Can a North Carolina employer require assignment of every invention?
No. N.C. Gen. Stat. § 66-57.1 carves out a category of inventions an assignment clause simply cannot reach: anything the employee developed entirely on their own time, without the employer's equipment, supplies, facility, or trade-secret information, that neither relates to the employer's business or actual or demonstrably anticipated research or development nor results from the employee's work. To the extent a provision purports to apply to that type of invention, it is against the public policy of the State and unenforceable — though the employee bears the burden of proving that an invention qualifies. On a touch screen, a tap shows all 2 sources in this group.
Section 66-57.1 frames the carve-out as a ceiling on what an assignment promise can capture. However broadly the contract is written, it does not reach an invention the employee made on their own time and with their own resources unless one of two statutory exceptions applies .
The two exceptions return an own-time invention to the employer's reach if it either relates to the employer's business or anticipated research or development, or results from the employee's work. Outside those exceptions, the statute supplies the teeth: a provision that tries to require assignment of a protected invention is not merely unenforceable as drafted but declared contrary to public policy .
One feature distinguishes North Carolina from the California and New York carve-outs: the statute places the burden of proof on the employee. An employee claiming a given invention falls within the § 66-57.1 exclusion must establish that it qualifies .
Because North Carolina, like California, renders an overreaching provision unenforceable rather than rewriting it, a drafter should limit the assignment to what § 66-57.1 allows and carve out the protected own-time inventions in the text itself rather than trusting a court to pare an assign-everything clause back into compliance.
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N.C. Gen. Stat. § 66-57.1 makes an assignment clause inapplicable to an invention the employee developed entirely on their own time without the employer's equipment, supplies, facility, or trade secret information, unless the invention relates to the employer's business or actual or demonstrably anticipated research or development, or results from work performed by the employee for the employer.
Any provision in an employment agreement which provides that the employee shall assign or offer to assign any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his own time without using the employer's equipment, supplies, facility or trade secret information except for those inventions that (i) relate to the employer's business or actual or demonstrably anticipated research or development, or (ii) result from any work performed by the employee for the employer.
See N.C. Gen. Stat. § 66-57.1.
N.C. Gen. Stat. § 66-57.1 declares that, to the extent a provision purports to apply to a carved-out own-time invention, it is against the public policy of the State and is unenforceable.
To the extent a provision in an employment agreement purports to apply to the type of invention described, it is against the public policy of this State and is unenforceable.
See N.C. Gen. Stat. § 66-57.1.
N.C. Gen. Stat. § 66-57.1 places the burden of proof on the employee to establish that an invention qualifies for the own-time carve-out.
The employee shall bear the burden of proof in establishing that his invention qualifies under this section.
See N.C. Gen. Stat. § 66-57.1.
Must a North Carolina employer notify the employee?
No. This is the key contrast with California, which requires a written notice under Labor Code § 2872, and Washington, which requires one under RCW 49.44.140(3). North Carolina's §§ 66-57.1 and 66-57.2 contain no notice, disclosure-to-the-employee, or acknowledgment requirement of any kind. Section 66-57.2 regulates the employer's conduct — barring the carved-out provision as a condition of employment and permitting a mandatory invention-reporting duty — but it never conditions a compliant clause's validity on giving the employee notice of the carve-out. On a touch screen, a tap shows all 2 sources in this group.
The statutes are short and self-contained. Section 66-57.1 defines which inventions an assignment clause cannot reach and states its own remedy — unenforceability against public policy — without mentioning notice. Its text does the work through scope alone .
Section 66-57.2 turns to the employer's side and again imposes no notice duty. What it does is forbid the employer from demanding the carved-out provision as a condition of employment, while allowing the employer to require the employee to report inventions .
The contrast with the two notice states is worth flagging, because a multistate employer that built its form around the California § 2872 or Washington RCW 49.44.140(3) notice may carry that language into North Carolina and assume it is required here. It is not. The absence of a notice requirement cuts the other way too: a North Carolina employer cannot cure an overbroad assignment clause by giving notice, because § 66-57.1 makes the offending provision unenforceable regardless of what the employee was told. Some secondary summaries loosely describe a North Carolina notice obligation, but the operative statutory text imposes none.
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N.C. Gen. Stat. § 66-57.2(a) bars an employer from requiring a provision made unenforceable under § 66-57.1 as a condition of employment or continued employment, but imposes no requirement that the employer give the employee notice of the carve-out.
An employer may not require a provision of an employment agreement made unenforceable under G.S. 66-57.1 as a condition of employment or continued employment. An employer, in an employment agreement, may require that the employee report all inventions developed by the employee, solely or jointly, during the term of his employment to the employer, including those asserted by the employee as nonassignable, for the purpose of determining employee or employer rights.
See N.C. Gen. Stat. § 66-57.2(a).
N.C. Gen. Stat. § 66-57.1 defines the own-time carve-out by the scope of the invention alone and conditions nothing on notice to the employee — the statute imposes no notice, disclosure, or acknowledgment requirement.
Any provision in an employment agreement which provides that the employee shall assign or offer to assign any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his own time without using the employer's equipment, supplies, facility or trade secret information except for those inventions that (i) relate to the employer's business or actual or demonstrably anticipated research or development, or (ii) result from any work performed by the employee for the employer.
See N.C. Gen. Stat. § 66-57.1.
Who owns an invention by default in North Carolina?
The inventor. Absent a written assignment, the baseline rule under federal patent law — which governs who holds title to a patentable invention in North Carolina as elsewhere — is that rights belong to the employee who conceived it. The U.S. Supreme Court restated that premise in Stanford v. Roche, and although others may acquire an interest, that interest must trace back to the inventor. North Carolina overlays the common-law hired-to-invent doctrine, confirmed in Speck v. North Carolina Dairy Foundation, under which an employee engaged to invent must surrender the resulting invention; and once ownership has vested in the employer, § 66-57.2 protects it from being unwound in a later compensation dispute. On a touch screen, a tap shows all 2 sources in this group.
Stanford v. Roche anchors the default. The Court held that the Bayh-Dole Act did not displace the long-standing rule that an invention belongs to its inventor, treating that premise as the baseline against which any assignment must be measured .
Because ownership starts with the inventor, an employer's title is derivative: it exists only if and to the extent the employee assigned it. Any third-party interest in the invention must trace back to that inventor-grantor .
North Carolina's own overlay is the hired-to-invent doctrine. In Speck v. North Carolina Dairy Foundation, the Supreme Court of North Carolina held that where an employee is engaged to invent, the resulting invention belongs to the employer even without an express assignment clause .
Speck rests the doctrine on the terms of the engagement rather than on any signed assignment: if the employee is set to a prescribed inventive result and reaches it, the invention is the employer's regardless of what the employment contract says about ownership .
The federal roots of that doctrine are older. United States v. Dubilier Condenser Corp. states the hired-to-invent rule the North Carolina courts follow: one employed to make an invention who succeeds during the term of service is bound to assign the resulting patent .
Once title has vested — whether by an express clause or by the hired-to-invent doctrine — North Carolina protects it against being clawed back in a pay dispute. Alongside Morris v. Scenera Research, in which the state's high court, assuming without deciding that the employee had been hired to invent, rejected an attempt to rescind that bargain and reclaim inventions, the 2016 amendment to § 66-57.2 bars revocation or rescission of vested invention rights in a compensation dispute — unless the written agreement provides otherwise or the employee proves the employer obtained title by fraud .
Morris supplied the policy rationale the statute now codifies: on the assumption that the employee had been hired to invent, the court reasoned that such an employee should not be able to undo that bargain and recapture ownership merely because a compensation dispute later arises .
Both the hired-to-invent doctrine and the anti-rescission bar are narrow and fact-intensive, and neither is a substitute for a written clause. The dependable path for a North Carolina employer is a written present-assignment (hereby assigns) clause — present-tense language that transfers legal title automatically on conception, rather than a future promise to assign — operating within the boundaries §§ 66-57.1 and 66-57.2 impose.
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Stanford v. Roche confirms the long-standing premise of U.S. patent law that rights in an invention belong to the inventor.
Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor.
See Bd. of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776 (2011).
Stanford v. Roche holds that although others may acquire an interest in an invention, that interest as a general rule must trace back to the inventor — so an employer takes title only through an assignment from the employee-inventor.
Thus, although others may acquire an interest in an invention, any such interest — as a general rule — must trace back to the inventor.
See Bd. of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776 (2011).
Speck v. North Carolina Dairy Foundation holds that the fruit of the labor of one hired to invent belongs to the employer absent a written contract to assign — North Carolina's hired-to-invent doctrine.
The fruit of the labor of one who is hired to invent, accomplish a prescribed result, or aid in the development of products belongs to the employer absent a written contract to assign.
See Speck v. North Carolina Dairy Foundation, Inc., 311 N.C. 679 (1984).
Speck v. North Carolina Dairy Foundation holds that when a hired-to-invent employee accomplishes the prescribed result, the invention belongs to the employer even where the employment terms contain no express ownership provision.
If the employee fails to reach his goal the loss falls upon the employer, but if he succeeds in accomplishing the prescribed result then the invention belongs to the employer even though the terms of employment contain no express provision dealing with the ownership of whatever inventions may be developed.
See Speck v. North Carolina Dairy Foundation, Inc., 311 N.C. 679 (1984).
Dubilier states the hired-to-invent doctrine: an employee engaged to make an invention who succeeds during the term of service is bound to assign the resulting patent to the employer.
One employed to make an invention, who succeeds, during his term of service, in accomplishing that task, is bound to assign to his employer any patent obtained.
See United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933).
N.C. Gen. Stat. § 66-57.2(b), as amended in 2016, provides that an employer's ownership of an employee invention that has vested by contract or operation of law is not subject to revocation or rescission in a dispute over compensation or benefits — subject to any contrary provision in the employee's written employment agreement, and inapplicable where the employee proves the employer acquired ownership fraudulently.
An employer's ownership of an employee's invention, discovery, or development that has or becomes vested in the employer by contract or by operation of law shall not be subject to revocation or rescission in the event of a dispute between the employer and employee concerning payment of compensation or benefits to the employee, subject to any contrary provision in the employee's written employment agreement.
See N.C. Gen. Stat. § 66-57.2(b).
Morris v. Scenera Research, assuming without deciding that the employee had been hired to invent, reasoned that allowing such an employee to rescind that agreement and reclaim ownership of inventions made during the employment would place the employee in a far better position, and the employer in a far worse position, than the parties' original bargain.
If an employee is hired to invent but could later rescind that agreement and claim ownership of inventions made during his or her employment, the employee would end up in a far better position, and the employer in a far worse position, than when the parties reached their original bargain.
See Morris v. Scenera Research, LLC, 368 N.C. 857 (2016).
Are trailing-assignment (holdover) clauses enforceable in North Carolina?
Only so far as they are reasonable. Neither § 66-57.1 nor § 66-57.2 caps post-employment assignment periods, and no reported North Carolina appellate decision found in our review squarely decides whether a trailer clause reaching inventions first conceived after employment ends is enforceable. The operative lens is North Carolina's ordinary restrictive-covenant law: a holdover clause that functions as a restraint on the departing employee's ability to work would most likely be tested for reasonableness under United Laboratories v. Kuykendall , and — critically — North Carolina courts do not rewrite an overbroad covenant: under Beverage Systems and Whittaker an overbroad clause is left unenforced, and a court may enforce only a separable part that is reasonable on its own .
Start with what the statutes do not do. Sections 66-57.1 and 66-57.2 govern which inventions an assignment clause may reach and how vested rights are protected, but they set no durational ceiling on post-employment trailing assignments and say nothing about a clause reaching inventions conceived after the employment relationship ends. North Carolina supplies no statutory analogue to California's Business and Professions Code § 16600.
Because the statutes are silent, a holdover clause that restrains an ex-employee's post-departure work is most naturally analyzed under North Carolina's general restrictive-covenant standard. United Laboratories v. Kuykendall states the reasonableness test that governs such a restraint, upholding a covenant only where it is reasonably necessary to protect a legitimate interest .
“reasonably necessary to protect the interests of the covenantee, and not against public policy”
The framing question North Carolina courts ask is whether the restraint reaches further than the employer's protectable interest requires .
The consequence of overbreadth is the sharpest contrast with reformation states like Texas. North Carolina does not rewrite an unreasonable restraint to a reasonable one. In Beverage Systems of the Carolinas, the Supreme Court of North Carolina reaffirmed Whittaker's rule that a court confronted with an overbroad covenant simply declines to enforce it .
“The courts will not rewrite a contract if it is too broad but will simply not enforce it.”
Whittaker also states the limit of that rule: where the covenant is separable, a court may enforce a part that is reasonable, but it does not redraft the rest .
Two points follow, framed predictively because no North Carolina appellate decision found in our review applies this reasonableness standard to an invention holdover specifically — the reported cases apply it to non-competes and non-solicits. First, an aggressive trailing clause that sweeps in an ex-employee's independent post-employment inventions would most likely be judged as a restraint of trade and tested for reasonableness. Second, because North Carolina courts will not rewrite an overbroad covenant and will enforce only a separable reasonable part, a clause drafted too broadly risks being struck in whole rather than narrowed — so a trailer clause narrowly tied to inventions conceived during employment, or to a short and defined trailing period for inventions derived from the employer's confidential information, stands on far firmer ground than an open-ended provision that functions as a disguised noncompete.
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United Laboratories v. Kuykendall states North Carolina's restrictive-covenant reasonableness standard: a non-competition covenant is upheld only where supported by valuable consideration, reasonably necessary to protect the interests of the covenantee, and not against public policy.
non-competition clauses were in partial restraint of trade, they would nevertheless be upheld if the covenants were supported by valuable consideration, reasonably necessary to protect the interests of the covenantee, and not against public policy.
See United Laboratories, Inc. v. Kuykendall, 322 N.C. 643 (1988).
United Laboratories v. Kuykendall frames the operative reasonableness inquiry as whether the covenant is reasonably necessary to protect the employer from improper or unfair competition.
whether the covenant is reasonably necessary to protect the employer from improper or unfair competition.
See United Laboratories, Inc. v. Kuykendall, 322 N.C. 643 (1988).
Beverage Systems of the Carolinas, reaffirming Whittaker General Medical Corp. v. Daniel, holds that North Carolina courts will not rewrite an overbroad restrictive covenant but will simply decline to enforce it — North Carolina rejects judicial reformation of overbroad restraints.
The courts will not rewrite a contract if it is too broad but will simply not enforce it.
See Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693 (2016) (quoting Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989)).
Whittaker General Medical Corp. v. Daniel holds that a covenant in restraint of competition that is too broad to be a reasonable protection of the employer's business will not be enforced.
If a contract by an employee in restraint of competition is too broad to be a reasonable protection to the employer’s business it will not be enforced.
See Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).
Whittaker General Medical Corp. v. Daniel holds that where a covenant in restraint of competition is separable and one part is reasonable, the court will enforce the reasonable part.
If the contract is separable, however, and one part is reasonable, the courts will enforce the reasonable provision.
See Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).
N.C. Gen. Stat. § 66-57.1 declares that, to the extent a provision purports to apply to a carved-out own-time invention, it is against the public policy of the State and is unenforceable.
To the extent a provision in an employment agreement purports to apply to the type of invention described, it is against the public policy of this State and is unenforceable.
See N.C. Gen. Stat. § 66-57.1.
N.C. Gen. Stat. § 66-57.2(b), as amended in 2016, provides that an employer's ownership of an employee invention that has vested by contract or operation of law is not subject to revocation or rescission in a dispute over compensation or benefits — subject to any contrary provision in the employee's written employment agreement, and inapplicable where the employee proves the employer acquired ownership fraudulently.
An employer's ownership of an employee's invention, discovery, or development that has or becomes vested in the employer by contract or by operation of law shall not be subject to revocation or rescission in the event of a dispute between the employer and employee concerning payment of compensation or benefits to the employee, subject to any contrary provision in the employee's written employment agreement.
See N.C. Gen. Stat. § 66-57.2(b).
Do not paper a North Carolina employee with an out-of-state assign-everything invention-assignment form. Section 66-57.1 voids an overbroad clause to the extent it reaches a protected own-time invention, and North Carolina gives no reliable blue-pencil to rewrite a violating provision, so limit the assignment to what the statute allows and expressly carve out the protected own-time inventions in the text itself . North Carolina requires no § 2872-style notice, but § 66-57.2 still constrains the employer — it bars conditioning employment on the void provision and, once invention rights have vested, forbids clawing them back in a compensation dispute unless the written agreement says otherwise or the employee proves the employer obtained title by fraud . And an aggressive holdover or trailer clause reaching inventions conceived after employment ends risks being judged an unreasonable restraint and struck in whole rather than narrowed, because North Carolina will not rewrite an overbroad covenant — keep any trailing assignment narrow, short, and tied to the employer's confidential information .
What does federal law require a confidentiality and invention assignment agreement in North Carolina to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
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An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).