Under the “hired to invent” doctrine, employees who develop intellectual property during the course of their employment generally have no ownership rights to such innovations. Earlier this month, the North Carolina Supreme Court agreed that the employer’s failure to pay bonuses tied to the intellectual property developments does not result in ownership rights to such innovations reverting to the employee.
In Morris v. Scenera Research, LLC, (Parker Poe represented the defendant in the appeal of this case to the North Carolina Supreme Court), the plaintiff alleged that after he left employment, the defendant failed to pay him bonuses tied to the granting of patents for developments made by him during his employment. The employer claimed that at the time of termination, the bonus amount was not calculable because the company had no idea whether the filed patents would be issued.
The trial court concluded that the bonuses were calculable based on the jury’s comparison to past patent success rates. In addition to monetary damages for the unpaid bonuses, the plaintiff sought rescission of the agreement between the employer and employee that the employer owned all rights to intellectual property developed by the plaintiff. The Supreme Court reversed the trial court and Court of Appeals on this issue, concluding that rescission is only an appropriate remedy in situations where the employee cannot be compensated monetarily.
In this case, the unpaid bonuses provided full legal remedies to the plaintiff, compensating him for his losses. The court noted that failure to uphold the hired to invent doctrine in such cases could throw the issue of ownership of corporate intellectual property into dispute, significantly devaluing such property and hindering innovation and risk taking by businesses.
This decision largely prevents employees from leaving work and claiming ownership to valuable innovations made during the course of their employment based on alleged mistreatment. It provides employers with significant confidence in their exclusive rights to such intellectual property.