Seattle-based company Amazon is facing a lawsuit from a former employee who is fighting an employment agreement that gave the company ownership of his invention and included a noncompetition clause. According to GeekWire, Amazon recently gave the employee the rights to his patent, but it did not agree to stop using the employee’s invention. This case illustrates some of the issues that employment agreements can cause.
Can Employers Claim Their Employees’ Inventions?
Generally, an inventor owns the rights to his invention. Washington law permits employment agreements that require an employee to give or assign his invention rights to the employer. However, an employer cannot claim an employee’s invention if:
-The employee developed it entirely on his own time
-The employee did not use any of the employer’s resources or trade secrets
-The invention did not result from the employee’s work for the employer
-The invention does not directly relate to the employer’s business or future research and development plans
Are Noncompetition Agreements Allowed?
Washington courts will uphold a noncompetition agreement as long as it is reasonable and fair. To determine whether a noncompete clause is reasonable, courts will usually look at three factors:
-Is the agreement necessary to protect the employer’s legitimate business interests?
-Are the restrictions on the employee no more than what is reasonably necessary to protect those business interests?
-Will the public be harmed by losing the employee’s services and skills?
Is the Agreement Enforceable?
Even if the employee has agreed to an invention assignment or noncompetition agreement, it may not be an enforceable contract.
One key issue is whether an employee signed the agreement before or after starting work. If the employee signed it before starting work, then an invention assignment or noncompetition agreement will probably be considered a condition for hiring the employee. However, if the employee has started work, then the company must give the employee something valuable in return for his signing the agreement. The employer must give something that the employee is not already entitled to, such as a bonus or extra vacation days. This was an issue in the Amazon case. The employee signed the invention assignment agreement after he started work, but he claimed that the company did not give him anything in return.
Another important question is what the employee and the employer thought the contract meant. In order for a contract to be enforceable, both sides must agree to its terms. If the employee thought he was agreeing to X, while the employer thought he was agreeing to Y, then there may be no contract. This was also an issue in the Amazon case. The employee signed the invention assignment and noncompetition agreements thinking that he would be working on the Kindle e-readers. After he signed the contract, the employee learned that he would be working on the Kindle Fire tablets. It is possible that this difference could invalidate the contract.
Employment agreements that include invention assignment or noncompetition clauses can be tricky for both employees and employers. If you are a have questions about an employment agreement, contact an employment lawyer for advice.
