File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Employer-Employee Patent Ownership: A Dilemma

India has long been a popular hub for international corporations looking to conduct info technological research and development, culminating in a plethora of intellectual property (IP) advancement. It is critical for organizations to comprehend the regulatory and functional dimensions of IP generated in India to secure successful ownership. The ownership of intellectual property in India differs depending on the IP regulations in place. In this context an invention made by an employee, for example, the employer will be the initial owner of the patent. As a result, the employer will hold the ownership of invention created by its employees.

This is not applicable, however, if the patent was generated by an independent contractor. Regardless if the creator is an employee, the inventor will be the original owner of an invention. This is the Dilemma of Employer-Employee Patent Ownership in India. In this research, the patents on work created during the course of employment is dealt while citing several IP Laws.

Suppose a person works in a pharmaceutical or Scientific laboratory for a prominent corporation. That person discovers a novel mix of chemicals, as well as a way of mixing those compounds, while working on pharmaceutical formulae, which greatly improves the medication's efficiency. That innovation has the potential to save innumerable lives while also generating enormous profits. But the question arises, who holds the rights to that invention?

On each end of the debate, one could construct moral assertions:
  • That person accomplished all of the intellectual and physical labor; the novel medication would not have existed if it hadn't been for that person's ideas and inventiveness.
  • However, the 2nd argument that arises is that it was the employer that gave the laboratory, substances, and equipment needed for that person to manufacture the drug—and it was created while the employer was paying him his income[1]. So, whose viewpoint is backed by patent law?

A persons' intellectual property is now acknowledged by the law, and various intellectual property frameworks can now be examined for ascertaining ownership in the employer-employee patent dilemma. According to The Copyright Act of 1957, the possession of copyrights is conferred to the employer when the creator of artistic work is recruited under a service contract and develops anything within the term of his job.

The Patent Act of 1970, on the other hand, is mute on the topic of an employer's ownership on an innovation developed by an employee while on the job, and only acknowledges the inventor's claim to an innovation. The implications of not acknowledging the patent rights on an innovation created by an employee using the employer's means on the development of IPR in the India is examined in this research[2].

Big technological corporations rely on their employees' creations and, as is customary to patent the creations or inventions in the corporation 's behalf. Pre-assignment and assignment contracts enable employees to surrender their rights to the corporation. Due to a loophole in the Indian Patent Act of 1970, this approach has become crucial in India. There is no section in the Act that specifies who owns the patents created by employees under the supervision of their employers. The Copyright Act, although being an old legislation, contains the specific provision, whereas the Patent Act does not.

The assignment contract allows the employer to file or enroll the Patent under their name in the lack of any relevant regulation under the Indian Patents Act. Because the inventor is considered the first patent owner, one dilemma that emerges is what happens if employees are not required to undertake pre-assignment and assignment agreements[3]?

Understaning The Concept Of Patent

A patent is a form of IPR that can be used to protect a procedure or product innovation. For a Patent to be Registered, the inventions must meet the requirements of novelty, utility, and non-obviousness. The existing Patent Act is a unification of India's previous patent laws. Sections 4 and 3 of the Patent Act [1] list the types of innovations that are not qualified for patents. The challenges of exclusive advertising rights, post- and pre-grant objections, and Mandatory Licensing have been addressed with the subsequent modifications.

The innovator or the assignee can submit a patent petition. A patent establishes an absolute right to use, sell, promote, or make to sale the patented goods or procedure, and prevents others from doing so. A patent in India is normally valid for 20 years from the date of filing.

The Employer-Employee Patent Ownership Dilemma

To receive a competitive advantage in the marketplace, corporations put effort and resources in R&D (Research and Development). The pharmaceutical sector, for instance, is devoting a significant number of financial resources for developing Covid-19 vaccines. It is usual custom to file patents in the corporation 's name. As a result, the legal system protecting IPR ought to be sympathetic to employers' significant investments in business techniques, machinery, and monetary assistance to innovators. The Patent Act, on the other hand, is ignorant to the implications of the employer-employee relationship on patents.

The law assigns the innovator as the first patent holder, posing a significant danger to the employer. The legislation defines the innovator as the first patent owner, posing a significant threat to employers. The absence of a rule allowing employers to profit from their contributions suffocates the nation's spirit of innovation and research. In addition, several overseas regulations on Employer-Employee Patent Ownership are examined in order to gain a comprehensive insight of foreign patent legislation and to identify shortcomings in the Indian counterparts.

Are Pre-Invention Assignment Enforceable In India?

A pre-invention assignment is a process that allows one participant to shift the ownership of any other future innovation to another. Corporations that deal with technological innovations need their employees to undertake a pre-invention assignment that gives the employer complete ownership of any innovations the employee makes while performing his regular tasks.

An assignment condition, a disclosure condition, and a power of attorney provision conditions are typically included in pre-invention assignments. The assignment provision gives the employer full ownership over any intellectual property developed within the term of employment. Employees are legally obligated to notify their employers about all aspects of intellectual property under the transparency provision. The power of attorney clause allows the employer to exert his ownership/title rights over ip rights[4].

For submitting a petition for assignment of the right to file for a patent, the Patents Act of 1970 requires the applicants to execute an agreement outlining their rights and responsibilities. An 'evidence of the right to submit a petition' is also required by law. Despite after a contract to assign, the Delhi High Court in Pine Labs Pvt. Ltd v Gemalto Terminals India Pvt Ltd (2011)[5]highlighted the legal necessity of ratification of such assignment.A contract to assign instead of an actual assignment is considered when ownership rights to potential works are assigned[6].

This idea was first developed in the sphere of copyright legislation, and it was then expanded to the area of patent law. Prior to an assignment is completed, an innovation must be confirmed and labelled. Despite the fact that the Copyrights Act of 1957 acknowledges an employer's entitlement to work generated by an employee within the term of employment, patent law has not developed to correct this shortcoming. As a result, instead of an actual assignment of rights over a potential work, a pre-invention assignment establishes an impartial assignment. In an actual assignment, the ownership in the intellectual property flows from one party to another and generates a legal right, whereas an agreement to assign does not do so.

In India, the unenforceability of pre-invention patent assignments adds another degree of regulatory requirements. Employees can reject ownership rights to an innovation created under their employment by executing an assignment agreement once the innovation is completed. This puts employers at danger, as disgruntled employees might hinder employers from asserting their ownership rights to innovations, they funded[7].

Patents On Work Created During The Course Of Employment- Apropos Employer-Employee Patent Ownership

The term course of employment refers to the time which an employee spends on the employer 's facilities planning to start or leave work, and also the period invested doing the customary tasks given to him. Whereas the Copyright Act of 1957[8] gives the employer rights of ownership to everything an employee produces or does when on the job, the Indian Patents Act of 1970 regards the innovator to be the original and primary proprietor of an innovation. There is no element in the law that enables a judge to recognise an employer's right to an innovation made within the term of employment. This is a significant issue since employers may later be unable to get rights of ownership from an employee.

The Historic Case Of Darius Rutton Kavasmaneck v/s Gharda Chemicals Ltd &Amp; Ors

The Bombay High Court ruled that patents registered by employees can be theirs if they were not required or directed to produce innovations as aspect of their job or within work time. The High Court held in Darius Rutton Kavasmaneck v Gharda Chemicals Ltd & Ors[9] that the respondent MD, Dr Gharda, owed no fiduciary responsibility to his main corporation to file the patents in the corporation 's name because he was not required to innovate in his power and ability as an MD.

Background Of The Case
The complainant was a small stakeholder in a corporation that manufactured and sold chemicals and byproducts, and they filed a lawsuit against Dr. Gharda as well as other investors and directors. The corporation was added as a fictitious defendant. The complainant wanted the defendants to stop selling, distributing, or generally handling with patents that Dr. Gharda had received in his personal name and that the complainant claimed were corporate assets.

The complainant's main objections regarding Dr. Gharda were that he allegedly exploited the corporation 's research and development resources, so any inventions submitted must have been in the corporation 's name, and that he bore a fiduciary obligation to the corporation to file the patents in the corporation 's name. The complainant asserted that if a corporation director has a fiduciary obligation to preserve the business's interests yet gets a financial benefit that is detrimental to the corporation 's interests, he ought to retain that financial benefit for the profit of the corporation.

Duty To Invent

The High Court rejected the lawsuit, finding that such an action could not be sustained because the complainant did not appear before the court with clean hands. The complainant had hidden reasons in initiating the lawsuit, as he operated a rival business and had also tried to transfer his stakes in the current corporation to a rival, according to the court. In any case, the High Court determined that the lawsuit was against the corporation 's best interests because the corporation 's existing patents could be cancelled if the lawsuit was successful.

It was further examined if Dr. Gharda owed the corporation a fiduciary obligation to file the patents in its behalf. The relevant question was if Dr. Gharda had an obligation to innovate as MD. The complainant, on the other hand, was unable to present any documentation demonstrating that Dr. Gharda was required to innovate or conduct research as aspect of his job.

Furthermore, the High Court pointed out that Dr. Gharda's agreement as MD simply gave him managerial rights and did not oblige him to innovate anything. A genuine corporation resolution was also issued, recognising that Dr Gharda's patents remained his property and did not belong to the corporation. In these conditions, the High Court determined that no obligation to innovate existed.

As a result, the High Court determined that Dr. Gharda had no fiduciary duty to file the inventions in the corporation's name because the discoveries were not created during the term of his job or either during working time. Dr. Gharda had also developed the innovations that were the subject of the inventions in his own right, rather than as element of his responsibilities to the corporation or in his position as MD. It was discovered that in Indian law, there is no presumption implying that patents registered by employees belongs to the company.

The High Court discovered no proof to support the complainant's second accusation that Dr. Gharda misused the corporation 's research and development assets to construct the ideas that were the basis of the patents. It was also mentioned that the patents were provided accessible to the corporation regardless of charge to exploit[10].

True And First Inventor

This is a significant judgment in the perspective of employer-owned intellectual property developed throughout employment, particularly for enterprises in technology-intensive sectors. The judgement underscores the Indian patent law stance that patents for discoveries made by employees can actually remain to the employee as the real and initial innovator. This is in stark contradiction to Indian copyright law, which stipulates that an employer is the initial owner of a patent generated within the term of employment.

When an employer uses employee-created inventions, it must be apparent if the employee was required to develop or if the patent rights is to be transferred to the employer. As a result, it is recommended that all employment agreements include a provision stating that the employer owns all IP rights developed during term of employment.

This tackles the circumstance in which an employee, despite having no obligation to innovate under his employment agreement, utilizes his employer's facilities to come up with ideas and then files the patents for those discoveries in his personal name. When an employee is hired particularly to develop innovations, the employment agreement should clearly specify that the person has an obligation or responsibility to innovate and that the employer owns those innovations[11].

Analysing The Employer-Employee Patent Laws In Countries Like UK & US

Employer-Employee Patent Ownership in the United Kingdom:
  • Countries including as the U.K., China, and Israel have deemed ownership provisions in their statutes. This law is based on the obligation to innovate concept, which prohibits an individual from claiming IP rights to works completed during the employment term.
  • Section 39 of the UK Patents Act, 1977 enables an employer to claim an innovation created by a person during the term of employment; however, the employer must show a legitimate connection in order to claim remedy under the Act.
  • With respect to patent ownership, English law enables an employee to serve as a trustee for the employer. The employee is obligated to hand over the ownership to the employer, and the employer is secured by the right to revoke the employee's Intellectual property rights within an acceptable timeframe and file for a fresh Patent.
Patent Ownership Between Employer and Employee in the United States:
  • The United States has a long history of employing the concept of shop-right to safeguard the employer's rights. A shop right is a non-exclusive license provided or authorized by the employee to the employee, allowing him to profit from the innovation without having to consult the innovator.
  • Even if the innovator sells their ownership in the Patent, the employer, who retains the license, cannot transmit this privilege.
For instance, in the case of Miller vs. Goodyear Tyres & Rubber Company: The plaintiff claimed specific performance of an agreement under which the respondent was expected to transfer and relinquish their ownership in a well-known innovation. The innovation was created throughout the term of employment and with the help of company's resources. As a result, the court concluded that denying a corporation the benefits of its accomplishment will cause it to stop financing mistakes and eliminate experimental divisions. SUGGESTION AND CONCLUDING REMARKS
The Indian Patents Act, 1970, lacks empathy for employer rights, revealing a fundamental shortcoming in the law protecting IPR. A citizen of India must get the consent of the Controller of Patents prior to applying for a patent across the nation, as per Section 39 of the aforementioned Act.

This lengthy authorization procedure deters international involvement in research and development in the nation. The Indian Patent Office has a history of rejecting the notion that a parent corporation's right to assign rights to an Indian subsidiary is automatically accessible. This raises even more barriers for international enterprises and hinders research and development investments. As a result, there is little uncertainty that the legal structure in India should adopt the actions taken by other nations to defend employer rights.

In addition to support and enhance the advancement of innovation and development, patent law must adapt. Constructing the legality of pre-invention assignments and the employer's ownership over the employee's innovation could be important measures in improving India's patent ownership regime.

  1. Richard Stim, NOLO, Who Owns Patents Rights Employer or Inventor?
  2. Anoop Narayan & Associates, ANA Law Group, Who Owns the IP Developed in India.
  3. Tushar Kohli, Mondaq, India: Employer Employee Patent Ownership in India, 06 Jul 2021.
  4. Kartikeya Prakash, Spicy Ip, The Dilemma of Employer-Employee Patent Ownership in India, May 2021,
  5. Pine Labs Pvt. Ltd v Gemalto Terminals India Pvt Ltd (DLH)-2011-8-464,
  6. Sohom Roy, Ipleaders, What is Employer Employee Patent Ownership in India, Oct 15, 2021.
  7. Karan Singh, Swarit Advisor, Employer-Employee Patent Ownership in India: An Overview, Feb 21, 2022,
  8. THE COPYRIGHT ACT, NO. 14 OF 1957, Acts of Parliament (India).
  9. Darius Rutton Kavasmaneck v Gharda Chemicals Ltd & Ors, SC, Oct 28, 2014.
  10. Bansal, Ashwani Kumar. PUBLIC INTEREST IN INTELLECTUAL PROPERTY LAWS. Journal of the Indian Law Institute, vol. 55, no. 4, Indian Law Institute, 2013, pp. 476–503,
  11. Vijay Pal Dalmiya, Mondaq, IP Laws in India You Must Know, Dec 13, 2017,

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers

Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


How To File For Mutual Divorce In Delhi


How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Increased Age For Girls Marriage


It is hoped that the Prohibition of Child Marriage (Amendment) Bill, 2021, which intends to inc...

Facade of Social Media


One may very easily get absorbed in the lives of others as one scrolls through a Facebook news ...

Section 482 CrPc - Quashing Of FIR: Guid...


The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of t...

The Uniform Civil Code (UCC) in India: A...


The Uniform Civil Code (UCC) is a concept that proposes the unification of personal laws across...

Role Of Artificial Intelligence In Legal...


Artificial intelligence (AI) is revolutionizing various sectors of the economy, and the legal i...

Lawyers Registration
Lawyers Membership - Get Clients Online

File caveat In Supreme Court Instantly