Ownership of IP: Do You Own Your Invention?

October 10, 2023

Insights Intellectual Property

In celebration of Small Business Month, Vector in collaboration with Smart & Biggar LLP, developed a series exploring the dynamic relationship between AI and IP. In this series, designed to help support Canadian startups and research professionals, Vector dives into how AI innovation intersects with intellectual property, discussing trends, challenges, and strategies that shape this ever-evolving landscape.

So you or your team have created an interesting, patentable invention that has some commercial potential. Now you need to figure out some important questions: do you own the invention? Are you even an inventor?

Inventorship

The question of inventorship is typically only raised as part of a development team. An “inventor” is generally considered to be an individual who has made an inventive contribution to any single aspect of the invention that is claimed in the patent. The process of inventing can include the conception and or reduction to practice of the invention. 

An invention can have multiple inventors, including persons from different organizations or companies who have worked together to develop a new product, even if such entities were specifically engaged and paid to carry out research and development.  An inventor may have contributed only a relatively small amount to the overall invention. It can be difficult to determine whether a particular person is an inventor, especially if the contribution was modest. 

Sometimes this determination cannot be made until the patent application is prepared, and it becomes clear what aspects of the invention are being claimed as new and inventive.

Ownership as an Employee

All inventors must be identified in the patent application.  A failure to do this can invalidate the patent.  However, the inventors do not necessarily have any ownership rights to the patent. If the inventors have assigned their rights to another company or entity person, called the “assignee”, that entity person owns the invention and the resulting patent rights.  

If you are an employee of a business when you invent something, the employer may in some cases automatically own the invention, depending on the nature of the employment, the laws where the employer has its business, and any contract between the employer and employee.  In many jurisdictions, an employer automatically owns an invention if the inventor was an employee whose job was the creation of inventions, and the invention was made in the course of the employment.  If you agreed by contract to assign inventions to the employer, this contract would normally be determinative of ownership. The precise wording of the contract and the nature or circumstances of the invention are important.

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Ownership between Founders/Partners/Shareholders

If you have started a company that has multiple shareholders, IP ownership should be decided as early as possible. A common method of handling IP within a company is through assignment agreements, which result in the inventions being assigned to the company. This can be included in founder’s agreements and in contracts with any partners.

For start-ups, it is highly advisable that you discuss IP ownership with legal professionals, who can help draft appropriate agreements, review existing policies, and ensure compliance with relevant laws and regulations. You should maintain detailed records of all IP created within the company, including invention disclosures, copyrights, trademarks, and trade secrets, as they will help you resolve disputes or challenges to ownership.

As typical shareholder documents deal with the financial rights of the company with little or no regard to IP rights, if you are not actively looking to sort out potential IP issues there may not be any documents outlining IP ownership when conflicts arise.

Ownership as a Member of an Institution

Many inventors, particularly for AI, benefit from institutional support; most institutions that generate inventions will have an inventions policy. As an inventor, you should check any affiliated institutions/universities that you work with to be informed of their invention policies. If you are creating an invention while affiliated with a university/institution, there is a high likelihood that, at minimum, you will need to disclose the invention to the university/institution.

It may also be to your benefit to have the university/institution take on the burden of commercialization, as those costs can be highly variable and potentially cost-prohibitive. Typically, the institution will take a smaller share of net revenues if the inventor pays for commercialization and a larger share of net revenue for bearing those costs.

AI-Generated Work

Although it is becoming increasingly clear that IP cannot be attributed to an AI (see: Intellectual Property and Generative AI: Many Questions, Few Answers, another article in this series), there are still questions about protecting AI-generated works.

The US copyright office has recently made a decision the copyrightability of AI-generated images in a case surrounding Kris Kashtanova’s 2022 work “Zarya of the Dawn”, created with Midjourney. In a letter dated February 21, 2023, the Copyright Office reasoned that “The fact that Midjourney’s specific output cannot be predicted by users makes Midjourney different for copyright purposes than other tools used by artists” on the grounds that, “because Midjourney starts with randomly generated noise that evolves into a final image, there is no guarantee that a particular prompt will generate any particular visual output. Instead, prompts function closer to suggestions than orders, similar to the situation of a client who hires an artist to create an image with general directions as to its contents.”

A new registration was issued that excludes copyright protection for solely the AI-generated images, but covers the original authorship that Ms. Kashtanova contributed to this work, namely, the “text” and the “selection, coordination, and arrangement of text created by the author and artwork generated by artificial intelligence.”

Conclusion

You will, as the inventor, remain the owner of the invention unless you give the rights to someone else by reason of an assignment, employment, or other specific reason. If you are one of multiple inventors, there can exist multiple owners; ownership can also be split amongst non-inventors (such as an institution).  Since this situation can present a difficult problem for a business, it is important to identify the inventors and resolve ownership issues, preferably as early as possible in the development process. 

Explore other articles in this series

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IP is a key business asset, especially in AI and machine learning. To gain a competitive edge, prioritize integrating IP into your business plans, including strategies for commercialization and monetization.

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