Ready to shake up the cosmetics industry? Just make sure your invention actually belongs to you.

Employees in the cosmetics sector often work in highly creative environments where innovation is encouraged and nurtured. For many, their job is to invent and develop new products which, if successful, make a significant financial impact for their employer. Most employees willingly accept that although they might create a new formula, devise a new production process, or design new packaging; this is all part and parcel of their job. The confusion as to who owns a great idea often arises when that creative process continues outside the lab or office.

So, if you are an employee who has recently had a ‘Eureka’ moment, before you leave your job and branch out on your own, you need to be clear on who owns your innovation. And ultimately, who is going to make money from it?

Inventor or owner?

‘Inventing’ and ‘owning’ a great idea are quite different. Understanding the difference is critically important in determining who owns an invention which, in turn, will determine who can apply for IP rights and, if those rights are commercialised, who can make money from an invention or creative works.

‘Inventorship’ identifies the creator or creators of an invention. ‘Ownership’ on the other hand, identifies the rightful owner or owners of an invention – who has the right to restrict third party activities in relation to that invention.

While they can be one and the same, often the inventor and owner are different people or businesses, which unless it is very clear, is where misunderstandings and disputes can arise.

Being creative: is it your job?

If you are not employed, the rules are simple – you will be the first owner of any invention or other creative work that you come up with.

However, if you are an employee resident in the UK and create an invention, the UK Patents Act 1977 states that the first owner of your invention will be your employer, assuming the invention was made during the course of your normal duties, or during the course of duties specifically assigned to you. This only applies, however, if the duties were such that an invention might reasonably be an expected result. The Act overrides contract law including an individual employment contract.

If you hold a senior position in a company, such as a director of a company, the UK Patents Act 1977 considers that you have a special obligation to further the interests of your employer. In such cases any invention made in the course of your duties will belong to your employer as the first owner of the invention.

It’s a similar story for designs – if you create a design that is suitable for protection through a UK registered design, the Intellectual Property Act 2014 states that the first owner of the design will be your employer – again, as long as the design is created in the course of your normal duties as an employee as set out in your employment contract.

Exceptions to the rule

However there are exceptions. For example, if you come up with an invention or creative work whilst employed, but the invention or creative work was not made in the course of your normal duties, then, under UK law, you are the first owner.

However, how do you define ‘outside the course of the employees’ normal duties? Sometimes, this can be clear cut – for example, if you work in the marketing department for a company that produces nail varnish and you come up with a new facial serum product, the invention is obviously outside your normal duties and therefore you will be the first owner.  Yet what if you create a new form of packaging that makes nail varnish easier to apply? This could be connected with your job if it could be used by your employer, and so discussions with your employer may be required to determine first ownership. Unfortunately, these can turn nasty, especially if the invention is a good one with the potential to earn you lots of money!

In this sort of situation, it is best to try and address the issues early on with the help of experts rather than stick your head in the sand and hope no questions get asked later on. It is much easier to sort out potential issues before things have progressed too far – and the invention is a successful commercial product that everyone suddenly wants a share of.

As IP law overrides specific clauses in contracts, inventors or authors cannot prevent inventions or other creative work being first owned by their employer if it is created in the course of normal duties. Employers may in some cases be willing to consider assigning the rights of an invention back to the inventor, but this would have to make business sense to the employer. As an example, an employee may wish to have a clause in their employment contract stating that if they come up with an invention or other creative work in the course of their normal duties, although it is owned by their employer, there is the option for this to be assigned to the employee if it is not of interest to the company.

Protecting your idea

As ownership when dealing with employee inventions and other creative works is determined by an understanding of ‘normal duties’, these should be recorded precisely  in a document that both parties have agreed to as being accurate, for example, in an employment contract or job description. Any changes to those normal duties should be recorded in the same way. This is important in the safeguarding of both employees and employers ownership rights, ensuring it is clear to both parties and therefore helping avoid disputes later on which can be costly.

In general, IP can only be granted to the inventor or author, or to the party who claims ownership from the inventor. Therefore the chain of title from the inventor through to the applicant for any IP rights needs to be very clear. Despite the position set out by UK law, it is best practice for employers to have employees sign a document specifically assigning their rights in an invention or other creative work to the employer, again so that all parties are clear who owns the invention or creative work.

Still not sure or want to discuss this in more detail? Please contact the author, Rosalyn Newsome, trade mark attorney and Head of Cosmetics sector, Barker Brettell.

This article is based on an original article ‘Who owns your great idea?’ written by Lucy Trueman, patent attorney and partner, Barker Brettell.