Invention Assignment Laws in New York: Who Owns What You Create

Federal law does not provide a uniform national rule on employee invention ownership. Instead, the framework relies on contract law and patent law principles under 35 U.S.C. § 101 and the Uniform Trade Secrets Act adopted in various forms across states. The federal Patent and Trademark Office (USPTO) enforces patent rights but does not regulate employment relationships or invention assignment.

Federal courts apply the "shop rights" doctrine in disputes, which grants employers a limited license to use inventions made by employees using company resources, even if the employee retains ownership. However, this doctrine varies by jurisdiction and does not provide comprehensive employee protection.

Title VII and other federal employment laws do not address invention ownership. The federal government has no central agency enforcing invention assignment rights for private employees. Most federal protection comes through patent law enforcement, not employment law. Employers in states without strong state invention laws can typically claim broad ownership of employee creations through employment contracts.

New York Labor Law §140 provides robust protection for employee inventions that federal law does not. This statute establishes that an employer cannot require an employee to assign any invention to the employer unless: (1) the invention is developed entirely on the employer's time; (2) the invention is developed using the employer's equipment, supplies, facilities, or trade secrets; or (3) the invention relates directly to the employer's actual or demonstrably anticipated business and was developed as a result of the employee's work.

New York's law is significantly stronger than the federal baseline because it explicitly prohibits unreasonable restraints on employee inventions. The statute creates an affirmative right for employees to retain ownership of most personal creations. Federal law, by contrast, permits broad assignment clauses through contract alone and provides no statutory protection.

Additionally, New York General Obligations Law §5-322.1 restricts the enforceability of invention assignment and non-compete agreements. Under this statute, any covenant not to compete must be reasonable in time, area, and line of business. Courts apply this same reasonableness standard to invention assignment provisions, making overly broad assignments unenforceable.

The statute applies to all employers in New York, regardless of size. There is no employee threshold. Any agreement signed by an employee is subject to §140 scrutiny. The protection covers any type of invention—whether patentable or not, whether trade secrets or not. If an invention does not meet all three criteria (time, resources, and business relation), the employee retains ownership even if a contract states otherwise. A court will invalidate the assignment clause as void. The remedies available include declaring the employee the rightful owner, preventing the employer from using the invention, and recovering attorneys' fees if the employee prevails in court.

The primary exception to employee protection is when the invention is created entirely using employer resources or during paid work time. If an invention is developed wholly on the employer's dime and using only company equipment, facilities, or supplies, the employer owns it regardless of employee intent. This applies even if the employee is not formally directed to develop it.

Another exception applies when the invention directly relates to the employer's actual or demonstrably anticipated business and results directly from the employee's work. For example, a software engineer at a cybersecurity firm who develops a new encryption algorithm in her own time may lose ownership if the algorithm is directly related to the company's cybersecurity product line and she developed it as an outgrowth of her job responsibilities. The key word is "demonstrably anticipated"—the employer must prove the business connection was foreseeable, not speculative.

Under New York General Obligations Law §5-322.1, invention assignment agreements may be enforceable if they satisfy the reasonableness standard. An assignment clause that applies only to inventions directly related to the employer's actual business, created during work hours or using company resources, is likely reasonable and enforceable. By contrast, an overly broad clause claiming all inventions the employee creates during employment—including personal projects on weekends using personal equipment—will be void as unreasonable restraint on trade.

Unions and collective bargaining agreements may contain different rules. If a union contract specifies invention ownership terms, those terms may supersede §140 protections to the extent permitted under labor law. However, courts have been cautious about enforcing broad union assignments that conflict with §140's protective intent.

At-will employment status does not override §140. An employer cannot claim invention ownership simply because the employee is at-will. The statutory criteria must still be met.

**Step 1: Document the Invention and Development Process.** Keep detailed records of when and where you developed the invention, what resources you used, and whether company time or equipment was involved. Document the date of creation, your personal notes, drafts, prototypes, and any evidence showing personal funding or equipment use. Save emails, calendar entries, and timestamps proving development occurred outside work hours. If you used any company resources, document exactly what was used and for how long. This documentation becomes critical evidence if the employer later claims ownership.

**Step 2: Review Your Employment Agreement and Invention Assignment Clause.** Examine your employment contract, employee handbook, and any separate invention assignment agreement. Identify the specific language claiming employer ownership. Note whether the clause is limited to work-related inventions or claims all inventions broadly. Compare the clause against New York Labor Law §140's three-part test (time, resources, business relation). If the clause conflicts with §140 or is unreasonably broad, it may be unenforceable.

**Step 3: Attempt Internal Resolution (Recommended but Not Required).** Send a formal written letter to your employer's HR department or directly to management explaining that you believe the invention is your personal property under New York Labor Law §140. Reference the statute by name and section number. Explain which of the three criteria (time, resources, business relation) do not apply to your invention. Request written acknowledgment that you retain ownership. Keep a copy of this letter. Many disputes resolve at this stage when employers realize the legal risk of claiming ownership of a clearly personal invention.

**Step 4: File a Claim in New York Civil Court or Seek Arbitration.** If internal resolution fails and the employer claims ownership, you have two paths. First, you can file a breach of contract or declaratory judgment action in New York State Supreme Court (the trial-level court) seeking a declaration that you own the invention and that any assignment clause is void. You can also seek an injunction preventing the employer from using the invention. The filing fee is approximately $210 for the summons and complaint. You must file within six years of the employer's breach (typically when they claim ownership or refuse to acknowledge your rights). Alternatively, if your employment agreement contains an arbitration clause, you may be required to arbitrate the dispute instead of filing in court. Review your agreement to determine which process applies.

**Step 5: Consult an Employment or Intellectual Property Attorney.** Because invention ownership disputes often involve patent law, trade secret law, and employment law simultaneously, you should consult an attorney specializing in intellectual property or employment law in New York. An attorney can review your specific invention, your employment agreement, and the circumstances of creation to assess whether §140 protects you. If your invention is potentially patentable or commercially valuable, the stakes justify legal counsel. Many attorneys offer free initial consultations. An attorney can also represent you in negotiations with your employer, prepare demand letters, and litigate if necessary. If you prevail in court, you may recover attorneys' fees and costs, which can offset legal expenses.