Invention Assignment Laws in North Carolina: Who Owns What You Create

Federal law does not broadly govern invention ownership—this is primarily a state contract and common law matter. However, federal patent law (35 U.S.C.) provides that inventions are owned by their creator unless there is a valid written agreement assigning rights to another party. The Defend Trade Secrets Act (18 U.S.C. § 1836) protects trade secrets and may affect disputes over invention-related confidential information, but it does not determine initial ownership.

Federal employment law (Title VII, ADEA, ADA) does not address invention assignment directly. The Federal Circuit and courts applying federal patent law have held that employment agreements assigning inventions must be clear and unambiguous to be enforceable. Employers seeking to own employee inventions must have a written agreement in place before the invention is created. The EEOC and DOL do not enforce invention assignment disputes; those are civil matters resolved in contract or patent litigation.

North Carolina General Statute § 66-57.1 and § 66-57.2 regulate restrictive covenants in employment, including invention assignment clauses. Under North Carolina law, a non-compete or restrictive covenant (which includes invention assignments) is enforceable only if it is: (1) in writing, (2) supported by legitimate business interests (which include trade secrets, confidential information, and goodwill), (3) reasonable in scope of time, area, and line of business, and (4) not otherwise against public policy.

Under North Carolina common law, absent a written agreement, employers have 'shop rights'—a limited right to use inventions made by employees during employment using company equipment, time, or resources, but not exclusive ownership. The employee retains the patent rights unless there is an express assignment agreement. If an invention is made entirely on the employee's own time, with the employee's own resources, and is unrelated to the employer's business, the employee generally owns it outright, even without a written agreement.

North Carolina does not have a statute limiting or voiding invention assignment agreements the way California does. However, courts will not enforce an overly broad invention assignment that purports to cover inventions made on personal time entirely outside the scope of employment. Employers in North Carolina are not required to disclose their invention assignment policies in writing, but doing so strengthens enforceability. If an invention assignment clause is unclear or appears to conflict with the employee's actual job duties, North Carolina courts construe ambiguities against the drafter (the employer). State law covers all employers in North Carolina, regardless of size.

North Carolina law does not protect employee-owned inventions from broad assignment clauses the way California does. However, several key exceptions exist:

First, if there is no written assignment agreement in place before the invention is created, the employer cannot claim ownership. The employer has only shop rights—the right to use the invention, not own it exclusively. Second, inventions made entirely on the employee's own time, using personal resources, and unrelated to the employer's business are owned by the employee, even if an assignment clause exists, because such a clause would be unreasonably broad.

Third, North Carolina courts will not enforce invention assignment clauses that are unconscionable or violate public policy. A clause that claims ownership of all inventions an employee makes for life, regardless of context, is likely to be struck down. Fourth, if the assignment clause is ambiguous—for example, it does not clearly define what inventions are covered—courts construe the ambiguity against the employer.

Fifth, shop rights doctrine limits employer ownership even with a written agreement. If the invention was made on company time using company resources but the agreement is unclear, the employer has a shop right (a license to use) rather than full ownership. Sixth, union employees or those covered by collective bargaining agreements may have different rights if the union contract addresses invention ownership. Seventh, independent contractors are not employees, so invention assignment clauses in contractor agreements are treated as ordinary contracts between businesses and may have different enforceability standards.

Step 1: Document the invention and your creation process. Keep records of when you conceived the invention, what time you spent on it (on company time vs. personal time), what resources you used (company equipment vs. personal equipment), and the context (whether it relates to your job duties). Save emails, design documents, lab notes, sketches, or code that show the development timeline. Document whether the invention was created during work hours, after hours, at the office, or at home. Note whether you used company materials, trade secrets, or proprietary processes. This documentation is critical if you later dispute ownership.

Step 2: Review your employment contract and any invention assignment agreement carefully. Determine exactly what the agreement says you must assign. Check whether the assignment clause defines 'inventions' broadly (all inventions) or narrowly (inventions related to company business). Look for language about inventions made 'during employment,' 'using company resources,' or 'on company time.' Determine whether the agreement covers inventions made outside work or only those made in the course of your job duties. If the agreement is ambiguous, note the unclear language. Check your employee handbook or any policy documents provided at hire. If no written agreement exists, note this—it is critical to your case.

Step 3: If you believe your employer wrongfully claims ownership of your invention, first send a written demand letter to your employer stating your position. Document the date you created the invention, explain why you believe it is not covered by any assignment clause (or why the clause is unenforceable), and request a written acknowledgment of your ownership or confirmation that the employer will not claim rights. Keep a copy of this letter. If your employer refuses or does not respond, you have several options: (1) File a declaratory judgment action in North Carolina state court asking the court to declare you own the invention; (2) Apply for a patent in your name and list yourself as the inventor on the patent application—if your employer disputes this, the patent office and courts will resolve it; (3) Consult an intellectual property attorney to evaluate whether your agreement is enforceable under § 66-57.1 and § 66-57.2.

Step 4: Litigation and investigation process. If you file suit, discovery will occur where both sides exchange documents and take depositions. Your employer will produce the signed assignment agreement, any emails about the invention, and documents showing what resources were used. You will be asked detailed questions about when you created the invention, what you were doing for the company at the time, and whether you used company resources. The court will apply North Carolina law to determine whether the assignment clause is valid, whether it applies to your specific invention, and whether enforcement would be reasonable. The process typically takes 1-2 years for trial, though many cases settle during discovery. Expect significant attorney fees and costs.

Step 5: Consult an intellectual property (IP) attorney licensed in North Carolina before taking action. An IP attorney can review your contract, advise whether the assignment clause is likely enforceable under state law, and explain your options. If you want to pursue ownership, an IP attorney can help file a declaratory judgment action or defend against the employer's claims. If a patent is involved, a patent attorney (who must be registered with the U.S. Patent Office) can advise on patentability and file patent applications. Consider consulting an employment attorney if you believe the employer is retaliating against you for asserting ownership rights.