It is relatively common, particularly in the scientific field, for employees to invent things. Who owns the employee’s invention will depend on whether or not the invention was made in the course of the employee’s employment. If it was, then the employer owns the invention. While this principle may seem straight forward, a recent case illustrates the difficulties that can arise, particularly where there is no written employment contract between the parties defining the scope of the employee’s duties.

Empress Abalone Limited produced abalone pearls. It employed Richard Langdon from February 1996 to July 1999, at Kaikoura where it was undertaking, in conjunction with the University of Canterbury, a research project. In September 1996, it obtained funding for the project from the Foundation for Research, Science and Technology ("FRST").

Mr Langdon, while still employed by Empress, applied for patients for various methods of growing half pearls. Empress brought proceedings against Mr Langdon in the Employment Court claiming that it was entitled to any interest or ownership in the patent applications and in the related intellectual and other property because Mr Landgon had invented the methods for growing the half pearls in the course of his employment.

It relied on a rule of law that where an employee in the course of employment made an invention which was part of his duty to make, the law imported into the contract of employment a term that the invention is the property of the employer.

Mr Langdon claimed that he had made the particular invention in his own time and without using his employer’s materials or facilities. The Employment Court dismissed the employer’s claim on the basis that Mr Langdon’s employment was limited to processes for the growing of spherical pearls, and not half pearls. Therefore, the invention was not made in the course of his employment.

The employer appealed to the Court of Appeal. In determining whether the invention was made in the course of Mr Langdon’s employment, the Court of Appeal noted that the case was made more difficult because the parties did not have a written employment contract defining the scope of his employment. The Employment Court had therefore focused on the limited nature of FRST project documentation. This approach to the construction of Mr Langdon’s employment contract was too narrow the Court of Appeal said.

In the end, the Court of Appeal did not decide the issue, but instead referred it back to the Employment Court to reconsider the matter in light of the guidance it had given regarding the proper construction of Mr Langdon’s employment contract.

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