Employee Invention, Assignment Gap, and a Competing Licence
A Kitchener robotics firm hired an engineer in 2019 under an employment contract that assigned "all inventions relating to the Company's business" to the employer but said nothing about the engineer's pre-employment work. Before joining, the engineer had built a prototype gripper mechanism on his own time and disclosed it in a job interview. In 2021, on company time and using company test equipment, he refined the gripper and filed a US provisional in his own name. In 2022 the company filed a PCT application naming itself as applicant. In 2023 the company granted a non-exclusive licence to a US distributor covering "all patents and applications owned by the Company relating to gripper technology." The engineer now claims he owns the Canadian rights to the gripper, has left the company, and has signed a term sheet with a rival. The company wants to know who owns what, whether the distributor licence covers the Canadian patent, and whether the engineer's pre-employment prototype is a bar.
1. Analyse ownership of the Canadian rights to the gripper, distinguishing the pre-employment prototype from the 2021 refinement.
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Separate the two contributions because they attract different rules.
Pre-employment prototype. Absent an express assignment, an invention made before employment belongs to the employee. The contract assigns only inventions "relating to the Company's business" - that language is forward-looking and does not capture pre-existing work. The interview disclosure does not transfer ownership; disclosure is not assignment. So the engineer presumptively owns the prototype.
2021 refinement. This was made on company time with company equipment, in the course of the engineer's duties, and it relates to the company's business. That falls squarely within the assignment clause. Under the Patent Act, an invention made by an employee in the course of employment belongs to the employer absent agreement to the contrary, and here there is an express clause reinforcing that default. The company owns the refinement.
The hard part - is the claimed invention the prototype or the refinement? Ownership follows the inventive concept actually claimed. If the Canadian claims recite only features present in the 2021 refinement, the company owns them. If the claims recite the prototype's core mechanism unchanged, the engineer has a strong argument. Where the refinement is an improvement on the prototype, the usual result is that the engineer owns the underlying prototype rights and the company owns the improvement - which creates a blocking problem: neither can exploit the combined product without the other.
Practical step. Obtain the engineer's employment file, the interview notes, dated prototype records, and the provisional text, then map the claims feature by feature. Consider a confirmatory assignment or a cross-licence to clear the block.
2. Does the 2023 distributor licence extend to the Canadian patent? Explain the interpretive approach and the risk to the company.
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The licence covers "all patents and applications owned by the Company relating to gripper technology." Three interpretive questions arise.
1. Did the company own the Canadian rights when it granted the licence? If the Canadian application names the company as applicant, the company owned the application and the licence reaches it. If the engineer is later shown to own the underlying rights, the company purported to license something it did not own, and the licence is ineffective to the extent of that gap. A licensor cannot grant more than it holds.
2. Does "relating to gripper technology" capture the Canadian patent? Canadian courts read licence grants in context. A broad descriptive phrase will usually capture patents in the same technical family, but a court may confine it to patents the parties actually had in mind. Extrinsic evidence - the negotiation emails, the list of patents exchanged, the royalty calculation - will drive the result. If the Canadian application was pending and disclosed in due diligence, it is almost certainly captured.
3. Territorial scope. A Canadian patent confers rights only in Canada. A non-exclusive licence to a US distributor covering "all patents" will be read as covering the licensed territory unless it expressly extends worldwide. If the distributor sells into Canada, the company needs to know whether that licence authorises Canadian acts; if it does not, the distributor is infringing the Canadian patent.
Risk to the company. If the engineer owns the prototype rights, the company has both an ownership dispute and a potential breach of the distributor licence (failure to deliver the licensed rights). Recommend a title audit and, if needed, a corrective assignment or licence-back from the engineer before the rival deal closes.