The state of New York has enacted legislation clarifying the scope of an employer's ownership of intellectual property created by its employees (A. 5295). Effective immediately, Governor Hochul has signed a law invalidating any provision in an employment agreement that requires employees to assign to the employer any rights to an invention developed entirely on the employee's own time without using the employer's equipment, supplies, facilities, or trade secrets.

The new law, however, contains exceptions for inventions that:

• "relate . . . to the employer's business, or actual or demonstrably anticipated research or development of the employer" and
• "result from any work performed by the employee for the employer."

With these exceptions, the law codifies language that is already often included in the intellectual property clauses of employment agreements. According to the New York State Assembly memorandum describing the purpose of the new law, the provision is meant to "both protect employees and increase incentives for innovation." California, Illinois, New Jersey, and Nevada have similar laws protecting intellectual property created by employees.

Next Steps

Employers should review their standard employment agreements to ensure compliance with the new section of the New York Labor Law.

If you have any questions about your company's compliance, please contact a member of the DWT employment services group.