Some companies force employees to sign proprietary rights agreements under which the employee automatically assigns to the company any patent applications that the employee files within one year following separation from the company. I have always considered these provisions unjustifiable. California law apparently has reached the same conclusion.
Applied Materials Made a Mistake
In Applied Materials, Inc. v. Advanced Micro-Fabrication Equipment (Shanghai) Co., et al., 630 F.Supp.2d 1084 (2009), the U.S. District Court for the Northern District of California held that such a provision is unlawful.
Specifically, the post-employment proprietary rights provision violated:
- California Business and Professions Code Section 16600, which pertains to restraints on engaging in a lawful profession, trade, or business; and
- Section 17200, which pertains to unfair competition.
Review Employee Proprietary Rights Agreements
Prudent California employers should review any post-employment provisions in their proprietary rights agreements.
- Do not include automatic assignment of any post-employment inventions.
- Limit provisions concerning post-employment inventions to those inventions that were conceived during the employment period based on the employer’s confidential information.
Check out all posts about proprietary rights.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
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