Under the common law, intellectual property, created by an employee in the course of his employment and pertaining to the business of his employer, belongs to the employer. Nevertheless, in order to leave no question as to this, most employers require employees to sign an agreement to this effect (the well known Employee Invention Assignment Agreement).
Some (miserable, blood-sucking) employers, however, seek to go further. They want to own any intellectual property created by an employee during a period, usually a year, after he leaves their employ. An individual subject to such a provision may find it difficult, or impossible, to secure new employment during the term of such a period. What employer wants to hire an employee whose inventions will belong to his former employer? Indeed, some employers use these provisions as a (sneaky, underhanded) substitute for a noncompetition agreement.
Of necessity, many employees are forced to agree to such terms as a condition of employment. Also of necessity, many employees are forced to challenge such terms after leaving their employment. Well, employees rejoice! A federal court, in the Northern District of California (home of the Terminator), has held that such a provision “touches post-employment inventions, regardless of when they were conceived or whether they were based on [the employer’s] confidential information [and] necessarily operates as a restriction on employee mobility.” The provision was held to be both unenforceable and a form of unfair competition under California law. Applied Materials Inc. v. Advanced Micro-Fabrication Equipment (Shanghai) Co.
THE LESSON TO BE LEARNED: Seemingly innocuous invention assignment agreements can have serious implications if you change jobs – be careful what you sign.