Even if your Ontario employment contract has no Intellectual Property clause, the common law concept of “shop rights” may apply. If you create an invention using your employer’s time, tools, or materials, you may own the patent, but your employer receives an automatic, free, and non-exclusive right to use the invention in their business.
Many exciting startups and small manufacturing shops in cities like Hamilton, Mississauga, and London operate without formal, 30-page employment contracts. In these casual environments, it is common for a clever machinist or a junior developer to figure out a better way to do things, eventually creating a brand-new tool, software script, or physical invention. Without a written agreement assigning intellectual property to the company, a massive legal question arises: who actually owns it?
Many workers assume that because they invented it, they own it outright and can charge their boss to use it. 💵 However, Ontario courts rely on established common law principles when contracts are silent. Depending on what you were hired to do, the employer may own it completely, or they may possess a “shop right.” This guide clarifies these complex unwritten rules and helps you understand how to protect your creative work.
Step-by-Step Guide to Understanding Shop Rights in Ontario
If you have invented something valuable while at work and there is no written policy regarding ownership, you must evaluate your situation carefully. Follow these steps to determine who holds the legal rights to your creation.
Step 1: Determine if You Were “Hired to Invent”
The most crucial legal test is your job description. 🔍 If you were hired as an engineer, a software developer, or an R&D specialist, your primary duty is to solve problems and create. In Ontario common law, if you are “hired to invent,” your employer automatically owns the patent rights to anything you create during your employment, even without a written IP clause.
Step 2: Identify General Employment Status
If you were hired as a general labourer, a sales representative, or an administrative assistant, you were not hired to invent. If you happen to invent a brilliant new packaging machine while working on the warehouse floor, you generally own the underlying patent rights, not your employer.
Step 3: Assess Your Use of Company Resources
This is where the “Shop Right” comes into play. 🗂 If you (the general employee) used the company’s tools, materials, workshop, or paid company time to develop your invention, the law grants the employer a shop right. This means the employer gets an implied, non-exclusive, royalty-free license to use your invention in their daily business operations forever.
Step 4: Understand the Limits of a Shop Right
A shop right is a shield for the employer, not a sword. The employer can use the invention internally, but they cannot sell the patent, and they usually cannot license it out to other companies. You, as the patent owner, still have the right to patent the invention and sell it to third parties (provided you do not breach any confidentiality rules regarding the employer’s trade secrets).
Step 5: Seek Legal Counsel Before Filing a Patent
Before you rush to the Canadian Intellectual Property Office (CIPO), you need to ensure you actually hold the rights. Consult with an employment lawyer or an IP lawyer in Ontario. Filing a patent application for something that legally belongs to your employer can lead to immediate termination and a costly civil lawsuit.
How Much Does it Cost in Ontario?
Intellectual property disputes can become incredibly expensive if both sides believe the invention is worth millions. 💰 Here is a look at the financial realities.
- Lawyer Fees: An IP or employment lawyer will usually charge between $350 and $700 CAD per hour to review your job description and determine if a shop right exists.
- Patent Litigation: If your employer sues you in the Superior Court of Justice to claim full ownership of the patent rather than just a shop right, legal defence costs can quickly exceed $50,000 CAD.
- Value of the Shop Right: The shop right is royalty-free. This means the employer pays you $0 CAD for using the invention, no matter how much money it saves the company internally.
Comparing IP Ownership Scenarios Without a Contract
| Employee’s Job Role | Resources Used | Who Owns the Patent? |
|---|---|---|
| R&D Engineer (Hired to invent) | Company tools and time | The Employer owns it completely. |
| Warehouse Worker (General) | Company tools and time | Employee owns it; Employer gets a Shop Right. |
| Sales Rep (General) | 100% personal time & tools | The Employee owns it completely. |
| Independent Contractor | Varies (Usually their own) | The Contractor (unless a contract says otherwise). |
How Long Does the Process Take?
Clarifying an unwritten IP dispute can take considerable time. Negotiating a formal licensing agreement with your employer to clear up the ambiguity might take 1 to 3 months of drafting. If the situation degrades into a lawsuit over who truly owns the patent rights, litigating the matter in the Canadian court system typically takes 2 to 4 years.
Frequently Asked Questions (FAQ)
Can my employer sell the shop right to a competitor?
No. A common law shop right is generally personal to the employer’s business. They cannot assign, transfer, or sell this free license to another company unless they are selling their entire business to a new owner.
What if I built it at home, but tested it at work?
Testing an invention extensively on company time or using company equipment can still trigger a shop right for the employer, as you relied on their resources to perfect the invention.
Does a shop right expire if I quit my job?
No. If the employer acquired a valid shop right while you were employed there, that right continues indefinitely, even after you resign or are terminated.
Are shop rights written in the Employment Standards Act?
No. The ESA does not cover intellectual property. Shop rights are a matter of “common law” (rules developed by judges in past court cases) and the federal Patent Act.
Leave a Reply