California is well known for its broad restrictions relating to non-competition clauses applicable to workers. After a recent decision by the Federal Circuit, such notoriety may extend to the patent realm. Employers should beware to not fall into this employment agreement trap.
In what it characterized as an issue not previously addressed by California’s appellate courts, in Whitewater West Industries v. Alleshouse, No. 2019-1852 (Fed. Cir. Nov. 19, 2020), the Court of Appeals for the Federal Circuit held that that California state law not only restricts non-competition provisions in employment agreements, but also prohibits certain provisions related to invention assignment. Specifically, employment agreement provisions requiring the assignment of inventions conceived by (former) workers post-employment, without use of the employer’s confidential information, are not permitted in California.