STATE OF NEW JERSEY
217th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2016 SESSION
Sponsored by:
Assemblyman DAVID C. RUSSO
District 40 (Bergen, Essex, Morris and Passaic)
Assemblyman CRAIG J. COUGHLIN
District 19 (Middlesex)
SYNOPSIS
Protects employee rights to ownership and usage of employee inventions developed entirely on employee’s own time and without using employer’s resources.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning certain employee inventions and supplementing P.L.1974, c.80 (C.34:1B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. (1) Any provision in an employment contract between an employee and employer, which provides that the employee shall assign or offer to assign any of the employee’s rights to an invention to that employer, shall not apply to an invention that the employee develops entirely on the employee’s own time, and without using the employer’s equipment, supplies, facilities or information, including any trade secret information, except for those inventions that:
(a) relate to the employer’s business or actual or demonstrably anticipated research or development; or
(b) result from any work performed by the employee on behalf of the employer.
(2) To the extent any provision in an employment contract applies, or intends to apply, to an employee invention subject to this subsection, the provision shall be deemed against the public policy of this State and shall be unenforceable.
b. If an employee, outside the context of an employment contract, voluntarily offers to the employee’s employer an opportunity to acquire any of the employee’s rights to an invention subject to subsection a. of this section, following the development of the invention, which development may include the idea or concept for the actual production of the invention, the employer shall have no more than nine months from the initial date of the employee’s offer to the employer to accept or reject the opportunity to acquire any rights. After this period, the employee shall retain all of the employee’s rights to the invention, and the employer shall be barred from any further opportunity to acquire any of the rights.
2. This act shall take effect on the first day of the third month next following enactment, and shall apply to any employment contract entered into on or after that effective date.
STATEMENT
This bill prohibits an employment contract between an employee and employer that requires the assignment by the employee of any employee invention developed entirely on the employee’s own time and without using the employer’s resources. However, this prohibition shall not apply to any such invention that: (1) relates to the employer’s business or actual or demonstrably anticipated research or development; or (2) results from any work performed by the employee on behalf of the employer.
To the extent any provision in an employment contract applies, or intends to apply, to any such employee invention falling under the scope of the bill, the provision shall be deemed against the public policy of this State and shall be unenforceable.
The bill further provides that, outside the context of an employment contract, if an employee voluntarily offers to the employee’s employer an opportunity to acquire any of the employee’s rights to an invention, following the development of the invention, which development may include the idea or concept for the actual production of the invention, the employer shall have no more than nine months from the initial date of the employee’s offer to the employer to accept or reject the opportunity to acquire any rights. After this period, the employee shall retain all of the employee’s rights to the invention, and the employer shall be barred from any further opportunity to acquire any of the rights.
The general intent of this bill is to preserve an employee’s common law rights to the exclusive ownership and usage of any employee invention totally unrelated to the job functions of the employee and created wholly without using any employer resources. Under current law in New Jersey, nothing prevents an employer from acquiring the rights to any such employee invention through the express terms of an employment contract. This bill would prevent the employer’s acquisition of rights to such invention through such a contract, thereby preserving the employee’s rights to the employee’s own invention. It also intends to preserve these rights by setting a limited period, of nine months, during which an employer can acquire rights to such inventions when voluntarily offered by the employee. Beyond this period, the employee shall retain all of the employee’s rights, and the employer shall be barred from any further opportunity to acquire them.