A term commonly used to describe certain employers’ rights with respect to IP created by employees in the course of their employment. The key dangers with shop right are
- first, that it is often poorly understood, even by IP lawyers;
- second, that the nature of shop right can vary depending on the form of IP;
- third, that it can vary in each jurisdiction that the right arises in; and
- fourth, that ‘choice-of-law’ or ‘conflict-of-law‘ rules vary, so that sometimes the law of the place of creation or employment applies and sometimes the law of the jurisdiction in which the IP right is asserted applies.
Under the United States copyright statute, works of authorship made for hire by employees working within the scope of their employment automatically become the property of the employer (work made for hire or ‘work for hire.’) However, patent rights do not automatically become the property of the employer, rather the employer may own the rights based on complex case-law based rules and factors including whether the employee was “directed to invent” and what that “scope of employment” was. Indeed in the United States it is possible, depending of the facts of the situation, that an employer’s shop right may be limited to a royalty-free license to use the patented invention, without assignment or licensing rights, while the employee/inventor might be able to resign and go into competition with a former employer or sell or license the patent rights to a competing company. The nature of the employment relationship may also be important – a dangerous potential exception to Shop Right is where the inventor is a contractor, known as Contractor IP. It is important to consider local employment law in determining if the work or invention is created by an employee in such a way as to confer ownership or a license on the employer.
Commonly, laws outside the US confer ownership of a copyrighted work on an employer if the work is created by the employee “in the course of their employment,” i.e., a similar expression to “scope of employment” – but problems can again arise around whether the employee did create the work “in the course of,” especially if they did it in their spare time, in a hiatus from their job, or the work is only tangentially related to their employment duties. There may also be an interface with local employment laws.
See Inventor’s Bonus, Collective Work.
A key exception to shop right in most jurisdictions is that it does not apply to contractors or consultants. Where a work is to be created by a non-employee, ownership must typically be reached in a written contract that leads to the work’s creation. Questions of ownership of works or inventions made by employees is very much a creature of local contract and employment law (National law, and in the US state and federal law) it should be approached with caution.