Ytdyklly

I find it interesting that your company has devalued patents significantly, and then seemed surprised when some of your engineers have decided it's not worth their time.

You talk about trust, but it's evident that the engineer does not trust you, as he opted to lie about forgetting, rather than saying "No thank you. I do not wish to share this work.".

I wonder, did he say "no", and was he forced into saying he forgot because he was threatened either explicitly or implicitly by you or the company?

The very fact you have IT going through everything he has touched at work, presumably for a scrap of proof that will allow you to force him to produce work that he did in his free time suggests to me that he is right to lie, play stupid, and refuse your advances.

The business has made a decision to significantly reduce the benefit for patents. They would have factored in scenarios such as this, as the cost of doing business. There is a chance that you'll lose not just a stream of patents, but engineers. Probably starting with your best ones.

It sounds like you've committed to lose him. Because you wouldn't be treating him like this if you wanted to keep him. Clearly you've put a significant value on some of his work, at the expense all all future work of his, and you'll get neither.

I'd just chalk this off as a learning exercise for the company.

30 patents in two years is roughly $75k a year that's been changed to $15k. So he's been given a $60k a year in pay reduction.

So, yeah, he's probably going to quit and go work for someone else. Further everyone is acting like that's the case. The company's relationship with him is broken, it can't be fixed.

How can I resolve this?

In terms of getting the current code, which he developed on his own time and not on company computers or using company resources:

Wait until he quits, then offer to hire him as a consultant to develop the code you know darn well he has. Let's make some WAGs here. 1000 hours to make this code at $250/hour. So if it's worth $250k to you, offer him that and wait a few months for him to do it so everyone can say with a straight face that he developed it while not under that clause which says the company owns everything in his head while he works for you.

This engineer has filed over 30 successful patents over the past 2 years, and all of these inventions are used in our products.

This was indication enough for your senior management to not to call of the patent encouragement program. The management was somehow unwise enough to change that and put a new policy in place which reduces the benefits of investing time and effort in getting the work done. So, it's no surprise that the people who were "inspired" by the previous program are not interested in continuing with your organization anymore.

His employment agreement states that any and all intellectual property he generates while employed with us, even during weekends/free-time, is the property of the company. IT has searched his OneDrive, laptop, etc., and we can't find a single shred of code/documentation on these ideas.

I don't know why some organization choose to under-estimate the capability of their workforce!! If you believe on that person to be smart enough to deliver the results you described, do you believe he will be fool enough to carry around the pieces of evidence in case he does not want to reveal something? This incident might have just made him more determined to leave the organization, for good.

The situation is tough: the only way this ends with a positive outcome for you and your organization is, ensure the engineer gets treated with the "respect" they deserve. If you think he (and his ideas) is as valuable as you describe, talk to your higher management, and create an exception. Make the old rule part of his contract (as an exception) and mention that now and in future also, he would get benefits as he was getting before the introduction of the change.

Also, ensure that you do not pressurize him to reveal this particular patent. As you mentioned, he might already has a concern of the legal liabilities. If you can make him comfortable enough, in time, he will come out with patent ideas which will help your organization, but allow him the time he needs to "regain" the confidence.

To add a touch of reality: After trying all these damage control and more, if he choose to stay, I'd consider you and your organization incredibly lucky. He added value to your organization, and he was paid off by change in policy which basically invalidates all his effort and talent. Try hard to retain him, but don't get your hopes high.

TL;DR Do not give him the feeling that any of the actions you take to try to retain him is a one-off activity. Show him that the company values him and his contribution, and he is safeguarded against any possible de-valuation of his efforts / contribution. His interests will be taken care of this time and in future, also.

Your best alternative really sounds like it is for you to walk away; You are throwing good time after bad trying to entice/squeeze your employee for the new patent. Giving it to you now is an admission that he was lying and opens up his legal exposure.

His employment agreement states that any and all intellectual property he generates while employed with us, even during weekends/free-time, is the property of the company.

Invention-rights assignments for off-hours are unenforceable depending on the state. (See, for example, https://law.justia.com/codes/california/2005/lab/2870-2872.html) It really is a signal that your company has a fairly predatory legal culture, or at least an outdated one.

This is a negotiation. Your senior engineer was doing this work in his spare time in exchange for financial compensation. Your company suddenly changed the price they were willing to pay. Your senior is Not offering the product at that price.

Any attempt to compel him to provide the patents will likely cause him to dig in his heels and also find work elsewhere.

You are raving up and down throughout your entire post about how awesome he is. Find a way to get him his money. He is clearly worth it. Upper management may not be happy with his current stance. It sounds like they are digging in their heels. Negotiation will partly need to be with them. You will need to convince them that smoothing things over with him and his ego are worth it (that's assuming it is, not every brilliant worker is worth the entitlement that pursues them.)

As for him balking at the offer at the previous price, you need to find a way to smooth things over. To assure him that things will be better. Probably now and moving forward. His ego is probably a little (understandably) bruised. So factor that into your attempts to smooth things over. After all the company just drastically devalued the work he was doing. It had to feel like a slap in the face and the wallet. It may also take getting legal reassurances from a lawyer to mitigate his concern for legal liabilities.

(If the promotion with the move is unappealing to him then take it off the table. It has no negotiable value.)

You solve it by figuring out how to offer this stellar engineer a very large sum of money in terms of a salary to stay on board. If he earned $110k on patents through your company patent program then this guy knows what he is talking about and basically needs to be paid tenure. You then grin and bear it with his recent memory loss.

Reading through your description of the situation, it is quite obvious that you are a junior manager who is out of his depth.

Your real problem is not the engineer.
Your real problem is that you failed as a manager.

You failed:
1. the people who you are supposed to manage (you certainly are not a leader, despite the inflation in the terminology today - leader vs. manager) and protect from arbitrarily detrimental decisions of highly placed bean counters
2. the company - as a manager in the company, you are supposed to act in company's best interests and fight against decisions that are detrimental to the company (as the devaluation of patents obviously is, not because of the value of patents, they have little to none, except in very specific legal situations, but because that policy will cause the best and brightest to leave)
3. the engineer in question - who is obviously significantly smarter than you are and you do not deserve to be managing someone like him. For his sake, and yours, I hope he sticks to his guns and does not recall any element of that technology he forgot. Your inaction and bad decision making cut his career in your company from underneath him

Clearly you are not aware of these obligations because noone ever explained them to you.

At this point all you do is desperately try to save your own next performance review as a manager.

As to the issue of patents in general - being a fairly prolific patent author myself and serving on various patent review/approval committees, I can claim with confidence that the vast majority of patents are not worth the electronic bits that comprise their description. The vast majority of them are neither novel nor enforceable. The only entities who benefit from patents are the large incorporated entities fighting each other in court for business mistakes that one side made and has no real way of repairing (e.g. Qualcomm vs. Apple cases). The real competitors certainly do not respect or care about any of these patents (e.g. China vs. US).

I think he's worried that by agreeing to such a deal, he's opening himself up to legal liability (it would involve indirectly admitting he was being dicey/dishonest about "not knowing what I'm talking about").

If he is concerned about liability, then why don't you offer him a release or waiver of liability? A lawyer should be able to help you with this.

He makes the bux. You pass the buck. Looking here for a solution to save your job (or at least look good so you can get a promotion)? Offer to take a pay cut. Or better yet tell senior management to take a pay cut to get the funds to pay this guy. Senior Management is an overpaid cancer. Wait till you find out how expensive it is to do 'design by committee'.

How about talking with him off company property and suggest that you both quit your obviously rotten company and start a competitor?