As of September 15, 2023, New York brought into effect a new law that imposes restrictions on employers, preventing them from mandating that employees assign certain intellectual property rights to their employer. According to a legal update published on JD Supra, the new law is posing significant changes to longstanding policies, potentially forcing employers to review and make necessary modifications to their traditional practices and form agreements to remain in compliance with New York law.
Policies stipulating employees assign their IP rights to their employer have been commonplace in many industries, particularly where research and development are integral to business functions. These policies provide a method for businesses to protect and monetize any innovations or inventions created by employees within the scope of their role.
However, New York’s new law challenges this tradition, presenting an upheaval for employers. The law prevents companies from claiming ownership of employees’ inventions and intellectual property that are developed entirely on the individual’s own time, and without the use of the employer’s equipment, supplies, facilities, or trade secret information. While the line between individual and company-owned intellectual property can appear blurry, this law imposes a clear restriction on employers.
The purpose of this new law is twofold. Firstly, it seeks to protect employees’ rights to their independent creations. Secondly, it encourages innovation by offering better protection for inventors working under an employer but creating independent works in their personal capacity.
As a consequence, employers based in New York will be required to review their existing policies and form agreements to ensure they do not violate the aforementioned mandates. Any businesses in New York whose current practices do not align with these regulations could face legal complications and potential fines.
This development is a notable shift in the legal landscape with respect to job-related intellectual property rights and presents both challenges and opportunities for corporations and their legal advisors. The implications of this change are set to unfold in the coming months, making it pertinent for employers and legal professionals alike to monitor developments closely.