Can a South Dakota employer require assignment of every invention?
There is no statutory ceiling — but South Dakota is not a blank-slate state. No South Dakota statute carves own-time, own-resource inventions out of an assignment clause the way California or Washington law does. What South Dakota does have is SDCL § 60-2-10, a Field Code provision under which anything an employee acquires by virtue of employment belongs to the employer — an employer-flavored default-ownership rule, not a carve-out — and the South Dakota Supreme Court has already refused to read it as an employer-ownership invention statute where the invention was developed on the employee's own time.
Statutory silence on the carve-out side is verifiable. A section-by-section sweep of SDCL chapter 60-2, the master-and-servant chapter, surfaces no invention provision at all, and none of the restraint-of-trade exceptions in SDCL §§ 53-9-9 to 53-9-12 addresses invention assignment. So a South Dakota employer drafting an assignment clause starts from contract law, not from a statutory ceiling on what the clause may capture.
The statute that does exist points the other way. SDCL § 60-2-10 descends from § 1142 of the 1877 Civil Code — the same Field Code lineage as California Labor Code § 2860 — and reads as a broad employer-acquisition default .
Broad as that text sounds, the South Dakota Supreme Court declined to treat it as a self-executing invention-ownership statute. In Rural Pennington County Tax Ass'n v. Dier, a county highway superintendent developed highway-records software at home, on his own time, and the court held § 60-2-10 gave the county no claim to the proceeds because no ownership agreement — express or implied — existed and no significant county resources were used .
The practical consequence is that a South Dakota employer can, in principle, contract for assignment more broadly than a California or Washington employer, because no statute carves own-time inventions out of the clause and no notice formality conditions its enforcement. But the breadth is not unlimited. An assignment clause is still an ordinary contract term, and to the extent a clause operates as a restraint on the former employee — the post-employment holdover scenario — South Dakota's restraint-of-trade statute, SDCL § 53-9-8, supplies a hard outer limit discussed below.
Sources for this answer
Primary law
A.1 SDCL § 60-2-10 — Products of employment belong to employerSDCL § 60-2-10 supports the rule that South Dakota's only employment-IP statute is an employer-flavored Field Code default — anything an employee acquires by virtue of employment belongs to the employer — not a California-style carve-out limiting what an assignment clause may reach.
Anything that an employee acquires by virtue of employment, lawfully or unlawfully, during or after the term of employment belongs to the employer, excepting any compensation due the employee.
See SDCL § 60-2-10.
Case law · 1994-05-11
A.2 Rural Pennington County Tax Ass'n v. DierRural Pennington County Tax Ass'n v. Dier supports the rule that SDCL § 60-2-10 does not operate as a self-executing employer-ownership invention statute — the court required an express or implied ownership agreement and found none, so the employer took nothing in an invention developed on the employee's own time.
No express or implied agreement as to Pennington County’s ownership of inventions developed by Dier has been established.
See Rural Pennington County Tax Ass'n v. Dier, 515 N.W.2d 841 (S.D. 1994).
Must a South Dakota employer notify the employee?
Not applicable. Because South Dakota has no invention-assignment carve-out statute, there is no statutory line for a notice to mark and no notice requirement of the kind California imposes under Labor Code § 2872 or Washington imposes under RCW 49.44.140(3). The only employment-IP statute on the books, SDCL § 60-2-10, is a default-ownership provision that contains no notice, disclosure, or acknowledgment formality of any kind.
There is nothing to give notice of. Notice statutes exist in the carve-out states precisely to alert the employee to a statutory own-time protection that limits the assignment clause; South Dakota has enacted no such protection, so the notice question presupposes a carve-out South Dakota does not have. That is why this entry is marked not applicable rather than a bare no.
The full text of § 60-2-10 confirms the absence — it allocates ownership and says nothing about employer formalities .
For a multistate employer the takeaway is the inverse of the notice states: a South Dakota employer neither has to give a § 2872-style notice nor can rely on one to cure an overbroad clause. Whether the assignment binds turns on the contract language, the common-law default discussed next, and the restraint-of-trade limits — not on any statutory formality.
Sources for this answer
Primary law
B.1 SDCL § 60-2-10 — Products of employment belong to employerSDCL § 60-2-10 supports the conclusion that South Dakota imposes no invention-assignment notice or disclosure formality — the state's only employment-IP statute allocates default ownership and contains no notice requirement, and no carve-out statute exists for a notice to describe.
Anything that an employee acquires by virtue of employment, lawfully or unlawfully, during or after the term of employment belongs to the employer, excepting any compensation due the employee.
See SDCL § 60-2-10.
Who owns an invention by default in South Dakota?
The employee, unless hired to invent — and unlike most states without a carve-out statute, South Dakota has on-point state supreme-court authority saying so. In Rural Pennington County Tax Ass'n v. Dier, the South Dakota Supreme Court adopted the common-law rule that mere general employment gives the employer no exclusive rights to an employee's invention, quoting the Corpus Juris Secundum summary of the rule with approval and citing United States v. Dubilier Condenser Corp., and it construed SDCL § 60-2-10 consistently with that default.
Dier is the anchor. Taxpayers claimed the county owned royalties from software its highway superintendent had developed at home with his wife, invoking § 60-2-10. The court rejected the claim, describing the common-law rules as best summarized in a treatise passage it quoted with approval — treatise text adopted by the court, not the court's own sentence .
The holding is fact-bounded, and the boundary matters. The court expressly rested on the absence of significant employer resources .
Open statutory question: whether § 60-2-10 vests outright employer ownership — beyond a common-law shop right — in an invention made on employer time with significant employer resources remains unadjudicated, because Dier resolved only the own-time, no-resources scenario . Dier is also a public-employee, taxpayer-suit case, though § 60-2-10 speaks to employment generally and the court's adoption of the common-law rule is not limited to public employers .
The federal baseline runs in the same direction. Under Stanford v. Roche, rights in an invention belong to the person who conceived it, so an employer's title is derivative of an assignment .
The principal common-law exception is the employee hired to invent. Under United States v. Dubilier Condenser Corp. — the case Dier itself cites — an employee engaged to make a particular invention who succeeds during the term of service must assign the resulting patent to the employer .
Two closing calibrations. First, no South Dakota decision found in our review adopts the shop-right or hired-to-invent doctrines by name; Dier gestures at that framework through Dubilier, so treat the doctrines as the federal and general common-law backdrop rather than as settled South Dakota holdings. Second, because ownership starts with the inventor and § 60-2-10 cannot be counted on to transfer invention title by itself after Dier, the dependable path for a South Dakota employer is a written present-assignment clause that transfers title on conception, rather than reliance on the statute or on a future promise to assign .
Sources for this answer
Case law · 1994-05-11
C.1 Rural Pennington County Tax Ass'n v. DierRural Pennington County Tax Ass'n v. Dier adopts the common-law default for South Dakota — quoting with approval the Corpus Juris Secundum summary that, absent an express or implied ownership agreement, general employment gives the employer no exclusive rights to the employee's inventions — and construes SDCL § 60-2-10 consistently with that rule, citing United States v. Dubilier Condenser Corp.
In the absence of an express or implied agreement as to the ownership of inventions of the employee, the employer from the mere fact of a general employment has no exclusive rights to the inventions of his employee, even though in order to perfect his invention the employee uses his employer’s property, or receives the assistance of others in the employer’s pay, or takes time which should have been given to his employer’s business.
See Rural Pennington County Tax Ass'n v. Dier, 515 N.W.2d 841 (S.D. 1994) (quoting 30 C.J.S. Employer-Employee § 117 (1992)).
Case law · 1994-05-11
C.3 Rural Pennington County Tax Ass'n v. DierRural Pennington County Tax Ass'n v. Dier expressly rested on the absence of significant employer resources, so whether SDCL § 60-2-10 vests outright employer ownership in a resource-heavy, employer-time invention remains an open question the case did not decide.
Nothing in the record establishes that county resources were utilized to any degree of significance.
See Rural Pennington County Tax Ass'n v. Dier, 515 N.W.2d 841 (S.D. 1994).
Case law · 2011-06-06
C.2 Bd. of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular SystemsStanford v. Roche confirms the long-standing premise of U.S. patent law that rights in an invention belong to the inventor, the baseline against which any South Dakota assignment clause or statutory default is measured.
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).
Case law · 1933-05-08
C.4 United States v. Dubilier Condenser Corp.United States v. Dubilier Condenser Corp. — cited directly in Dier — holds that an employee hired 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).
Are trailing-assignment (holdover) clauses enforceable in South Dakota?
It depends on how broad the clause is, because South Dakota's restraint-of-trade statute creates a real voidness risk. No South Dakota decision found in our review addresses a post-employment invention-assignment clause. SDCL § 53-9-8 voids contracts restraining a lawful profession, trade, or business except for the narrow exceptions in §§ 53-9-9 to 53-9-12, and none of those exceptions covers invention assignment. The likeliest analysis splits in two: a narrow holdover tethered to the employer's trade secrets would face reasonableness scrutiny under the framework of 1st American Systems, Inc. v. Rezatto, while a broad holdover that functions as a de facto noncompete risks being void outright under § 53-9-8.
Start with the statutory baseline, which is voidness, not reasonableness .
The exceptions are a closed list — sale of business goodwill, partnership dissolution, business-entity ownership transfers, the employee noncompete and customer-nonsolicit box in § 53-9-11, and captive insurance agents — and an invention holdover fits none of them. Central Monitoring Service, Inc. v. Zakinski adds the interpretive lens: the exceptions are construed strictly against restraint .
The only employment exception is a tight one. Section 53-9-11 permits an employee noncompete or customer nonsolicit capped at two years and, for the nonsolicit, tied to a specified area — so a holdover clause that operates as a restraint on working in the field would have to fit inside this box to survive as a noncompete .
The other path is Rezatto. There the court held a noncompete void for exceeding the statutory exception but treated the employee's nondisclosure covenant as divisible and enforceable if reasonable — the closest South Dakota analogue for an IP-protective covenant that is not a pure noncompete. The court adopted a three-part reasonableness test from Blake's Harvard Law Review article on employee agreements not to compete .
Rezatto also supplies the severability principle — the statute voids a contract only to the extent it restrains trade, which is why the void noncompete did not drag the nondisclosure covenant down with it .
Put plainly: a narrow, trade-secret-tethered holdover clause should expect Rezatto-style reasonableness scrutiny; a broad holdover — one sweeping in everything related to the employer's business regardless of any connection to its confidential information — functions as a de facto noncompete and risks being void under § 53-9-8 unless it fits the two-year box of § 53-9-11. Both paths are predictions from adjacent covenant law, not holdings on invention holdovers — no South Dakota invention-holdover decision was found in our review.
On rescue doctrines: Rezatto supports severing a void restraint from enforceable covenants, but no South Dakota authority found in our review reforms an overbroad assignment clause into a valid one, and the strict construction of the exceptions points toward severance rather than judicial rewriting.
Sources for this answer
Primary law
D.1 SDCL § 53-9-8 — Contracts in restraint of trade voidSDCL § 53-9-8 supports the rule that South Dakota's baseline for restraints of trade is voidness — any contract restraining a lawful profession, trade, or business is void to that extent unless it fits one of the closed statutory exceptions in §§ 53-9-9 to 53-9-12, none of which covers invention assignment.
Any contract restraining exercise of a lawful profession, trade, or business is void to that extent, except as provided by §§ 53-9-9 to 53-9-12, inclusive.
See SDCL § 53-9-8.
Primary law
D.4 SDCL § 53-9-11 — Employment contract competition limitationSDCL § 53-9-11 supports the rule that South Dakota's only employment exception to the voidness baseline is a noncompete or customer nonsolicit capped at two years from termination — the box a holdover clause operating as a restraint on working in the field would have to fit.
Except as otherwise provided in § 53-9-11.2, an employee may agree with an employer at the time of employment or at any time during employment not to engage directly or indirectly in the same business or profession as that of the employer for any period not exceeding two years from the date of termination of the agreement and not to solicit existing customers of the employer within a specified county, first- or second-class municipality, or other specified area for any period not exceeding two years from the date of termination of the agreement, if the employer continues to carry on a like business therein.
See SDCL § 53-9-11.
Case law · 1981-10-14
D.2 1st American Systems, Inc. v. Rezatto1st American Systems, Inc. v. Rezatto supports the reasonableness path for IP-protective covenants that are not pure noncompetes — the court enforced a nondisclosure covenant severed from a void noncompete, adopting a three-part reasonableness test from Blake's Harvard Law Review article.
[A] covenant is reasonable only if it (1) is no greater than required for the protection of the employer, (2) does not impose undue hardship on the employee and (3) is not injurious to the public.
See 1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51 (S.D. 1981) (quoting Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625 (1960)).
Case law · 1981-10-14
D.5 1st American Systems, Inc. v. Rezatto1st American Systems, Inc. v. Rezatto supports severability — SDCL 53-9-8 voids a contract only to the extent it restrains trade, so a void noncompete does not drag down a divisible, reasonable IP-protective covenant.
Finally, SDCL 53-9-8 provides that the contract is void only to the extent that it is a restraint of trade.
See 1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51 (S.D. 1981).
Case law · 1996-09-04
D.3 Central Monitoring Service, Inc. v. ZakinskiCentral Monitoring Service, Inc. v. Zakinski supports strict construction of the § 53-9-8 exceptions — they must be read narrowly to promote the prohibition on restraints of trade, the lens a court would bring to any argument that a holdover clause slips past the statute.
Such exceptions must be construed narrowly so as to promote the prohibition against contracts in restraint of trade.
See Central Monitoring Service, Inc. v. Zakinski, 1996 SD 116, 553 N.W.2d 513.
Primary law
D.6 SDCL § 53-9-8 — Contracts in restraint of trade voidSDCL § 53-9-8 supports the drafting risk that a broad holdover clause operating as a de facto noncompete is void to that extent unless it fits a closed statutory exception, none of which covers invention assignment.
Any contract restraining exercise of a lawful profession, trade, or business is void to that extent, except as provided by §§ 53-9-9 to 53-9-12, inclusive.
See SDCL § 53-9-8.
Case law · 1981-10-14
D.7 1st American Systems, Inc. v. Rezatto1st American Systems, Inc. v. Rezatto supports drafting a holdover clause to survive reasonableness review — no greater than required to protect the employer, no undue hardship on the employee, and not injurious to the public — the test the court adopted from Blake's Harvard Law Review article for a covenant severed from a void noncompete.
[A] covenant is reasonable only if it (1) is no greater than required for the protection of the employer, (2) does not impose undue hardship on the employee and (3) is not injurious to the public.
See 1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51 (S.D. 1981) (quoting Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625 (1960)).
Case law · 1996-09-04
D.8 Central Monitoring Service, Inc. v. ZakinskiCentral Monitoring Service, Inc. v. Zakinski supports the drafting expectation that a South Dakota court will construe the § 53-9-8 exceptions narrowly, so an overbroad holdover is more likely to be severed or voided than saved by a generous reading of the exceptions.
Such exceptions must be construed narrowly so as to promote the prohibition against contracts in restraint of trade.
See Central Monitoring Service, Inc. v. Zakinski, 1996 SD 116, 553 N.W.2d 513.
Because SDCL § 53-9-8 makes voidness — not reasonableness — the baseline for restraints, and the South Dakota Supreme Court construes the statutory exceptions narrowly, draft any trailing-assignment clause to the minimum the employer's confidential information actually requires. Tether the clause to inventions derived from the employer's trade secrets or confidential information, keep the trailing period short, and avoid sweep that reaches everything related to the employer's business — a clause that restrains the former employee's ability to work in the field functions as a de facto noncompete and risks falling entirely rather than being trimmed. A narrow clause, by contrast, positions the employer to argue the covenant is no greater than required for its protection, imposes no undue hardship, and does not injure the public — the three-part reasonableness showing South Dakota law demands of an IP-protective covenant severed from any void restraint .