Legal Definitions - shop right

Shop Right

A shop right is a legal principle that grants an employer a non-exclusive, royalty-free, and permanent license to use an invention developed by one of their employees. This right arises when an employee creates an invention during their employment, utilizing the employer's resources such as company time, equipment, facilities, or materials, even if the employee was not specifically hired to invent.

Essentially, while the employee typically retains ownership of the patent for the invention, the employer gains the right to use that invention in their business without having to pay royalties or seek further permission. This doctrine aims to fairly compensate the employer for the investment of resources that contributed to the invention's creation.

Here are a few examples illustrating the concept of a shop right:

• Example 1: Software Development
  Imagine Sarah, a software engineer at "InnovateTech," whose primary role is maintaining existing enterprise software. In her spare time at work, using her company-issued laptop and accessing InnovateTech's cloud development environment, she develops a novel algorithm that significantly optimizes data processing. Sarah was not specifically assigned to create new algorithms, but she used company resources and time.

  How it illustrates "shop right": InnovateTech would likely have a shop right to use Sarah's new algorithm within their own products and services. While Sarah would typically own the patent for her algorithm, InnovateTech wouldn't need to pay her royalties or get her permission each time they implement it, because she developed it using their equipment and during her employment.

• Example 2: Manufacturing Tooling
  Consider Mark, a manufacturing engineer at "Precision Parts Co.," a company that produces specialized components. His job involves improving the efficiency of the assembly line. During his regular work hours, using Precision Parts' computer-aided design (CAD) software and prototyping equipment in the company lab, Mark designs and tests a unique fixture that dramatically speeds up a specific assembly process.

  How it illustrates "shop right": Precision Parts Co. would acquire a shop right to use Mark's innovative fixture in their manufacturing operations. Even if Mark secures a patent for his fixture, the company can deploy it across their production lines without paying him for its use, because he conceived and developed it using company resources and within the scope of his employment.

• Example 3: Chemical Discovery
  Dr. Anya works as a research chemist for "PharmaSolutions," a pharmaceutical company, primarily focused on testing the stability of existing drug compounds. During her shifts, while conducting routine experiments, she notices an unexpected reaction using company chemicals and lab equipment, which leads her to synthesize a completely new compound with potential therapeutic properties. Her specific project was not to discover new compounds.

  How it illustrates "shop right": PharmaSolutions would likely have a shop right to use Dr. Anya's newly discovered compound for their own research, development, and even commercialization efforts. Although Dr. Anya might hold the patent for the compound, PharmaSolutions would not owe her royalties for its use, given that she developed it using the company's laboratory, materials, and time.