Meaning
Common law principles provide an employer with an implied right to use certain creations when no formal contract exists. The shop rights doctrine applies when there is no written agreement regarding the ownership of inventions. Under the shop rights doctrine, the employer does not own the patent, but they have the right to continue using the invention within their own business.
Usage Right
The right is generally limited to the specific location or business unit where the invention was developed. Because the shop rights doctrine is an equitable remedy, it cannot be transferred to another company unless the entire business is sold. This makes the right less valuable than full ownership.
Resource Dependency
Courts look at whether the employee used the employer’s tools, materials or time to create the invention. If the work was done entirely on the employee’s own time without company equipment, the shop rights doctrine may not apply. This creates a factual dispute that often requires witness testimony to resolve.
Limited Protection
Employers prefer to avoid relying on this doctrine by using clear written assignments. The shop rights doctrine acts as a fallback position for companies that neglected their paperwork. It ensures that a business is not held hostage by its own employees for inventions made on the job.
