Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Employee Invention Bill to Protect Employee Intellectual Property Rights

Author: Scarinci Hollenbeck, LLC

Date: December 16, 2016

Key Contacts

Back

NJ Assembly Passes Employee Invention Bill – What Could This Mean for Your Business?

employee invention bill

The New Jersey Assembly recently passed legislation that governs provisions contained in employment agreements related to the intellectual property created by an employee. The bill, Assembly Bill No. 492, aims to protect an employee’s rights to the exclusive ownership and usage of any employee invention developed on the employee’s own time and wholly without using any employer resources.”Under current law in New Jersey, nothing prevents an employer from acquiring the rights to any such employee invention through the express terms of an employment contract,” said Rep. Craig Coughlin (D-Middlesex) in a press statement. “This bill would prevent the employer’s acquisition of rights to the invention through such a contract, thereby preserving the employee’s rights to the employee’s own invention.”

Employment Agreements Governing IP

Employers do not automatically assume the rights to any intellectual property (IP) created by their employees. Under U.S. patent law, inventors are presumed to hold ownership rights, and patents must typically be filed under the name of the inventor. Accordingly, many businesses use employment agreements to govern the ownership of employee-created IP, such as an assignment-of-inventions agreement or work-for-hire agreement.

Provisions of Assembly Bill No. 492

The proposed legislation bans any provision in an employment contract between an employee and employer that requires the assignment by the employee of any employee invention developed entirely on the employee’s own time and without using the employer’s equipment, supplies, facilities or information, including trade secrets.  However, the prohibition shall not apply to “inventions that: (a) relate to the employer’s business or actual or demonstrably anticipated research or development; or (b) result from any work performed by the employee on behalf of the employer.” To the extent any provision in an employment contract applies, or intends to apply, to an employee invention subject to the law, the provision will be deemed against the public policy and unenforceable.

In addition, Assembly Bill No. 492 provides that, outside the context of an employment contract, if an employee voluntarily offers his or her employer an opportunity to acquire any of the employee’s rights to an invention to which the bill applies, the employer would have no more than nine months from the initial date of the employee’s offer to accept or reject the opportunity to acquire any rights. After this period, the employee would retain all the rights to the invention, and the employer would be barred from any further opportunity to acquire any of the rights. As amended prior to passage by the Assembly, the bill expressly states that it “does not impede or otherwise diminish the rights of alienation of inventors or patent-owners.”

The bill, as written, “shall apply to any employment contract entered into on or after that effective date of enactment.”

The New Jersey Assembly unanimously passed the bill on November 21, 2016, but a companion bill has not yet been introduced in the Senate. We will continue to track the status of the proposed legislation and post updates as they become available.

Are you a New Jersey business owner unsure of how this employee invention bill could potentially affect your business? Would you like to discuss the matter further? If so, please contact me, Jason Mushnick, at 201-806-3364.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate post image

Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate

The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]

Author: Donald M. Pepe

Link to post with title - "Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate"
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand post image

Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand

Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]

Author: Donald M. Pepe

Link to post with title - "Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand"
Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them post image

Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them

The five most common real estate disputes are breach of contract claims, landlord-tenant conflicts, zoning and land use disagreements, construction claims, and boundary disputes. Understanding why each arises, and taking preventive steps early, can help property owners, tenants, developers, and investors avoid costly litigation. Key Takeaways: Real estate transactions are complex endeavors involving numerous parties […]

Author: Paul Grossman

Link to post with title - "Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them"
When a Child Turns 18: The Gap in Your Family’s Estate Plan post image

When a Child Turns 18: The Gap in Your Family’s Estate Plan

Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]

Author: George McGowan

Link to post with title - "When a Child Turns 18: The Gap in Your Family’s Estate Plan"
Business Mediation: An Overview and Practical Tips post image

Business Mediation: An Overview and Practical Tips

Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]

Author: Paul Grossman

Link to post with title - "Business Mediation: An Overview and Practical Tips"
Top 5 Causes Leading to Construction Defect Litigation post image

Top 5 Causes Leading to Construction Defect Litigation

The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]

Author: Paul Grossman

Link to post with title - "Top 5 Causes Leading to Construction Defect Litigation"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.
“If you would like to submit a file, please email it directly to info@sh-law.com.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!