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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

October 3, 2023

New York State Labor Law Amended: New Provision Regarding Employee Inventors

On September 15, 2023, New York State Governor Kathy Hochul signed bill S5640/A5295, amending the labor law to add a new Section 203-f, which is directed toward employee inventors.1 In doing so, New York joined the growing number of states with legislation that limits the extent to which employers can claim ownership of their employees’ inventions. 

The new Section 203-f specifies:

1. Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(A) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

(B) Result from any work performed by the employee for the employer.

According to the new law, a provision of an employment agreement will be unenforceable and against public policy if the provision requires an employee to assign to an employer the employee’s rights in these types of inventions that fall outside of the specified exceptions. 

In light of this development, employers of New York State residents should review their employment agreement forms and update any employment documents that contain intellectual property ownership provisions, such as employee confidentiality and intellectual property contract forms and employee handbooks, manuals, and policies. Specifically, employers should review any clauses that provide them with rights to inventions conceived by employees that lack the limitations consistent with the new law. 

Notably, the new law applies only to inventions. Therefore, in updating their documents, employers should consider a bifurcated approach that provides employers with one scope of ownership for inventions and a broader scope of ownership for other forms of intellectual property, such as trade secrets and copyrights. 

With careful planning and consideration, employers can successfully navigate this new section of New York’s labor law. 

If you have any questions regarding the content of this alert, please contact Renato Smith, partner, at rsmith@barclaydamon.com; Pranav Katti, associate, at pkatti@barclaydamon.com; or another member of the firm’s Labor & Employment, Patents & Prosecution, or Trademarks, Copyrights & Licensing Practice Areas. 

The Labor & Employment Podcast is a weekly Barclay Damon Live podcast hosted by Ari Kwiatkowski that provides employers with important updates regarding ever-evolving state and federal labor and employment laws as well as a wide range of timely topics pertaining to labor and employment issues in the workplace. Click here to watch or listen to the Labor & Employment Podcast as well as Barclay Damon’s other podcast series: Cyber Sip and Cannabis Counselor. 
                                                                                  

1NY CLS Labor § 203-f

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