- A common misconception is that anything an employee creates "on the job" automatically belongs to the employer.
- For copyright — which covers things like software code, written content, designs, and other original works — Canadian law generally treats an employer as the first owner of a work…
- Ownership of an invention an employee comes up with is a less settled default than copyright ownership.
An employee builds something valuable on company time — a new process, a piece of software, a product design — and the business assumes it automatically owns it. Sometimes that assumption is correct. Sometimes it is not, and the gap between the two is exactly what an invention assignment clause in an employment contract is meant to close.
This article explains the different default ownership rules that apply depending on what was created, why those defaults are not something a business should rely on alone, and what a strong assignment clause actually needs to cover.
The Default Rules Are Not What Most Employers Assume
A common misconception is that anything an employee creates "on the job" automatically belongs to the employer. That is broadly true for some kinds of intellectual property and considerably less certain for others — which is precisely the trap employers fall into when they skip a written assignment clause and simply assume ownership.
Copyright: Generally Employer-Owned by Default
For copyright — which covers things like software code, written content, designs, and other original works — Canadian law generally treats an employer as the first owner of a work created by an employee in the course of their employment, absent an agreement to the contrary. This default is relatively favourable to employers compared to other forms of intellectual property, but it still depends on the work genuinely having been created within the scope of the person's employment, which is not always a clean, obvious line — a side project built on personal time with personal equipment is a different situation than something built during work hours using company resources.
Patents and Inventions: A Murkier Default
Ownership of an invention an employee comes up with is a less settled default than copyright ownership. Historically, Canadian courts have looked at whether the employee was specifically hired, or specifically assigned, to invent or solve the kind of problem the invention addresses — an employee in a role focused on research and development is in a different position than, say, an administrative employee who happens to invent something unrelated to their job. This is a fact-specific, judgment-based analysis rather than a bright-line rule, and it is exactly the kind of uncertainty a written assignment clause is designed to remove.
Why You Need an Explicit Assignment Clause Anyway
Because the default rules vary by type of intellectual property, are fact-specific, and can be genuinely unclear at the margins, relying on them is a risky strategy for any business that depends on what its employees create. A clear, written invention assignment clause:
- Removes the guesswork about whether a specific creation falls inside or outside the scope of employment
- Covers inventions, designs, and other IP that might otherwise fall into the murkier "who really owns this" category
- Creates a paper trail that matters enormously later — in financing due diligence, in a sale of the business, or in any dispute over who owns a key asset
- Sets clear expectations for the employee from day one, avoiding an awkward conversation after something valuable has already been created
What a Strong Invention Assignment Clause Covers
- [ ] A clear, present-tense assignment of inventions, designs, and works created within the scope of employment or using company resources — not just a vague promise to assign something "in the future"
- [ ] A definition broad enough to capture the kinds of creative or technical output relevant to the role, without being so broad it tries to capture an employee's unrelated personal projects
- [ ] An obligation to disclose inventions created during employment, so the company actually knows what exists to assign
- [ ] Cooperation obligations — signing documents, providing information — needed to formally register or protect IP after the fact (for example, in a patent application)
- [ ] A carve-out or disclosure process for inventions the employee already had before starting, so those are not inadvertently swept in
- [ ] Coordination with confidentiality obligations, since an invention is often also confidential information before it is ever formally protected
Special Cases: Contractors, Co-Founders, and Prior Inventions
- Independent contractors are not employees, and the ownership defaults that apply to employees do not automatically extend to contract work — a business engaging a contractor to build software, a design, or a product needs its own explicit assignment language in the contractor agreement, since assuming employee-style default ownership is a common and costly mistake.
- Co-founders working without a clear employment or founder agreement are in a particularly exposed position, since it may be unclear whose "employment," if anyone's, the work falls under at all.
- Prior inventions an employee brings with them from before they joined should be identified and excluded up front, so there is no later dispute about whether something predates the employment relationship.
Frequently asked questions
If an employee invents something using their own equipment on a weekend, does my business still own it?
Not automatically, and this is exactly the kind of situation where the "scope of employment" line gets blurry. A written assignment clause that addresses use of company resources, confidential information, and job-related subject matter — rather than relying on when or where the work physically happened — gives much clearer footing.
Do I need a separate clause for copyright and for inventions, or does one clause cover both?
A well-drafted assignment clause can address both in one place, but the underlying legal defaults are different enough that the clause needs to be written with both in mind rather than assuming one general statement covers everything equally well.
What about contractors and freelancers — does the same clause work for them?
No. Contractor agreements need their own explicit IP assignment language, since the default ownership rules that lean somewhat in an employer's favour for employees do not automatically apply to independent contractors.
Is a verbal understanding that "the company owns everything I build" good enough?
It is far weaker than a written clause, both because its exact terms are hard to prove later and because it does not include the practical mechanics — disclosure obligations, cooperation on registration, carve-outs for prior work — that a proper clause provides.
This is a corporate question
Start a file online — flat, published fees, reviewed by a licensed Ontario lawyer before a dollar is owed.