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What is Intellectual Property Assignment?
Intellectual property assignment is a process in which the ownership of a work product created for an entity by an employee or consultant is transferred to the entity.
Typically, an employee or consultant will sign an agreement that explicitly assigns any intellectual property created during service with the company. For the employee, this is called either a Confidentiality and Inventions Assignment Agreement (CIIAA) or Proprietary Information and Inventions Assignment Agreement (PIIAA).
4 Types of Intellectual Property
You should consider 4 of the main kinds of valuable assets under an intellectual property assignment:
- A trademark
- A copyright
- Trade secrets
These are all considered valuable assets of a company, and knowing how they work and how they’re created can help protect them.
Here is an article to learn more about intellectual property.
A patent is granted by the government and gives the owner of the patent unlimited ability to build, sell or use their invention while at the same time preventing others from doing so.
Typically, patents issued have a 20-year life span, but some expire in 14. After this period, anyone else can copy, build, or sell the invention. Any attempt to circumvent this time allowance would result in a patent infringement .
To receive exclusive rights to build, sell or use your invention, you have to provide details about your invention that would allow someone who is “practiced in the arts” to recreate it. Also, there are four requirements for a patent to be issued:
- The subject matter must be “patentable” (as defined by Congress and the courts).
- Your idea must be “new.”
- The idea must be “useful.”
- Your idea must be “non-obvious.”
Additionally, you can file for three different types of patents:
- Utility Patent : Utility patents are granted for inventions or discoveries of useful processes, machines, articles manufactured, the composition of matter, or any new and useful improvements to the above.
- Design Patent : Design patents are granted for any new, original, or ornamental design. This type is valid for 14 years after it is issued.
- Plant Patent : Plant patents are granted to persons who invent, discover, and reproduce any distinct or new variety of plant, asexually. This type is valid for 20 years after it is issued.
Here is an article to learn more about patents.
A trademark is any word, phrase, symbol, design, or combination that identifies goods or services. The term “trademark” is used for both trademarks and service marks. Still, a service mark is reserved for those services related to the company.
Owning a trademark doesn’t automatically mean you own the words or the phrasing, but rather that you own the rights to how to use that word or phrase concerning specific goods or services. A great example is an online store that tries to use the Nike swoosh mark for their own t-shirts or shoes. This is trademark infringement .
To obtain trademark protection, you must first choose the specific category of goods or services the trademark will cover. This also means the company looking to obtain the trademark must already produce the category of goods/services to be trademarked or have a demonstrative or good faith intent to provide them.
Here is an article to learn more about trademarks.
Copyright infringement is probably one of the most well-known areas of IP protection. Copyrights are obtained to protect original authored works such as:
- Audio recordings
- Computer programs
- Architectural works
Things like titles, names, short phrases, slogans, familiar symbols or designs, lettering, coloring, or a list of ingredients or contents, are not considered creative . Still, they are also included as items that can be copyrighted. In general, copyrights can protect the way you convey a message or expression, but not ideas, procedures, systems, concepts, processes, and discoveries.
Companies can have a record of ownership over copyrights, as the law allows for ownership through “ works made for hire ” or works created by an employee within the scope of their employment.
Here is an article to learn more about copyrights.
Businesses have a wide range of confidential information, but not everything is considered a trade secret. Typically, a trade secret refers to information that is not publicly known and involves a reasonable effort to keep it confidential.
It also has to offer some form of economic value to the information holder that would only be beneficial if the information was not known by anyone else. States and even countries have varying laws regarding trade secrets. An excellent way to consider what constitutes trade secrets is to consider what information you wouldn’t want your competitors to get ahold of.
Think about pricing information, marketing strategy, or specific processes used to manufacture your goods.
Here is an article to learn more about trade secrets.
Image via Pexels by Andrea Piacquadio
Does IP Assignment Need Consideration?
An enforceable and valid intellectual property assignment needs to have a valid contract. A contract requires:
- Acceptance of the offer
- Proper consideration
Now, what is considered valid consideration could vary. Still, generally consideration “must be ‘bargained for’ and not "illusory’” (Restatement (Second) of Contracts, § 77).
In some cases, small monetary considerations, as well as non-monetary considerations, are enough to create a binding contract, as long as there is an exchange of value between parties.
What is an Intellectual Property Assignment Agreement?
The intellectual property assignment agreement is the document that binds everything together. Companies traditionally use IP agreements to protect their inventions. However, in this arrangement, they are still free to transfer ownership of IP on a case-by-case basis.
It is sometimes called an IP transfer agreement. It ensures that if an employee helps to develop an intangible creation while employed with the company, the company still owns the rights and responsibilities to the creation.
An IP Property Assignment Agreement usually includes the following sections:
- Definition of Intellectual Property
- Future Intellectual Property Assignment
- Representations and Warranties
- Assumption of Liabilities
- Termination; Survival of Certain Provisions
- Governing Law and Venue
- Entire Agreement; Counterparts
Who Uses an Intellectual Property Assignment Agreement?
Any entity or person can use an intellectual property assignment to protect their original inventions. Still, they can safely transfer ownership of IP when needed.
Example of an Intellectual Property Assignment
Some examples of intellectual property assignments include:
- A New Software Company: A software company working on brand-new proprietary software may assign a technology assignment agreement. This type of assignment protects startup companies before they create the company. The developers may keep certain IP rights in some cases.
- An Existing Manufacturing Company: An existing company involved in manufacturing technology could institute an Invention Assignment agreement for their employees to sign. This gives the company ownership over any relevant intellectual property created by the signing employees.
- New Sub-Contracted Employees: Newly contracted employees could be hired by a company to conduct research or work on new product development. In these roles, a company may ask that they sign an IP Assignment Agreement that assigns back to the company any ideas, work, a product of work, or inventions related to the business created during employment.
Intellectual property assignments are not for the faint of heart. Oftentimes these are multi-layered and complex arrangements that require careful negotiation.
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Meet some of our Intellectual Property Assignment Lawyers
I am an attorney admitted in NY, with over 6 years of experience drafting, reviewing and negotiating a wide array of contracts and agreements. I have experience in Sports and Entertainment, Real Estate, Healthcare, Estate Planning and with Startup Companies. I am confident I can assist you with all of your legal needs.
Rishma D. Eckert, Esq. is a business law attorney who primarily represents domestic and international companies and entrepreneurs. A native of both Belize and Guyana, she remains engaged with the Caribbean community in South Florida: as a Board Member and General Counsel for the Belize American Chamber of Commerce of Florida, and Member of the Guyanese American Chamber of Commerce. She holds a Bachelor of Laws degree (LL.B.) from the University of Guyana in South America, a Master’s degree in International and Comparative Law (LL.M.) from Stetson University College of Law in Gulfport, Florida, and earned a Juris Doctor degree (J.D.) from St. Thomas University School of Law in Miami, Florida. Licensed to practice in the State of Florida and the Federal Court in the Southern District of Florida, Mrs. Eckert focuses her passion and practice on domestic and international corporate structuring and incorporation, corporate governance, contract negotiation and drafting, and trademark and copyright registrations.
Founder and Managing partner of Emerald Law, PLLC, a business law firm specializing in contract drafting and corporate transactions. Kiel worked as in house counsel for a variety of companies before launching his own firm, and most recently served as the Chief Legal Officer for an international private equity firm.
Skilled in the details of complex corporate transactions, I have 15 years experience working with entrepreneurs and businesses to plan and grow for the future. Clients trust me because of the practical guided advice I provide. No deal is too small or complex for me to handle.
Experienced attorney and tax analyst with a history of working in the government and private industry. Skilled in Public Speaking, Contract Law, Corporate Governance, and Contract Negotiation. Strong professional graduate from Penn State Law.
Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.
Mark A. Addington focuses his practice primarily on employment litigation, including contractual disputes, restrictive covenants (such as non-competition, non-solicitation, or confidential information restrictions), defense of wage and hour, harassment, retaliatory discharge, disability, age, religion, race, and sex discrimination.
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The ABCs of CIIAAs: Protecting Employee-Generated IP
intellectual property , hiring , employees , US
Companies seeking to avoid employment disputes and to secure intellectual property rights to their employees’ inventions should make sure that all employees have signed confidentiality and inventions assignment agreements . These agreements are often referred to as Confidential Information and Inventions Assignment Agreements , or “ CIIAAs ” (sometimes also known as Proprietary Information and Inventions Assignment Agreements , or “ PIIAAs ”). You can generate your own agreement via Cooley GO Docs: Form of Employee Confidential Information and Inventions Assignment Agreement
Strong CIIAAs should include the following provisions:
Definitions of Confidential Information and IP Rights
CIIAAs should address fundamental questions such as: (1) What type of confidential information, inventions and intellectual property does the agreement cover, and (2) What are the employee’s obligations and the employer’s rights with respect to such information and IP ? Ideally, you should tailor the definition of “confidential” or “proprietary” information to your particular industry—what is confidential information is likely to differ between, say, software companies and life sciences companies. At a very general level, confidential information should include all confidential knowledge, data, and information of your company. Inventions should include all ideas, concepts, materials, processes, data, programs, designs, and copyrightable works, including all intellectual property rights in such inventions, and intellectual property rights include the patents, copyrights, trademarks, trade secrets, mask works and other rights recognized by the laws of any state or country.
Confidentiality provisions serve as a cornerstone of a good CIIAA . A CIIAA should require employees to hold the company’s confidential information in the strictest confidence and forbid them from using or disclosing that information.
Assigning IP: The Magic Words
To properly protect yourself, your company must ensure that the CIIAA includes an assignment from the employee to the company of any right, title, or interest in the company’s inventions and IP. The provision should cover inventions created by the employee during his or her employment with the company. Note that in some states, such as California, an employer cannot require an employee to assign all inventions created during his or her employment. As a result, in California, the CIIAA should require assignment of those inventions that the employee generates using any of the company’s time or resources, or that fall within the company’s business or research and development. The key language—i.e., the “magic words”—that we want to see in every CIIAA is the actual assignment by the employee of his or her IP rights to the company, coupled with an agreement to assign in the future (when any such inventions are made, conceived or reduced to practice). For example, “ I hereby assign, and agree to assign in the future (when any such inventions or intellectual property rights are first reduced to practice or fixed in a tangible medium, as applicable), to ABC Corp. all my right, title, and interest in any inventions made, conceived, reduced to practice, or learned by me, alone or with others. ”
Most CIIAAs contain a “carve-out” provision by which employees list all of their prior inventions (before starting work with your company) that they intend to specifically exclude from their assignment of IP to the company. You should take a close look—and engage IP counsel as necessary—at what a prospective employee intends to carve out as prior inventions to make sure that there is no overlap between those prior inventions and the type of IP your company is aiming to produce. You can be sure that prospective investors, acquirers, and the like will be doing the same. In addition, your CIIAA should grant your company a broad license to any prior inventions that the employee uses in any company machine, process or other work.
All employees should agree to refrain from certain activities that could put your company at a competitive disadvantage in the marketplace. Specifically, they should agree, during the term of employment and for some reasonable period of time thereafter, not to solicit or encourage any of your employees to leave their employment with your company; hire or engage your employees; or solicit your customers or prospective customers. You want to protect against former employees using contacts or confidential information they acquired while working for your company to steal your business or goodwill. Note, an agreement to “not hire” an employee may not be enforceable in all states (as opposed to agreeing to “not solicit” an employee).
CIIAAs should also prevent employees from engaging in business activities that compete with your company. At a bare minimum, this prohibition should last through the entire term of the employee’s relationship with the company. In some instances, you will want the non-compete to extend for a year or more past the employee’s time with the company (going far beyond a year may backfire, because unreasonable durations may be held unenforceable in court). Beware that covenants not to compete are not enforceable everywhere—for example, they are not enforceable in California except in very narrowly defined circumstances. State law governs these agreements, and states view non-competes in different ways. Accordingly, you should consult with employment counsel to make sure you use the appropriate agreement for each of your employees.
Tailoring and Enforcing CIIAAs
Many emerging companies ask how much to vary their CIIAAs, depending on the incoming employee’s role. For example, a non-compete is likely more important for a CTO than a new secretary. One approach is to use two different forms—one for use with high level employees, engineers, software developers and other employees who are hired to design or create the company’s products and technologies and another form for use with lower level employees and employees who provide general administrative services. Most companies, however, have all employees sign the same form. Bear in mind that you should use different versions of your form agreements which have been vetted by local counsel for use with employees in different states and consult with counsel to determine the optimal approach for tailoring and enforcing CIIAAs to best suit your company’s needs. Best practice, however, is that once you have developed your form CIIAA, you do not negotiate that form with each individual employee.
Last reviewed: January 21, 2015
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Intellectual property assignment: What it is and how to make one by Siege Media, contributor to LegalZoom
Intellectual property assignment: What it is and how to make one
What would you like to protect?
by Siege Media, contributor to LegalZoom updated January 09, 2023 · 9 min read
Just as with buying and selling physical property, transferring the ownership of intellectual property is an important part of doing business. Whether you're starting a new business, buying product rights, or purchasing a company, an intellectual property assignment can help you smoothly transfer IP ownership rights.
What is an intellectual property assignment?
An intellectual property assignment is the transfer of an owner's rights in copyrights, trademarks, patents, trade secrets , or other intangible creations. These transfers may take place on their own or as part of a larger transaction.
An intellectual property assignment provides records of ownership and transfer while also protecting the rights of all parties involved in buying or selling IP. This essential documentation helps establish a clear record of the title for intellectual property.
By having an intellectual property assignment in place, you can help keep your intellectual property safe from illegal use, distribution, and more.
What should an intellectual property assignment include?
An intellectual property assignment includes important details about the transfer of intellectual property and the parties involved. The contents of an IP assignment can be laid out in 17 different sections.
In the intellectual property assignment, you will find:
- Who is involved in the transfer
- What IP is being transferred
- How much the IP costs
- Why the transfer is valid
When done correctly, an intellectual property assignment provides a written acknowledgment of the rights and responsibilities transferred in the sale.
IP assignment pros and cons
Intellectual property assignments have many advantages, but before transferring your IP in this way, it's important to consider the limitations of IP assignments as well.
Pro: Guaranteed payment at the price negotiated
If a seller decides to give up the ownership rights of their intellectual property using an IP assignment, they can be sure that they will receive the exact compensation stated in the agreement. An IP assignment agreement will also state a strict payment deadline for the buyer, ensuring that the seller is paid by the agreed-upon date.
Pro: No lingering responsibilities
Once an IP assignment agreement goes into effect after being signed by both parties, the seller may no longer have any responsibilities related to the intellectual property involved in the sale. Because of this, the seller can remove themselves from being responsible for any future obligations related to the intellectual property once the agreement has been signed.
Con: One-time payment
Unlike with an IP licensing agreement, the use of an IP assignment transfers all ownership rights of the sellers' intellectual property for a set price. If a seller uses an IP licensing agreement, they will still retain ownership rights, which allows them to control how their intellectual property is used while still receiving income via fees and/or royalties (think renting vs. selling).
Con: Loss of ownership rights
Using an IP assignment agreement, sellers surrender all ownership rights to the intellectual property and no longer have any say over how the IP is used. This gives the buyer complete control and ownership rights of the intellectual property involved.
How to complete an intellectual property assignment
IP assignments aren't inherently complicated, but it's important to include the right information. The following is how an IP assignment agreement can be crafted. Learn about each section in more detail.
1. Introduction of parties
This section identifies the document as an intellectual property assignment. It should include:
- Each of the parties involved
- The date the document will be signed
Each party is given a name (usually “Assignor" or something similar) that will be used throughout the entire document. The assignor is the party giving up its ownership interest and the assignee is the party receiving it.
Recitals offer up key background information about the parties involved. This section is known as the whereas clause because it explains the intent to transfer intellectual property rights.
3. Assignment of intellectual property
This section covers the agreement and acceptance of the intellectual property assignment. It's important to note that the intellectual property is not described in the agreement itself but in the addendum Exhibit A, which is referenced throughout the assignment.
This section should cover:
- The amount to be paid for the intellectual property
- The time period in which the payment must be made
The payment's due date and price are only enforceable after both parties have signed the agreement.
5. Assignor's representations and warranties
Here is where you will find the assignor's promises about the property that is being sold. There are often at least seven subsections, each addressing a specific promise made by the assignor.
The assignor swears that:
- They are the owner of the IP.
- They have not sold the IP to any third party.
- They have the authority to enter the agreement.
- They have no knowledge that the IP has been plagiarized or taken from any third party without authorization.
- They do not know of any permissions that must be obtained to complete the IP assignment.
- If the IP involved includes a patent , they are unaware of any existing challenges to the validity of the patent. If the IP doesn't include a patent, patent application , or other patent-related materials, you can delete this provision from the representations and warranties.
- The property was not created while the creator was working on behalf of a third party.
If either party would like to include additional promises and warranties, they may do so here.
6. Assignee's representations and warranties
Here is where you will find the assignee's promises about the transaction.
The assignee swears that:
- They have enough funds to pay for the assignment.
If any additional representations or warranties are required, they may be added here.
This section states the assignor's promise to help with any paperwork needed to complete the assignment. Typical documentation can include:
- Filing information about the assignment with a registry office
- The transfer of document titles
If applicable, the assignor may also promise to help with transfer paperwork for filings outside of the country. This information is only needed if it is relevant to your agreement.
Protecting intellectual property is crucial to IP ownership. This section includes each party's future obligations if the intellectual property is found to infringe on a third party's rights.
There are two options provided, and you should choose whichever one works best for your situation.
- The assignor takes all responsibility for the infringement, agreeing to pay all related expenses and costs.
- The assignor makes its responsibilities conditional, greatly limiting their obligations if a claim is brought.
The assignor can't make both promises at once, so only one of these promises should be included in the final agreement.
9. Successors and assigns
If applicable, you may list a successor organization. In the event that a successor is involved, this section will state:
- Who will inherit the IP ownership rights
- Who will be responsible for any ongoing obligations
This section will also state any organizations to which rights and obligations have been permissibly assigned.
10. No implied waiver
In the agreement, one party may allow the other to break an existing commitment in the assignment—for example, if the assignor allows the assignee to make a late payment without penalty.
An attempt to waive a previously agreed-upon commitment is only valid if:
- The waiver is in writing
- The waiver has been signed by the waiving party
If one party allows the other to break a commitment, it does not mean that any other existing commitments are also invalidated.
Here you will list the addresses to which all official and legal correspondence should be delivered.
You will also need to list the mailing address for:
- The assignor
- The assignee
For any digital correspondence, the parties involved may include their email addresses.
12. Governing law
This section grants the parties the option to choose the state laws that will interpret the document. Note that the included language will not affect where a potential claim can be brought.
13. Counterparts and electronic signatures
Both parties may agree to sign the agreement using electronic signatures .
This section allows the agreement to stay valid, even if a part of it is invalidated in the future. For example, if a state law is passed that affects a section of your agreement, only that section will be invalidated.
This will leave the rest of your agreement intact and enforceable.
15. Entire agreement
This section of the document states that the document each party is signing is:
- The official agreement
- Directly related to the issues and IP involved
Even though a party could argue in the future that other enforceable promises may exist, this will provide some protection from those claims.
Here you will find that the headings at the beginning of each section are for organization and should not be interpreted as operational parts of the agreement.
17. Description of intellectual property
Referenced in Section 1, Exhibit A provides a detailed description of all intellectual property involved in the sale. If the description is too vague, the seller may end up giving up more than they intended or vice versa. When completing this section, be sure to be as specific and detailed as possible.
In addition to a detailed description of the intellectual property, note the goodwill that is being sold with the property. Goodwill is the intangible value of the property being sold, often including:
- Reputation with customers
- Relationship with the community
- Brand value that's not tied to a trademark
Don't worry about making the descriptions sound lawyerly—simple, succinct, and complete descriptions should suffice. Attach any relevant registrations or samples (for example, “*See attached drawing").
Intellectual property assignment FAQ
Consider these common questions and answers when completing an intellectual property assignment.
What's the difference between an intellectual property assignment and a license?
The use of a license allows the licensor to maintain ownership of the intellectual property rights. When using an intellectual property assignment, the assignor is giving up all of their ownership rights to the assignee.
It is always a good idea to have someone witness the assignor and assignee signing and dating the document.
What's the difference between an intellectual property assignment and a lease?
When obtaining the use of intellectual property using a lease, the assignee does not receive any ownership rights. Because of this, the assignor retains all ownership and control of the intellectual property and can dictate how it is used. Depending on the specifics of the lease, the assignor may be compensated via royalties and/or fees.
What is a quitclaim assignment?
A quitclaim assignment is an agreement that transfers all of the seller's rights to the intellectual property without any guarantees that the seller has the right to do so. If a third party is to claim ownership of the intellectual property down the road, the buyer will be on their own to defend the claim.
Do copyright assignments need to be notarized?
While copyright assignments must be done in writing to be valid, notarization isn't required. But it is always a good idea to have someone witness the assignor and assignee signing and dating the document.
Ready to get started? Use this form to create an intellectual property assignment in minutes . If you aren't looking to give up ownership rights of your intellectual property, keep it protected .
About the Author
Siege Media, contributor to LegalZoom
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Patent Assignments in Employment Agreements – a Sometimes Overlooked, but Always Important Component
- Gregory K. Gerstenzang
November 16, 2021
By: Thomas McNulty and Peter Lando, with assistance from summer intern Tyler Gruttadauria
Businesses, of course, have a strong interest in owning intellectual property created by their employees. Intellectual property—patents, copyrights, and other confidential and proprietary information including trade secrets—is often the most valuable asset a business can own, so it is important to ensure that employee developments and inventions belong to the employer. In the United States, inventions presumptively belong to the inventor, and any transfer of ownership (“assignment”) must be in writing to be effective. Rather than requiring employees to sign assignment agreements for each patent application filing, employers sometimes rely on employment agreements and handbooks to establish ownership in intellectual property created by an employee. Employers often provide employment agreements with assignment clauses that are intended to give the employer rights in inventions made by the employee during the period of employment. These assignment clauses are often treated as mere boilerplate, yet the precise wording of these clauses can have major impacts on the effectiveness and limitations of any assignment.
Ensure that you have an Assignment and not a mere promise to assign
When drafting an agreement to have an employee assign future inventions, it is vital that the language used in an assignment clause states a present-tense, actual assignment. Phrases such as “hereby assign,” “agrees to grant and does hereby grant,” or that inventions “shall belong” to the employer and employee “hereby conveys, transfers and assigns” have been deemed by the courts to be effective to transfer ownership of a future invention without the need for any subsequent agreement. Ownership effectively transfers immediately, once the invention has been made. Assignment clauses that use future tense language, on the other hand, generally will require an additional agreement to result in a transfer of ownership of the invention, and any intellectual property (“IP”) covering the invention. Terms such as “will assign,” “agree to assign,” “will be assigned,” and the like, have been found by numerous courts to constitute nothing more than a promise or contract to assign an invention in the future, but not to serve as an actual assignment.
In addition to the wording used in the assignment clause, the language of any carve-outs should also be scrutinized. Agreements may contain a carve-out clause to exclude a new employee’s prior inventions from being assigned, or to prevent assignment of inventions unrelated to the employee’s work from being swept into the assignment provision. A broad, non-specific carve-out clause may prevent an employee agreement from automatically assigning inventions of that employee, even where the assignment clause includes the proper “hereby assign” type of language, because this leaves open the possibility that an invention is not subject to the assignment clause. This contrasting language may create an ambiguity in the employment agreement that subjects it to construction under state law, which in turn may allow for the employee to introduce extrinsic evidence, such as conversations that took place during employment negotiations, to defeat the automatic assignment. While patent assignment provisions are governed by Federal Circuit law, resolution of contractual ambiguities is governed by state law, which varies considerably regarding the admissibility of such extrinsic evidence.
Failure to obtain an automatic assignment can have negative consequences
An assignment clause that is deemed ineffective to automatically transfer ownership of an invention can create significant problems for an employer. In such circumstances, a business would not have standing to bring a patent infringement suit until it has taken the necessary steps to obtain a valid assignment. This may require the filing of a breach of contract claim against the employee to require fulfillment of the contractual obligations, including execution of assignment documents. In the interim, infringers could continue practicing the invention; and if the infringing activity has gone on long enough, the six-year statute of limitations may prohibit full recovery of damages. Further, if an inventor/employee has made only a promise to assign, and instead transfers ownership to a third party who lacks knowledge of the assignment obligation, that second transfer of ownership may well prevail, leaving the original employer with no exclusionary rights at all.
Ineffective assignment provisions can affect more than just litigation. Businesses and investors typically conduct IP due diligence when entering into transactions involving the investment in or sale of IP assets, company divisions or entire entities, and any weaknesses in assignment provisions may affect the perceived value of the IP assets and/or business being considered.
Do not count on the “Hired-to-Invent” doctrine to result in ownership of employee inventions
Some employers do not require employees to sign an agreement containing an assignment of inventions because they believe that they automatically own inventions that they paid someone to create. Under the “hired-to-invent” doctrine, this will only occasionally be correct. Employees or contractors hired (and paid) specifically to create a particular invention or to solve a particular problem may be deemed to have implicitly assigned their rights in the invention to the employer. This is a highly fact-based determination, however, and applies only to inventions created in response to the specific thing the employee was hired to do. A mere title of “researcher” or even “inventor” will not, standing alone, suffice to ensure ownership of inventions by the employer. Further, until a court has ruled one way or the other, an employer relying on this doctrine will not have any certainty in its rights to the invention. Should the court rule against the employer, it would lose the exclusionary rights it believed it possessed and may face an infringement lawsuit from the employee or anyone to whom the employee may have assigned the invention/patent rights.
Absent an effective assignment, an employer may obtain limited “shop rights” in inventions made using the employer’s time, materials, facilities or equipment. Shop rights take the form of an implied license to practice the invention, precluding the employee from obtaining damages or injunctive relief on a patented invention. Shop rights are limited, however, and do not allow the employer to prevent others from competing by practicing the invention. Further, shop rights cannot be transferred via license or assignment, effectively devaluing the IP assets and, perhaps, the company.
In addition to having the proper “hereby assign” language, employment contracts should ensure that inventions , rather than just patents or patent applications, are subject to the assignment clause. Language stating that all inventions, improvements, discoveries, and the like, whether or not patentable or copyrightable, are subject to the assignment, ensures that information that could be protected through other regimes, such as trade secrets, automatically become the property of the employer.
Intellectual property has taken on an ever-increasing role in determining the value of a business. A company’s ability to develop and protect its intellectual property is a key factor in its future success. Given this, it is important that businesses recognize that assignment provisions of employment agreements are not mere boilerplate, but instead may be one of the most important legal provisions that ultimately can impact not only an employment arrangement, but the value of the business itself.
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What is an employee intellectual property agreement
This article is written by Hannah Boban pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho .
Table of Contents
Innovative minds often come up with innovative ideas and intellectual property is a creation of such ideas in the mind. As per law, the owner of such an idea is the person which brings it into existence unless there is a contract to the contrary. Many of us think that the employer owns the intellectual property that an employee creates in the course of his employment. However, an employer assuming that all rights of the employee over such intellectual property are extinguished might be careless in his approach. The employee still owns the claim rights of an author, moral rights and rights to object to alterations to work. So, it becomes crucial to include the conditions determining the ownership of intellectual property in the contracts of employment, agreements of independent contractors or in agreements of a designer or consultant.
Hence, it becomes critical to include terms determining the ownership of intellectual property in employment contracts, independent contractor agreements or agreements with a consultant or designer. In this article, we will understand the concept of an employee’s intellectual property and what are the important clauses that should be drafted in an employee’s intellectual property agreement.
What is the meaning of “in the course of employment?”
If an employee brings any innovative ideas in the course of business or employment, the employer can claim the same if it was already mentioned in the contract and the employee also agreed to the same. But in case the intellectual property is created outside the course of the employment, an employer cannot claim the rights over it. For example, if an employee is hired in the accounting team of a designing company and if that employee designs a new pattern for a product of the company, he can be entitled to the intellectual property right in that design as he has done something outside the course of his employment, i.e. he has done something outside the terms of the employment of an accountant post. So it is necessary to have clarity on the duties of the employees to differentiate the scope of and what will constitute “in the course of employment” in the agreement agreed upon by both the parties.
Now let’s see what all should be stated in the terms of an agreement between the employer and the employee.
It should be always remembered that an agreement with an employee should not be an oral agreement, it should always be a written agreement. It will be always best if the employer gets the agreement signed by the employee before the date of commencement of the employment. Most of the companies have their own standard template of employment agreements for various kinds of jobs in the company. For example, the agreement for a designer will be different from that of a developer or a tester.
In a case where the employment agreement is not signed before the commencement of the employment due to any valid reasons, all the rights and liabilities will be affected from the date of commencement of the employment.
Terms that must be included employee intellectual property agreement
Now let’s look into the broad terms that must be included in any agreements that define intellectual property right:
- The intellectual property created by an employee or by an independent contractor or a consultant during the course of employment will be owned by the employer;
- Terms to the effect that the employee/independent contractor/consultant will sign any documents reasonably required (such as a deed of assignment) to record the employer’s ownership of the intellectual property created during his employment. This obligation should continue during and after employment. An employer should ensure that any assignment or license deals with existing rights and future rights;
- The confidentiality clause requires the employee or the consultant or the independent contractor to keep any information of the employer to be confidential and neither disclose the same nor use it in any matter outside the course of the employment;
- A clause should also be drafted for the employee or the consultant about whether they should disclose the new inventions and should a record be maintained to prove the originality of the work and the date of its creation;
- A clause where all the scope and definition of confidential information must be mentioned in the agreement. It must include the intellectual property created by the employee in the course of their employment, all the business information and any other intellectual property of the employer itself. The business information includes business plans, marketing strategies and plans, the company’s financial information, customer lists and any other details of the company necessary to be stated in the agreement.
- It must also include a term which states whether there is any waiver of moral rights by the employee during the employment over the intellectual property.
- It must be made sure that a term for restraining the former employee on the competition for a specified period of time and in a specific geographical area. It should be made sure that such restraints are reasonable.
Key points for drafting the agreement
For the best legal document it should be kept in mind to draft the agreement with the following key points:
- Any ideas, discoveries or inventions must be properly disclosed to the company by the employee if such ideas, discoveries or inventions are related to the business of the company and is during the course or period of employment.
- The company will be considered as the owner of such ideas, discoveries or inventions.
- If an employee is hired particularly for any invention, or for developing a work product, then the right on such invention or work products are the employers since it was created out of the employer’s expense and request.
Let’s look into an example: If an app developer is strictly appointed by an employer for the development of a particular app, then once the app is developed and the course of employment of the employee has come to an end, the intellectual property right belongs to the employer.
It should be also kept in mind by the employer to get the signature of the employee appointed in an intellectual property assignment agreement to avoid any future problem of the same.
- In the case of a startup company, in order to protect the important assets and to inform the investors of a startup company, which has an intellectual property which will be used as the pillar of the company for its success, the start-up must draft an intellectual property clause in its agreement which will be signed by everyone involved in the start-up which will also include the promoters, developers and the employees.
Now let’s see some of the provisions that must be included in the employee intellectual property agreement:
Provisions to be included in the employee intellectual property agreement
First of all, we should understand that there is no standard form for employee intellectual property agreement. So it must be carefully drafted and signed by the employee for its legal binding. No matter what the situation is, or where the agreement is made it should be made legally binding
Mostly the employee intellectual property agreement has at least the following three clauses in common:
1. Assignment clause
Generally speaking, an assignment clause is where the rights, duties, or contractual obligations are transferred from one party/person to another person/party. The assignment may be wholly or partly. The clause must also mention the conditions under which a party/person can assign these rights, duties or obligations.
In an employee, intellectual property agreement the assignment provision, the employee assigns to the employer his/her inventions/discoveries/ideas and also transfer the true and total ownership of the intellectual property. In this provision, it can either narrow down or broaden any inventions/ discoveries/ ideas or nearly anything the employee creates.
Example of an assignment clause in employee intellectual property agreement:
“I agree that all inventions that are (a) developed using equipment, supplies, facilities, or trade secrets of the company; or (b) result from work performed by me for the company; or (c) related to the Company’s current or anticipated research and development will be the Company’s sole and exclusive property and are hereby assigned by me to the Company.”
2. Disclosure clause
A disclosure clause in an employee intellectual property agreement is drafted in such a way that the employee informs the employer of the intellectual property that was developed as per the assignment clause. It should be noted that everything must be clearly and properly disclosed in this clause.
Example of a disclosure clause in employee intellectual property agreement:
“While I am employed by the Company, I will promptly inform the Company of the full details of all inventions, discoveries, improvements, and innovations, whether or not patentable, copyrightable, or otherwise protectable, that I conceive, complete, or reduce to practice (whether jointly or with others) and which: (a) relate to the Company’s present or prospective business, or actual or demonstrably anticipated research and development or (b) result from any work I do use any equipment, facilities, materials, trade secrets, or personnel of the Company or (c) result from or are suggested by any work that I may do for the Company.”
3. Power of attorney clause
Finally, there’s a clause where the employee appointed in the company appoints the company as an employee’s power of attorney to execute documents or take actions on behalf of them. The benefit of this clause is that the company will then have the power to sign documents or execute any other agreements on behalf of the employee to assign the intellectual property right to the business.
Usually, every company have this clause as a fairly standard one. The power of attorney provision guarantees the employer can register and administer the ownership rights without the employee, regardless of whether the employee is willing and able to assist.
Example of the power of attorney clause in employee intellectual property agreement:
“If the Company is unable to secure my signature on any document necessary to obtain or maintain any patent, copyright, trademark, or other proprietary rights, whether due to my mental or physical capacity or any other cause, I hereby irrevocably designate and appoint the Company and its duly authorized offers and agents as my agents and attorneys-in-fact to execute and file such documents and do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents, copyrights, and other proprietary rights with the same force and effect as if executed by me.”
Sample of an employee intellectual property agreement
Employee confidentiality and intellectual property assignment agreement
This EMPLOYEE CONFIDENTIALITY AND INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT (the “Agreement”) is made and entered into by and between [Company name] and [NAME] (“Employee”), as of [DATE] (the “Effective Date”).
Each of Company and Employee hereinafter may be referred to individually as a “Party” or, collectively, as the “Parties.”
In consideration of Employee’s employment with Company, the compensation Employee will earn in connection with such employment, Company providing Employee with access to Confidential Information (as defined below), and other good and valuable consideration, the sufficiency and receipt of which Employee acknowledges, Employee agrees as follows:
- Confidential Information:
i. Confidential information and trade secrets defined . Employee hereby acknowledges and understands the term “Confidential Information” means any data, information, or material of Company or its owners or its affiliates relating directly or indirectly to Company or its owners or Affiliates: clients and customers or potential clients and customers (collectively “Customer(s)”); competitors; vendors; advertisers; employees; contractors; suppliers; or business partners, that is discovered or developed by, or disclosed to, Employee through Employee’s relationship with Company, that is not generally ascertainable from public information, whether it is expressly identified as “confidential” or “trade secret,” that includes, but is not limited to: financial information; invoices; business plans; business and contract applications; contracts; forms; research; price lists; marketing materials; advertising materials and developments; sales materials and reports; copyrighted materials; Trade Secrets; the particular needs and requirements of Customers; identities of potential Customers; and all accompanying Customer data. Employee hereby acknowledges and understands the term “Trade Secret(s)” includes, but is not limited to, a confidential, proprietary, and/or sensitive: formula; software; methodology; model; architecture; pattern; compilation; program; device; method; technique; or process, that is discovered, developed in whole or part by Employee, or disclosed to Employee, through Employee’s relationship with Company, including any information, data, or material concerning the business of the Company, and all other information related to Company and its owner and Affiliates businesses, that is not generally known and readily ascertainable by proper means by any other person and/or Employee. This includes, but is not limited to, all inventions or discoveries made by Employee and/or Company (or its owners or Affiliates) resulting in whole or part from Employee’s relationship with Company. The term “Trade Secret(s)” also includes, but is not limited to, Customer lists, invoices and reports containing specifically developed information, such as the name, address, phone number, buying history and other traits of Customers, along with any other information that Company derives a competitive advantage from and that Company makes reasonable efforts to maintain a secret. For purposes of this Agreement, “Affiliates” means an individual, a partnership, a corporation, a limited liability company, an association, a joint-stock company, a trust, a joint venture, or an unincorporated organization, that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, Company.
ii. Use and restriction . Employee acknowledges that Employee will have access to and be provided with Confidential Information in connection with performing services for Company. Employee expressly recognizes that the efficacy and profitability of Company and its owners and Affiliates is dependent in part upon Employee’s protection of the Confidential Information. Employees may use the Confidential Information solely in connection with performing services for Company and its owners and Affiliates. To ensure the continued confidentiality of the Confidential Information, the Employee agrees to hold the Confidential Information in strict confidence. Employee shall not, either during Employee’s relationship with Company or for such period as such information remains Confidential Information after termination, disclose or use for Employee’s own benefit or for the benefit of any other individual or third party, directly or indirectly, any of the Confidential Information, except as such disclosure or use is expressly authorized by Company in writing. Employee hereby agrees to adhere to the method and form of protection of Confidential Information required by Company, subject to change at Company’s sole discretion. Employee shall not communicate any Confidential Information, even in furtherance of Company’s business, to any individual or third party not privy to the Confidential Information, without express consent by Company and the individual or third party’s agreement to be bound by confidentiality terms that adequately protect Company’s Confidential Information.
iii. Exceptions . The confidentiality and restriction on the use of Confidential Information under this Agreement shall not apply to Confidential Information to the extent that such Confidential Information: is now, or hereafter becomes, through no breach of this Agreement by Employee, generally known or available to the public; was known to Employee without an obligation to hold it in confidence prior to the time such Confidential Information was disclosed to Employee by Company; is disclosed or used, as applicable, with the prior written consent of Company and in accordance with any limitations or conditions on such disclosure or use that may be imposed in such written consent; or was or is independently developed by Employee without any use of or reference to the Confidential Information. In addition, notwithstanding any other language in this Agreement to the contrary, Employee understands that Employee may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (a) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney if such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law or for pursuing an anti-retaliation lawsuit; or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and Employee does not disclose the trade secret except pursuant to a court order.
iv. Required disclosure . The confidentiality obligations under this Agreement shall not apply to Confidential Information to the extent that such Confidential Information is required to be disclosed pursuant to the order or requirement of a court, administrative agency, or other authority, or otherwise by operation of applicable law. In the event of such order or requirement, Employee, if and to the extent permitted by law, shall give Company written notice thereof and of the Confidential Information to be disclosed as soon as practicable prior to the disclosure of such Confidential Information and shall provide such reasonable assistance as Company may reasonably request, at Company’s sole expense, in seeking a protective order or other appropriate relief in order to protect the confidentiality of the Confidential Information.
v. Other Nondisclosure Agreements . In the event that Company is subject to the terms of any confidentiality or nondisclosure agreement relating to some or all of the Confidential Information that imposes greater restrictions on the disclosure and/or use of such Confidential Information, then Employee shall comply with such greater restrictions to the extent that Employee is made aware of them in advance and in writing.
vi. Property of Company . Employee specifically acknowledges and understands that all Confidential Information and all of Company’s and its owners and its Affiliates strategies and files, including, but not limited to, computer data, reports, materials, records, documents, notes, memoranda, and other items, and any originals or copies thereof, related to the business of Company or its owners or its Affiliates, which Employee either is provided, prepares, uses, or simply acquires during the term of this Agreement, are and shall remain the sole and exclusive property of Company and, to the extent applicable, shall not be removed from Company’s premises without the prior consent of Company.
vii. Return or Destroy Confidential Information. Employee agrees, immediately upon the termination of the relationship between Employee and Company for any reason or upon earlier request by Company to make a diligent search for any and all documents, computer discs, electronic files, software, tapes, computer printouts, or any other material constituting Confidential Information described in this Section 1, and shall: cease using the Confidential Information; promptly return to Company or destroy all Confidential Information and any copies thereof; certify in writing (if requested in writing by the Company) that Employee has complied with the obligations of this Subsection vii.
viii. Return of Company Property . Employee agrees, immediately upon the termination of the relationship between Employee and Company for any reason or upon earlier request by Company to promptly deliver to Company all Company property not covered by Subsection vii.
2. Intellectual Property
i. Prior Inventions . Any intellectual property, including, but not limited to, any ideas, inventions, patents, trademarks, service marks, copyrights, creations, know-how, work product, and other developments or improvements, if any, patented or unpatented, that Employee, alone or with others, conceived, created, invented, developed, reduced to practice, or caused to be conceived and or caused to be reduced to practice prior to the earlier of (a) commencement of Employee’s employment with Company or (b) when Employee first provided services to Company, is listed on Schedule I attached hereto (“Prior Inventions”).
ii. Pre-Existing Work . If, in the course of Employee’s relationship with Company, Employee uses, relies upon, provides, or incorporates any Prior Invention or any other intellectual property Employee owns, or in which Employee has an interest, into any idea, invention, patent, trademark, service mark, copyright, creation, know-how, work product, and other development or improvement conceived, created, invented, written, developed, furnished, produced, or disclosed in whole or in part, alone or with others, whether or not during working hours, by Employee during the term of Employee’s employment with Company, Employee hereby grants Company, under all of Employee’s intellectual property and proprietary rights, the following worldwide non-exclusive, perpetual, irrevocable, royalty free, fully paid up rights: (a) to make, use, copy, modify, create derivative works of such intellectual property; (b) to publicly perform or display, import, broadcast, transmit, distribute, license, offer to sell, and sell, rent, lease or lend copies of the intellectual property, and derivative works of the intellectual property; and (c) to sublicense the rights in this Subsection 2(iii) to third parties.
iii. Work made for hire. Any work of Employee for which copyright could be claimed developed in the course of Employee’s employment with Company will be deemed “work made for hire” under federal copyright law and all ownership rights to such work belongs exclusively to Company. To the extent any invention does not qualify as a work for hire under applicable law, and to the extent, any invention is subject to copyright, patent, trade secret, or other proprietary right protection, Employee hereby assigns, and agrees to assign, all rights therein to Company.
iv. Required undertakings . Employee agrees, both while an employee of Company and thereafter, to assist Company and its owners and Affiliates, at Company’s sole expense, in any and all attempts to obtain patents, copyrights, and/or trademarks or other intellectual property protection on any work Employee participated in developing and agrees to execute all documents necessary to obtain such rights in the name of or to transfer such rights to Company. If, because of Employee’s mental or physical incapacity or for any other reason whatsoever, after the Company’s reasonable effort to secure Employee’s signature, Company is unable to secure Employee’s signature to apply for or pursue any patents, copyrights, or other protection for any invention assigned to Company under this Agreement or otherwise, Employee irrevocably designates and appoints Company and its duly authorized officers as Employee’s agent and attorney-in-fact to act for Employee and on Employee’s behalf and stead to file any applications and to do all other lawfully permitted acts to further the prosecution and issuance of any patents, copyrights, or other protections with the same legal force and effect as if executed by Employee.
v. Limited Exclusion . This Section 2 does not apply to any inventions or intellectual property for which no equipment, supplies, facility or Confidential Information of Company was used, and which was developed entirely on Employee’s own time, and (a) which does not relate (i) directly or indirectly to the business of Company or (ii) to Company’s actual or demonstrably anticipated research or development, or (b) which does not result from any work performed by Employee for Company.
Subject to Section 5, Employee agrees that during and after Employee’s period of employment with Company Employee will not, publicly or privately, disparage or defame Company or its Affiliates, or any of Company’s or its Affiliates’ employees, officers, governors, members or agents.
4. Injunctive Relief
In the event of a breach or threatened breach of any covenant in Sections 1, 2, or 3, Employee agrees that Company will be irreparably harmed, that money damages alone cannot adequately compensate Company, and that Company shall be entitled to temporary and injunctive relief as well as all applicable remedies at law or in equity available to Company against Employee including if the Company is the prevailing party in an action to enforce the terms of this Agreement, reasonable attorneys’ fees and costs incurred in bringing any action against Employee or otherwise enforcing the terms of this Agreement. Employee further agrees that in any such action, Company shall be entitled to relief without posting any bond or security.
5. No Unlawful Restriction
Employee understands and agrees that nothing in this Agreement or otherwise is intended to or will prevent or interfere with Employee’s ability or right to (a) provide truthful testimony if under subpoena to do so, (b) file any charge with or participate in any investigation or proceeding before the U.S. Equal Employment Opportunity Commission or any other federal, state or local governmental agency, (c) engage in any conduct protected under the National Labor Relations Act, or (d) respond to a subpoena, court order or as otherwise provided by law.
i. At-will employment . Employee’s employment with Company is “at will,” which means it may be terminated at any time and for any or no reason, at the option of either Employee or Company.
ii. Assignment . All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the Parties, except that the duties and responsibilities of Employee under this Agreement are of a personal nature and shall not be assignable or delegable in whole or in part by Employee.
iii. Severability . If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.
iv. Entire agreement . This Agreement together with the Employment Agreement effective as of [DATE] sets forth the entire agreement of the Parties and supersedes any and all prior agreements and understandings concerning Employee’s employment by Company. This Agreement may be changed only by a written document signed by Employee and an authorized representative of Company.
v. Governing law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive and procedural laws of the State of Minnesota without regard to rules governing conflicts of law.
vi. Jurisdiction . Employee irrevocably and unconditionally (a) agrees that any legal proceeding arising out of this Agreement shall be brought in a court of general jurisdiction in the State of [JURISDICTION], (b) consents to the non-exclusive jurisdiction of such court in any such proceeding, and (c) waives any objection to the laying of the venue of any such proceeding in any such court. The employee also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers.
vii. Attorneys’ Fees . In the event of any litigation or other proceeding concerning any controversy, claim or dispute between the parties hereto, arising out of or relating to this Agreement, the breach thereof or the interpretation hereof, the prevailing party will be entitled to recover from the other party reasonable expenses, attorneys’ fees, and costs incurred therein or in the enforcement or collection of any judgment or award rendered therein. The “prevailing party” means the party determined by the court to have most nearly prevailed, even if such party did not prevail in all matters, not necessarily the party in whose favour a judgment is rendered. Further, in the event of any breach by Employee under this Agreement, Employee shall pay all the expenses and reasonable attorneys’ fees incurred by Company in connection with such breach if the Company is the prevailing party.
viii. Counterparts . This Agreement may be executed in any number of counterparts (including facsimile counterparts or counterparts delivered by electronic transmission (e.g., PDF attachment)), each of which shall be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date first above written.
So, now we understand the importance of an employee intellectual property agreement and how it can affect the company if such an agreement is not drafted. This agreement acts as a layer of protection to the company especially a new company in avoiding any future problems. Much care must be given to the intellectual property of an employee. It can either help in the growth or destruction of the company.
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Employee Intellectual Property: Everything You Need to Know
The idea of employee intellectual property can raise a lot of questions for both employees and employers. 3 min read
The idea of employee intellectual property can raise a lot of questions for both employees and employers. If you are employed in a creative field where you are creating literary or artistic content, a college professor at a university, or work in research and development for a company, you may be confused as to what is considered your intellectual property versus what is that of the company. These questions become particularly pertinent when if and when you seek other employment. (Think prospective employers asking for writing samples, or a rival employer wanting to know the secret ingredient in something.)
How to Know When What’s Yours Is Yours
So, as an employee, how do you know if you own the rights to your intellectual property ?
If you signed something called an assignment agreement upon being hired, depending upon the verbiage, there is a very real possibility that not only does your employer own the intellectual property you create while at the office, they may also have a claim on projects that you create in your free-time, even if they have nothing to do with the job for which you were hired. Depending upon where you live, however, there may be a silver lining, as several states, including California and North Carolina, have passed laws making it more difficult for companies to take ownership of an employees creativity.
So, what if you did not sign an assignment agreement , or you are lucky enough to live in a state that has a strong appreciation of employee rights? You may still be in a situation where your employer owns the intellectual property to anything you created using company resources, on company time. You will want to consult all of the paperwork you signed when you were hired.
If you are working on side projects on your own time, you can protect yourself by keeping thorough records of everything you are working on, progress that you have made, dates, etc. By then mailing these records to yourself, the postmark will serve as a copyright .
Anything that was created during work hours, using company resources, and otherwise in the regular course of your day and work, is the intellectual property of the employer, by default. As such, you may want to steer clear of using company time or resources for your side projects. Save your side projects for evenings and weekends, when you are at home, just to err on the side of caution.
It’s Not All Bad News
While it may seem as though your employer is going to have rights to everything in your head, that is not true, either. Intellectual property that came about throughout the course of your regular work day (in the absence of an agreement stating otherwise) also has to be applicable to the job for which you are hired. For example, if you are hired as a marketing expert who is expected to create marketing plans, social media strategy and content, then sequence of code that you wrote for that computer science class you are taking at night, may be off-limits.
Sign on the Dotted Line
You may be thinking that the last thing an employee should do is sign anything regarding their intellectual property, for fear that they may be signing over their brain. While it’s certainly important, especially if you work in a field or profession in which intellectual property is of concern, to have a lawyer review any employment documentation before you sign it, you can be protecting yourself and your intellectual property rather than losing it.
By carefully reviewing what you are signing, you can ensure that side projects that you create on your time, with your own resources, are not the property of your employer. You can ensure that they only have rights to the intellectual property that you created that is within the scope of the job for which you were hired.
It can also save both you and your employer a lot of headaches, if and when the time comes for you to move, if everyone has always been on the same page regarding who owns what.
If you need help with employee intellectual property, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.
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Intellectual Property in Employment Agreements
by Matthew R. Osenga
One of your employees has developed a new method that substantially improves the efficiency of a process your company uses to manufacture one of its product lines. You want to file a patent application to cover the new method, but the employee refuses to cooperate and says that the invention belongs to him, not the company. Or, worse yet, the employee leaves the company and moves to your competitor. Shortly after commencing employment there, the competitor implements the improved method as well. So, who actually owns the intellectual property developed by an employee and how can a company protect itself from costly lawsuits or settlements regarding this issue?
For a company with substantial intellectual property in hand and under development, it is important to have employment agreements for new employees that include clauses for dealing with intellectual property rights.
When hiring new employees, be certain to have IP disclosure and assignment clauses in employment agreements for all employees. These clauses should require the new employee to promptly disclose new inventions or other intellectual property to the employer upon conception and to assign such inventions to the employer at that time. Be certain that the agreement is clear that the employee has an obligation to assign new inventions to the new employer as a part of the employment and that the employee has a duty to assist with the patenting process for such inventions.
Employment Agreements Should be Signed at the Start of Employment
Have all new employees sign such agreements prior to employment or at least on the first day. Some states may require additional consideration once employment has already commenced for such clauses to be valid. In those states, in order for the later signed agreements to be valid, the employer must provide a raise, bonus, or something else of value to the employee. Many companies do provide bonuses as incentives to produce patentable inventions, but these are not requirements for the validity of the employment agreement.
Use Common Legal Language in Employment Agreements
When preparing employment agreements, keep in mind that certain words have specific definitions or understandings in patent law. For example, ambiguity could arise as to whether the employee would “conceive” and “make” an invention. Try to stick with the definitions that are common to patent law. “Conception” refers to “formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is thereafter to be applied to practice.” This is more than just a vague idea of an invention, as it requires definite plans for how to implement the invention. “Make” or “reduction to practice” refers to the act of actually making the invention work for its intended purpose.
Inventions Made Prior to Employment
Next, to avoid a dispute as to whether the invention was developed prior to employment, when executing the agreement, give the new employee the opportunity to indicate that he developed the invention prior to commencing employment. Require that he prove this development by providing sufficient detail so that he can’t later argue that vague statements constitute conception. Unless the parties agree otherwise, the employee should retain all rights in inventions that he conceived or invented prior to commencing employment. This can also reduce the potential for a dispute with a prior employer that it owns an unpatented invention the former employee developed while working for the previous employer.
IP Assignment Provisions
Finally, use language that requires the employee to promptly disclose inventions to the company and to “hereby assign” all future inventions. This way, an assignment is not required later once the employment has ended and you need to find the former employee and potentially sue him to obtain his cooperation. Instead, make the assignment effectual as soon as inventions are conceived.
Former employees are not always cooperative in the patent process for their former employers. You should probably include language the grants the employer at least a partial power of attorney to execute documents on behalf of the former employee inventor in cases where that becomes necessary.
Planning ahead by including intellectual property provisions in employment agreements can save a substantial amount of time and money in the event you later try to secure rights in inventions that are important to your company.
For help with your patent or intellectual property needs, please contact Matt Osenga at (804) 565-3531 or [email protected] .
This blog is made available by Goodman Allen Donnelly for general information, and does not constitute legal advice. By reading this blog, you understand that there is no attorney-client relationship between you and the firm. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
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Intellectual property assignment is a process in which the ownership of a work product created for an entity by an employee or consultant is transferred to the entity. Typically, an employee or consultant will sign an agreement that explicitly assigns any intellectual property created during service with the company.
To properly protect yourself, your company must ensure that the CIIAA includes an assignment from the employee to the company of any right, title, or interest in the company’s inventions and IP. The provision should cover inventions created by the employee during his or her employment with the company.
An intellectual property assignment includes important details about the transfer of intellectual property and the parties involved. The contents of an IP assignment can be laid out in 17 different sections. In the intellectual property assignment, you will find: Who is involved in the transfer. What IP is being transferred. How much the IP costs.
Businesses, of course, have a strong interest in owning intellectual property created by their employees. Intellectual property—patents, copyrights, and other confidential and proprietary information including trade secrets—is often the most valuable asset a business can own, so it is important to ensure that employee developments and ...
Mostly the employee intellectual property agreement has at least the following three clauses in common: 1. Assignment clause Generally speaking, an assignment clause is where the rights, duties, or contractual obligations are transferred from one party/person to another person/party. The assignment may be wholly or partly.
Anything that was created during work hours, using company resources, and otherwise in the regular course of your day and work, is the intellectual property of the employer, by default. As such, you may want to steer clear of using company time or resources for your side projects.
When hiring new employees, be certain to have IP disclosure and assignment clauses in employment agreements for all employees. These clauses should require the new employee to promptly disclose new inventions or other intellectual property to the employer upon conception and to assign such inventions to the employer at that time.
Website Terms and Conditions—August, 2019. Please read the following terms and conditions carefully. They govern your access and use of this website. By accessing, browsing or using this website, you agree to be bound by these terms and conditions and accept them in full, as they may be modified by the operators of this website, Cognizant ...
B. Inventions and Original Works Assigned to the Company. During the term of my employment with the Company, I will promptly disclose to the Company, hold in trust for the sole right and benefit of the Company and hereby assign to the Company, all rights to and interests in Inventions which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed ...