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I was recently offered a funded masters program in the field of mathematical modelling and computer coding. I was given a contract to sign which I subsequently declined because I was unhappy with a clause that looked something like (my summary of the clause):

The student acknowledges that all rights to and interests in all intellectual property (including patents), and rights relating to know-how[, etc.] belong to the company.

At the time (and with my limited understanding of IP) I chose to decline the contract because the clause seemed too restrictive and ambiguous to me.

The part about patents seemed the most onerous. From what I understand (though I could be wrong on this), this means that any algorithm I produce for them over the course of the masters program could potentially be patented by them.

I have been thinking about contacting them again to see whether they would be happy to change the contract. Two questions:

  1. Am I correct that this is a particularly onerous clause, or am I just overthinking it?
  2. Given the fact that this is an industry funded project, and that they will want some long term benefit out of it, is it reasonable to ask that the patent rights wouldn't belong to them? Would there be any way in which I could ask them for some middle ground compromise, e.g., maybe by asking that if they wanted patent rights, that they could only have them for, say, 5 years?
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  • "What is reasonable" is not relevant, what you agree to, is. And that depends entirely on who is being asked. Everything else here is either a request for specific legal advice (off-topic everywhere on Stack Exchange) or a request for business advice (on-topic nowhere at Stack Exchange).
    – Nij
    Jun 9 at 6:03
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    Why specifically do you want to keep your patent rights? Usually, you retain the right to be recognized as the originator, and of course patented information isn't kept secret, so if the reason is you will want to publish the research you do during your master's program, the patent right transfer isn't an obstacle to that.
    – B. Ithica
    Jun 9 at 10:54
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    Why do you think they are funding you?
    – Studoku
    Jun 9 at 14:44
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    The clause you posted seems vague. Are there any preceding or following sentences that refer to the program they fund? If they want the ownership of what is produced during the time you work on the program it might be acceptable. If they want the ownership of whatever you think during the whole day even outside the time you are on the program is something questionable. Clauses asking total ownership of anything the worker may think 24/7 may be added to a contract, but they should be very well paid for.
    – FluidCode
    Jun 9 at 18:59
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    Personally, in the area of mathematics and computer science, I hate patents, and I would have my own problem with such a clause. But I think your reasoning is flawed. It's not like they're hiring you to paint their house. And filing a patent is expensive. A patent that expires after 5 years is probably not worth it. I would not bring up that 5 years idea. Furthermore, if you go to grad school, note that the school itself may try to get the rights to any of your patents, so read the fine print there as well. Jun 9 at 21:32
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It's only a slight overreach. In the state of California (as well as others), it's illegal for such a contract to effect IP that doesn't directly relate to the company's business and were created off the clock without the company's assets. But if it is any of those three, its standard in the industry that they own it. So if you're employed as a programmer and create a new invention in plumbing, under those more normal terms they'd have no rights to it. For programming related inventions its dicier- if they're paying you to get a masters in mathematical modeling, they probably have a claim on any algorithms you come up with. But not say a webpage you wrote for a business.

It's fairly common for even non-CA companies to write this into their contract, or for devs to require it in order to sign. I've known several people who have negotiated that clause in (I also know devs who have walked if the company wasn't ok with that). But you're never going to get them to waive it for the stuff that's actually related- what else are they getting out of the deal?

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    As a further note, if you come up with any clever algorithms, models, etc, (in your own, without company assets) wait to go public with them until after you‘re out of your contract and any terms within, then it belongs to you regardless.
    – morbo
    Jun 11 at 10:04
  • Also note, algorithms can't be patented, in theory at any rate, though the US patent office makes lots of money by ignoring that rule. Sep 4 at 20:19
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Am I correct that this is a particularly onerous clause

Without wanting to seem harsh: no, you are badly out of touch. The primary assets of any knowledge-based company is its intellectual property, and you are trying to say that you want to own that rather than the company. The company is the one taking the risk by investing money in the project, so they need to be able to profit from that long-term.

If you want to own your own IP, you are welcome to start your own company with your own money and risk being broke.

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    Yes they are paying you for the IP, but that does not prevent you from bargaining a certain percentage of proceeds from such IP. I suppose it won't be very common to do so and you'd have to be quite good at what you do, but patents don't have to have a single owner.
    – rubenvb
    Jun 9 at 14:28
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    @rubenvb Sure, that can potentially happen. But not for masters students unless they're incredibly, incredibly exceptional. Jun 9 at 14:32
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    It's actually fairly common for startups to offer a percentage of proceeds from new IP (i.e., stock options). However, this is generally only done by startups that can't afford to properly compensate their employees.
    – Brian
    Jun 9 at 19:32
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    Bottom line: the whole point of an IP employee is to produce IP for the company.
    – Agent_L
    Jun 11 at 15:29
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I'm the inventor on more than two dozen patents; I own the rights to none and I am quite happy with that state of affairs.

You completely misunderstand how patents work.

  1. In many R&D jobs being creative is part of your daily duties and creating IP is normal. That's what you get paid for.
  2. Filing patents is expensive and takes a lot of time and effort. Why would anyone invest in that without owning the rights for their investment.
  3. The vast majority of patents are "tactical": they strengthen your IP negotiation position with other companies, they prevent blatant copies, they safeguard your own products from predatory IP efforts, a large patent portfolio looks good to investors, etc.
  4. Very, very few patents are generating actual revenue. Even if they do, you need to put a significant investment into the licensing, application support and enforcement infrastructure.

Am I correct that this is a particularly onerous clause, or am I just overthinking it?

This is standard clause in most jurisdictions and your are not only overthinking it, but you have no clue how this really works.

is it reasonable to ask that the patent rights wouldn't belong to them?

No, it's not reasonable. That's what they pay you for so they own the rights.

Would there be any way in which I could ask them for some middle ground compromise, e.g., maybe by asking that if they wanted patent rights, that they could only have them for, say, 5 years?

You can try, but the answer is almost guaranteed to be no. Why would they agree do that?

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    Yes, I didn't see the negative in the statement. Fixed
    – Hilmar
    Jun 9 at 20:13
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A few "enlightened" employers, such as 3M, will give the inventors whom they employ a portion of the proceeds of their inventions for a period of time, as an incentive to invent new things – but the company still owns the patent rights themselves.

If you stop and think about it from their perspective, the company's position is quite reasonable. They are the ones who are taking the risks, putting up the money that you use, and paying you a salary! They provide you with the environment and the tools that you need to be inventive, and they rely on patent law to protect their business interests.

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  • Just to add, I've also seen companies issue a one-time bonus for each patent assigned to the company, as the incentive for inventing things.
    – B. Ithica
    Jun 11 at 7:40
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It's inconceivable they will remove or touch that clause.

It's the main, primary, basic business model and the whole reason the company and job exists.

(For better or worse - if you don't like the general business model, unfortunately the only alternative is to be an independent.)

If you asked to modify that clause, it would be weird.

(To make an example, if it would be as if they suggested, "oh, we don't want to pay you" - !) That clause is the entire raison d'etre of the business.

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Am I correct that this is a particularly onerous clause, or am I just overthinking it?

You're overthinking it. This is pretty standard. You're effectively an employee, and organisations in the business of producing IP will pretty much always require employees to assign rights for any created IP to their employer.

If you had a specific project unrelated to the funded work, you might be able to carve out an exception, but not for IP that you generate in the course of your paid work.

Given the fact that this is an industry funded project, and that they will want some long term benefit out of it, is it reasonable to ask that the patent rights wouldn't belong to them?

Other answers have already pointed out that they are paying you because they're expecting IP in return, but there is another probable reason why they're never going to agree to this.

You haven't given enough details of the project to be sure, but if you're working on problems of interest to them (which I assume you are, if they're paying you) then you will very likely have some exposure to their own research work, including material that hasn't yet been patented. That creates the risk that you might grab some of that material and patent it first. That's not likely to be an acceptable risk to them.

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The odds that you would create a patent that would have any kind of value are vanishingly small. The odds that the company would "patent" your code is even smaller.

If you invent something, just file the patent after you leave the company, or file the patent under a company name which you own. Either way, the odds that the company would ever find it out is negligible, unless you are in some incredibly specific business.

If your patent is so specific to the company and its technology that they would find out, well in that case, they deserve to own the patent don't they? because they are supporting your sorry ass. So, what are you worried about?

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  • Patents require an inventor's name. So it is not possible to shield yourself from a contract by hiding your name under a shell company alias.
    – Mefitico
    Jun 11 at 3:16
  • @Mefitico Sure it is. Just enter a pseudonym for the name. From a legal standpoint, it doesn't matter if named inventor used a pseudonym or nickname because once the patent is assigned, which can be done at the time of filing, then the patent belongs to the company.
    – Socrates
    Jun 11 at 11:25
  • I should re-check before saying, but no, you can't add a pseudonym on a patent, under penalty of the patent being considered legally void. "Inventor name" on a patent is not a mere formality with no implications it is something actually taken seriously.
    – Mefitico
    Jun 11 at 16:21
  • @Mefitico Show me the case in actual US law in which a patent was invalidated because an assigned patent used a pseudonym or nickname for the inventor.
    – Socrates
    Jun 11 at 17:27
  • Glad you limited it to the US. See this reference for an explanation on the topic, but I'm not even trying to find a case like you asked because that would be a difficult to commit kind of fraud. [US regulations] require the names of the inventors to be listed as such in a patent (names, not nicknames or organizations) and the application process requires submission of an oath or declaration of ...
    – Mefitico
    Jun 11 at 20:33

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