M4D3

Horton worked for the Wing Nut Company for two years. During working hours Horton used Wing Nut Company's equipment to develop an idea that Horton had been thinking about for five years. Finally, Horton invented a better wing nut.

Wing Nut Company laid claim to the invention on the grounds that the company's equipment had been used, on and the invention was made during company time. Horton obtained a patent on the invention and claimed that his employer had no rights to the invention at all.

Who is right and why? How could the argument have been prevented in the first place?