribution, while trade secret rights depend on non-publication and

secrecy, the court held that “Avtec offers no authority, and we have found none, for the

proposition that the alleged ‘owner’ of a trade secret . . . could maintain the secrecy of material

that is subject under federal law to publication at the will of another.”

Ultimately, after remand, the Fourth Circuit affirmed a ruling that the employee owned the

copyrighted work cannot be subject to an employer’s trade secret misappropriation claim over

that work.

Although the employer brought trade secret and fiduciary duty causes of action against the

employee rather than a breach of contract claim relating to invention assignment, that is a

distinction without a difference for our purposes, as the intellectual property rights arising from

an invention assignment contract would be trade secret rights. Thus, Avtec teaches that, should

an employee prevail on copyright ownership under the work for hire analysis, an employer likely

could not succeed in a breach of invention assignment claim over trade secret rights in the same

work, as the conflicting trade secret claim would be void ab initio.

Avtec, 21 F.3d at 575. This logic – that copyright ownership precludes a conflicting trade

secret ownership claim in the same information – formed the basis for a 2002 ruling in the

Eastern District of Texas, where a contractor’s ownership in a software program overrode the

hiring company’s claim to trade secrets in the same program. See Alcatel USA, Inc. v. Cisco

Sys., Inc., 239 F. Supp. 2d 645, 659 (E.D. Tex. 2002). That case did not involve the work for hire

doctrine because the author was an independent contractor, but its holding is consistent with the

theme of this essay, that copyright ownership in some instances can conflict with dueling claims

under other categories of intellectual property law.

See Avtec Sys., Inc. v. Peiffer, No. 94-463-A, 1994 U.S. Dist. LEXIS 16946, at *11-19,

25-26 (E.D. Va. 1994) (although the employer prevailed on the first scope of employment factor,

the employee won on the second and third factors; “Peiffer’s creation of the Orbit Program was

too little actuated by a purpose to serve the master.”; rejecting employer’s trade secret claim and

awarding no damages on breach of fiduciary duty claim), aff’d, No. 94-2364, 1995 WL 541610,

at *1 (4th Cir. Sept. 13, 1995).

Cases in this area appear to be exceedingly rare. In one odd Texas case, a court found that

an employer’s state-law claims against a former employee (including trade secret

misappropriation, conversion, and unjust enrichment) were preempted by the Copyright Act – a

conclusion that would not be reached today at least as to a trade secret claim. Thus, a potential

clash between the work for hire doctrine and trade secret ownership through an invention

assignment agreement was averted. See Butler v. Continental Airlines, Inc., 31 S.W.3d 642, 651-

52 (Tex. App. 2000).

2018] IS COPYRIGHT INCONSISTENT WITH INVENTION ASSIGNMENT? 40

Given this under-analyzed conflict, an employee’s potential copyright ownership of an outside-

the-workplace creation may well be the dispositive question in clashes where an employee

prepares work product for an outside opportunity while still employed. Litigants’ choices about

what law to focus on during ownership disputes over copyrightable works may be more

important than has been recognized thus far.

CONCLUSION – THE USE-VALUE OF THE SCOPE OF EMPLOYMENT TEST

This essay is not about ownership of ordinary-course creative work performed in the workplace

on behalf of an employer. It is instead about marginal cases where an employee, operating in

good faith, avoids the employer’s trade secrets, time, and equipment to start preparing for a new

job, forming a new company, or simply creating for personal interest. That is the context where

employer ownership is most debatable, and that is the context where the clash between the work

for hire doctrine and invention assignment agreement law is sharpest.

As we have seen, it is not difficult to imagine a situation where an employee creates something

outside the workplace that is both copyrightable and something an employer might claim as its

trade secret through contractual assignment. Whereas the scope of employment analysis might

provide that the employee was not hired to create the sort of work in question, did not create it

with the employer’s time or resources, and did not create it to serve the employer, invention

assignment agreement law might find that the work nonetheless can be deemed “related” to the

employer’s business in some manner.

Heightening the risk for employees, these rules are not intuitive. The work for hire doctrine is

barely a ripple in the ocean of intellectual property law. Reported invention assignment disputes

over outside-the-workplace creations that are not clearly related to the employer’s business are

rare. Employees may not recognize that an employer may stretch invention assignment law to

find ways to argue that the work relates to the employer’s business in some unexpected fashion.

And as discussed above, if the employee were unaware of that purported connection between his

or her at-home work and some project contemplated by a far-flung, international employer, it is

not clear that the employee’s lack of notice would play a role in the analysis. In jurisdictions like

South Carolina, invention assignment terms can reach beyond the grave, as it were, to allow past

employers to claim ownership in work product created long after an employee’s departure.

This potential for overreach endangers employee mobility and subjects new enterprises to

aggressive legal claims by former employers. Many employees may begin creating work product

for a new venture before leaving their current job. Some will break the rules in clear-cut ways,

but others try to do the right thing, yet still face legal traps for the unwary. Not everyone can

afford to quit and then start development work. And not everyone can afford legal advice before

quitting.

How should such conflicts be resolved? And how can these issues be resolved in a manner fair to

an employee operating in good faith? As to copyrightable work, one answer is that the work for

hire rules should control over the trade secret-centered rules of invention assignment agreement

law. That is not merely because copyright law is federal law while invention assignment law is

41 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW [Vol. 8:1

largely a matter of state contract and state statutory law.

After all, trade secret rights can now

exist under federal law as well, and some aspects of invention assignment contracts are also

matters of federal law.

Rather, the work for hire rules control because copyright ownership precludes a conflicting claim

to trade secret ownership, whether via an invention assignment contract or otherwise. As the

Avtec case explained, if an employee owns the copyright – and thus the right to disclose and

publish the work – an employer’s conflicting trade secret claim is not possible because there can

be no trade secret rights in something the adverse party has the freedom to disclose at will. To

put it in the language of invention assignment law, an employee cannot agree to a future

conveyance of a trade secret right that would be stillborn at the outset given overriding copyright

ownership under the work for hire doctrine’s scope of employment test.

This outcome is the better result for outside-the-workplace creations where the employer’s

ownership claim would require an attenuated argument that the employee’s at-home work

“relates” to the employer’s business in some strained or unexpected manner – or where the

employee had no notice that the employer was thinking of something similar in another office, or

with a different engineering team. Where work product is copyrightable, the scope of

employment test under the work for hire doctrine could become a tool to prevent overreaching,

and thereby to protect departing employees.

To be sure, this is hardly the same as full reform of a confusing regime, as this prospect only

applies in cases where the employee creates something copyrightable. People changing jobs face

a confusing mix of potential claims, and this is only part of the difficulties they face.

Future

essays in this series will examine others.

See DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1289-90 (Fed. Cir. 2008)

for the exception to this point.

For example, the law of fiduciary duty may require that certain employees provide an

“opportunity” to employers. The next essay in this series will focus on that “preparations to

compete” context.