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Confidential Information and Invention Assignment Agreement Template

Use our confidential information and invention assignment agreement to protect the work employees produce on company time.

Updated February 5, 2024 Reviewed by Brooke Davis

A confidential information and invention assignment agreement (CIIAA)  protects intellectual property like trademarks and patents, work products, business ideas, and internal processes.

It prevents the loss of this information by unscrupulous competitors or those seeking to claim the idea as their own. A business has the right to protect its intellectual property when it contributes its funds and resources to ideas or inventions, and a confidential information and invention assignment agreement can provide this protection.

What Is a Confidential Information and Invention Assignment Agreement?

When to use a confidential information and assignment agreement, limits on invention assignment agreements, how to write a ciia agreement, is a confidential information and invention assignment agreement enforceable, confidential information and invention assignment sample.

A confidential information and invention assignment agreement is a legal contract that gives an employer certain rights to inventions. These inventions refer to all the work that employees create during their employment with company resources, on company time, and for the company.

This agreement requires the employee to disclose inventions to the employer and “assign” ownership rights of the invention. The document will also state that the employee must assist the employer in obtaining a patent on the invention, when applicable.

You may want to use a confidential information and invention assignment agreement if:

• You own or manage a business and want to protect intellectual property.
• You work in human resources and need to update documents covering intellectual property.
• You want to protect against the disclosure of confidential information related to an invention.
• You want to ensure exclusive ownership of an invention.

There are limitations to what a confidential information and invention assignment can do. Some of these restrictions are placed by state law. For example, California ( California Labor Code § 2870 ) and Washington ( Washington Revised Code § 49.44.140 ) will not enforce an agreement when the invention was created entirely on the employee’s time and if they didn’t use any employer resources to invent it.

This limitation can deal with complicated nuances, but it is essential to understand that this agreement’s provisions must comply with state law.

The burden of proof usually rests with the employee to show they didn’t use company resources or knowledge in making their invention. Showing this proof may be challenging for the employee, so the agreement will likely remain enforceable despite any challenges by the employee.

Follow these steps to write an effective CIIA agreement:

Step 1 – Describe the Invention Assignment

Most contracts will assign intellectual property rights from the employee to the employer. These clauses will precisely define the invention and intellectual property that the company will own.

It should also specify all rights the employee is ceding to the employer . If the employee is to retain a partial interest as part of your agreement, this clarification will also be included here.

Step 2 – Explain the Confidentiality Requirements

This section will explain that any information related to the invention is confidential. It will also warn of the penalties for a breach of confidentiality.

The employee is not permitted to disclose the information except as permitted by the employer or the contract.

Outlining the effect of a breach helps to create an enforceable contract and warn the employee that you are serious. Some CIIA’s may also contain non-disclosure clauses to ensure confidentiality.

Step 3 – Highlight Any Exceptions

Some states require that a confidentiality and invention agreement have exceptions. This usually includes exceptions for employees who did not use company time, intellectual property, or resources in creating their invention.

Failure to include this exception is often damaging to the contract if a state requires exceptions.

Step 4 – Include Non-Compete Clauses

Many CIIAs include non-compete clauses as well. These clauses state that the employee isn’t allowed to enter business in the same industry for a certain period after leaving the company.

This clause prevents an employee from taking inventions they’ve made during their employment to another competitor or using them in a business of their own.

Non-competes have particular legal requirements in many jurisdictions to be enforceable. In certain professions, a non-compete may be against public policy and unenforceable. Make sure that an attorney analyzes your agreement to ensure it’s enforceable.

Step 5 – State the Duration of Agreement

The contract must explain when the employee’s inventions will become the company’s property. Many clauses explain how this will happen automatically at a particular time or the commencement of a specific event.

This is usually when the company employs the employee and can extend the employment for a certain period.

Step 6 – Provide the Governing Law

Provide the name of the state that will govern the agreement . If an issue arises in the future, you can refer to that particular state’s laws for guidance on how to proceed.

A properly drafted CIIA agreement is legally enforceable. It’s a contract between the employee and the employer and must comply with your state’s general contract requirements. It should typically include:

• Clear terms of the agreement
• Mutual acceptance of the terms
• An offer and an acceptance
• Consideration for the contract

CIIA agreements, in particular, must meet your state’s specific legal requirements. Different jurisdictions may require certain elements to enforce the confidentiality & invention assignment agreement.

This sample CIIA template can help you get started on drafting your own. Download it below as a PDF or Word File:

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• Trademark Infringement Cease and Desist Letter : Use this document to let offending parties know they are violating your trademark.
• Employee Non-Disclosure Agreement : An employee NDA is used to make sure employees don't use or make public information learned while working through the company.
• Interview Non-Disclosure Agreement : Protects your company from any disclosure of information made to a candidate who applies for a position.
• Mutual Non-Disclosure Agreement : An agreement written to protect both parties entering into the agreement.
• Legal Resources
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How to Draft an Invention Assignment Agreement

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Introduction

In the fast-paced world of technology, an invention assignment agreement is a key document for any inventor, entrepreneur or business owner. It provides legal protection and ensures that inventors receive a fair return on their inventions. But what exactly is an invention assignment agreement and why do entrepreneurs and business owners need one?

An invention assignment agreement is a legally binding contract that assigns ownership of an invention to another party, such as an employer or investor. The Agreement outlines the inventor’s rights and duties with regards to the use of their intellectual property while protecting them from theft or infringement by other parties. Furthermore, it clearly outlines payment terms, including any royalties or bonuses due to the inventor for their work. Having an Invention Assignment Agreement in place grants inventors peace of mind that their hard work will be rewarded fairly - something which can be invaluable when trying to succeed in the competitive technological landscape.

Business owners too should understand the importance of having a well-drafted Invention Assignment Agreement at hand as it can provide assurance that investments are adequately protected and secure from intellectual property theft. This can be crucial for entrepreneurs wanting to ensure long-term business success without facing costly legal disputes further down the line.

For anyone needing assistance creating an Invention Assignment Agreement, Genie AI offers a comprehensive resource to help you get started with drafting your own legally binding documents - all without paying a lawyer! Genie AI’s open source legal template library harnesses millions of data points to show you what constitutes market standard agreements; allowing users to customize high quality documents in minutes – saving both time and money! Our step-by-step guidance provides all the information needed on how to access our library today so you can get your project off to a strong start - all without needing a Genie AI account! So if you’re looking for reliable advice on how best tackle your next big venture - read on!

Definitions (feel free to skip)

Scope of Assignment – The range and limits of what is being assigned. Inventor – The person who creates or discovers something new. Assignee – The person or organization to whom something is assigned. Trade Secret – Information not generally known that gives a business an advantage over its competitors. Patent Application – A request to the government for permission to make, use, or sell an invention. Trademark – A distinctive word, phrase, symbol, or design used to identify a product or service. Copyright – A legal right that grants the creator of an original work exclusive rights to its use and distribution. Description of Invention – A detailed explanation of the features and functions of an invention. Rights of Assignment – The rights given to the assignee, such as the right to use, manufacture, reproduce, or sell the invention. Payment Terms – The amount and timing of payments made as part of the assignment. Confidentiality Clause – A clause that prohibits the assignee from disclosing any confidential information relating to the invention. Warranties – A guarantee that the inventor has the legal right to assign the invention to the assignee. Disclaimers – A statement that denies or limits a party’s legal responsibility. Legal Remedies – Ways of seeking legal enforcement of a contract, such as money damages or injunctive relief. Duration – The length of time that the agreement is in effect. Termination – The ending of the agreement. Notices – Written communication from one party to another. Dispute Resolution – The process of settling a disagreement between two parties. Governing Law – The set of laws that applies to a particular agreement. Jurisdiction – The authority of a court or other legal body to interpret and enforce the law. Sign and Date – To physically write one’s name and the date on a document to show agreement.

Define the scope of the assignment

Identify the inventor and assignee, draft a description of the invention, establish agreement on the assignment of rights to the assignee, set payment terms, include a confidentiality clause, include warranties and disclaimers, specify legal remedies, address duration and termination of the agreement, outline requirements for notices, including dispute resolution, clarify governing law and jurisdiction, sign and date the agreement, make copies of the agreement for each party, get started.

• Determine what invention is being assigned
• Identify who the inventor and assignee are
• Outline the scope of the assignment and what rights the assignee will be granted
• Specify the geographical area where the invention will be used
• Draft language for the assignment that includes the scope and rights of the assignee
• Review the language with both the inventor and assignee to make sure that everyone is in agreement

When you can check this off your list: When you have drafted the language for the assignment and both the inventor and assignee have reviewed and agreed to the language.

• Find out who the inventor is, and who the assignee (the person or company receiving the assignment) is
• Make sure the inventor and assignee are clearly identified in the agreement
• When the inventor and assignee have been clearly identified, you can move on to the next step of drafting a description of the invention.
• Include a detailed description of the invention, including relevant drawings, diagrams, and other relevant materials.
• Differentiate the invention from prior art if applicable.
• Identify the patent application number and filing date if the invention is already filed.
• If there is more than one inventor, make sure all inventors have agreed to the assignment.
• When the description is complete, you should have a clear understanding of the invention, who owns it and what is being assigned.

Once the description of the invention is complete, you can move on to the next step of establishing agreement on the assignment of rights to the assignee.

• Draft a clear agreement specifying the rights being assigned to the assignee
• Include details such as the scope of the rights, the geographic region and term of the assignment
• Make sure the assignee is aware that the invention must be kept confidential
• Include a clause which states that the assignee will not attempt to register the invention in any other country
• Add a clause that the assignor will defend any claims made against the assignee in relation to the invention
• Have both parties sign the agreement

You will know you are done with this step when you have completed the agreement, both parties have signed it, and the assignor and assignee have a copy of the agreement.

• Determine the payment method for the assignor in exchange for assigning the rights.
• Agree on a total sum for the payment or a payment plan.
• Include payment details in the agreement, such as the date of payment and any interest rates or fees.
• Have both the assignor and assignee sign off on the payment terms.

When this step is complete, the payment terms in the agreement should be agreed upon and documented in the agreement.

• Explain what a confidentiality clause is and why it’s important
• Identify the parties to the agreement, and include a definition and scope of confidential information
• Set out the duration of the confidentiality obligation
• Specify the permitted uses of confidential information
• Outline the remedies available to the parties in the event of a breach
• Include a clause permitting the parties to disclose confidential information to their advisors
• When complete, the confidentiality clause should provide a legally binding agreement between the parties that protects the confidential information disclosed
• When done, you can check this off your list and move on to the next step which is to include warranties and disclaimers.
• Include a clause in the agreement that states the assignor warrants that it owns the invention and has the right to assign it to the assignee
• Include a clause that the assignor has not previously assigned the invention to anyone else
• Include a clause that the assignor has not made any other agreement regarding the invention that would conflict with the assignment
• Include a disclaimer that the assignee is not receiving any implied warranties or guaranties with the assignment
• Include a clause that the assignor will indemnify the assignee in the event of any third-party claims
• Once you have included these warranties and disclaimers in the agreement, you can check this step off your list and move on to specifying legal remedies.
• Identify the legal remedies that each party would have if the other party breaches the agreement
• Consider what remedies are available in your jurisdiction and which are most appropriate for the situation
• Include remedies such as specific performance, liquidated damages, or other equitable relief
• Specify that the non-breaching party shall be able to seek all available remedies, including but not limited to damages and/or injunctive relief
• Indicate that the non-breaching party shall be entitled to recover all costs, including attorney fees, incurred in enforcing the agreement
• When complete, you can proceed to the next step, which is addressing duration and termination of the agreement.
• Determine the effective date of the agreement.
• Decide the duration of the agreement, including any applicable renewal options.
• Specify the circumstances under which the agreement can be terminated.
• Include provisions for either party to terminate the agreement with a certain amount of notice.
• Outline a timeline for any payments that need to be made upon termination.

Once you have determined the effective date, duration, termination, notice and payment requirements, you can check this step off your list and move on to the next step of outlining requirements for notices, including dispute resolution.

• Identify the parties to the agreement and their contact information
• Specify who will send and receive notices
• Outline the process for dispute resolution (e.g. arbitration, litigation)
• Establish a timeframe for notices to be sent and received
• Include language about compliance with applicable laws
• Include a clause that allows the parties to modify or amend the agreement
• Include a clause that allows the parties to assign their rights and obligations
• When complete, review the agreement and make sure it is legally sound
• When complete, sign and date the agreement
• When complete, get the agreement notarized, if required
• Identify the governing law of the agreement and the jurisdiction in which it will be interpreted and enforced
• Include the applicable state or country’s laws into the agreement
• Specify the court or other dispute resolution forum where any dispute or claim arising out of the agreement can be litigated
• Confirm that both parties agree to be bound by the governing law and jurisdiction chosen
• Once the governing law and jurisdiction is clarified, you can move on to the next step: signing and dating the agreement.
• Have both parties sign the agreement and include the date
• Make sure both parties include a witness to the agreement
• Have each party keep a copy of the signed agreement
• When done, you can check this off your list and move on to making copies of the agreement for each party.
• Ensure you have enough copies of the agreement for all parties
• Make sure to print out all copies of the agreement
• Make sure to provide copies for all parties to the agreement
• Once all parties to the agreement have a copy, you can check this off your list and move on to the next step.

Q: What are the differences between a US, UK and EU Invention Assignment Agreement?

Asked by Abigail on June 5th 2022. A: An Invention Assignment Agreement is an agreement between two parties, typically an employer and an employee, whereby the employee assigns all rights in any invention made during the course of their employment to the employer. The differences between US, UK and EU Invention Assignment Agreements mainly come down to the laws of the particular jurisdiction where the agreement is being used. US laws on invention assignment agreements are found in Title 35 of the United States Code, which covers patent law. In the UK, patent law is covered by The Patents Act 1977, while in the EU it is covered by Regulation (EU) No 1257/2012. Each jurisdiction will have different requirements for an Invention Assignment Agreement, so it is important to ensure that you are familiar with the laws of your jurisdiction when drafting an agreement.

Example dispute

Suing a company for breach of an invention assignment agreement.

• Plaintiff should be able to provide evidence of the invention assignment agreement between the parties, as well as any other relevant documents and communications.
• Plaintiff should be able to demonstrate that the terms of the agreement have been breached, e.g. by showing that the defendant has failed to pay royalties or has used the invention without permission.
• Plaintiff may be able to request an injunction against the defendant, requiring them to stop using the invention and/or pay back royalties.
• Plaintiff may be able to claim damages for any losses suffered as a result of the breach, for example, lost profits or other financial harm.
• Plaintiff may be able to negotiate a settlement including a payment from the defendant in exchange for dropping the suit.

Templates available (free to use)

Confidential Information And Invention Assignment Agreement Confidentiality And Invention Assignment Agreement Employee Invention Assignment Agreement Invention Assignment Agreement

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Confidentiality and Invention Assignment Agreement

A confidentiality and invention assignment agreement is typically signed by all founders and employees of company. The agreement creates a confidential relationship between the parties to protect any type of confidential and proprietary information and assigns all relevant work product to the company during the signors employment with the company.

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Patent Assignment Agreement

This Patent Assignment Agreement is a comprehensive document designed to facilitate the transfer of patent ownership from the original patent owner, known as the assignor, to another party, known as the assignee .

A patent is a legal grant issued by the United States Patent and Trademark Office (USPTO) to an inventor, providing exclusive rights to make, use, and sell their invention for a limited period , typically 20 years from the filing date. This protection is granted in exchange for the public disclosure of the invention. This system encourages innovation and lets inventors benefit from their creations for a specified period of time.

An assignment is the legal transfer of ownership or rights of a patent from one party (assignor) to another (assignee) . Using a Patent Assignment Agreement, the assignor forever relinquishes their rights to the patent, and the assignee assumes control and ownership of those rights for the duration of the patent.

This assignment can be made either before or after a patent application has been issued as a patent. By law, a patent is considered personal property and, so, can be sold or transferred in the same way one could sell a car or a piece of furniture. This document formally initiates the transfer process, providing clarity and protection for both parties involved. This agreement is particularly useful when inventors, companies, or individuals who wish to transfer their patent rights, whether for financial considerations, strategic partnerships, or other business transactions.

This document is different from a Trademark Assignment Agreement, which is used for the transfer of a different kind of intellectual property, known as a trademark. A trademark is usually a brand name or logo, unlike a patent, which is usually an invention of some sort. This is also slightly different from an Intellectual Property Release . Although that form could be used for a patent, it is generally used for copyrighted material, like works of art or pieces of music. In that case, payment is not made and, instead, the copyrighted works are simply "released," or given to another party. This document can also be distinguished from an Intellectual Property Permission Letter, as there, one party is writing to request permission to use the intellectual property of another. The Patent Assignment Agreement would then come after the letter, but the letter is not the formal legal document that initiates the transfer.

How to use this document

This document includes all the information necessary to transfer the ownership of a patent from one party to another. This document should be used when the transfer will be permanent, usually for a one-time fee , and no royalties will be due after the assignment. This document allows the parties to fill in details of the patent to be transferred, such as the patent name, original recordation number, and date the patent was initially issued . This ensures that everything needed for new recordation with the United States Patent and Trademark Office (USPTO) is present.

Once the document has been completed, both parties should sign the document in front of a notary and have the notary complete the notary page. The document must then be recorded with the USPTO within three months of its signing, or it becomes void. The current cost for filing an assignment with the USPTO is $40 per patent. The assignment can be filed either online or by mail.

Applicable law

In the United States, specific federal laws govern patent assignments, primarily under Title 35 of the United States Code , which pertains to the country's patent system. Section 261 of Title 35 outlines the general provisions related to patent ownership and transfers. According to this statute, patent assignments must be in writing to be valid, and they require the signature of the owner of the patent or their authorized representative. The law also specifies that the assignment must be recorded with the USPTO to establish priority and provide notice to the public.

How to modify the template

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Other names for the document:

Patent Assignment Contract, Intellectual Property Transfer Agreement, Technology Rights Conveyance Agreement, Innovation Assignment and Transfer Accord, Assignation of Patent Rights Contract

Country: United States

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How to Write an Employee Invention Assignment Agreement

Jump to section.

Writing an employee invention assignment agreement requires a lawyer to draft a document showing who owns what and the rights between an employer and employee. This contract helps in clarifying the terms of intellectual property rights as it relates to inventions, artwork, innovations, published content, and software code, among others that can be done by employees. This post will talk about how you can write an employee invention agreement and matters relating to the same.

Steps for Creating an Employee Invention Assignment Agreement

An employer should enter into an employee invention assignment agreement to safeguard its interests with respect to any inventions, creations, or discoveries made while performing duties for the company. These are steps toward writing a sound employee invention assignment agreement:

• Recognize Objective and Scope. Understanding this requires drafting the contract itself. The main purpose of this document is to describe to whom certain rights pertaining to their IP goes when they work with the firm.
• Include Parties’ Identification and Definition. The names of the two parties involved, employers and employees, must be added to these documents, together with their legal addresses and other relevant corporate information. Furthermore, define some important words used within this paper so that there would not be confusion about anything said later on.
• Highlight Intellectual Property Covered. Differentiate what kind of intellectual property is meant here in clear terms. It may include such things as designs, writings, and software products, among others as far as concerns, business concern is one part that ensures all potential kinds of intellectual property are covered.
• Establish Timing and Ownership. The period within which this contract runs needs defining. As a rule, it usually encompasses IP created by staff during their employment term at such a corporation. Determine if ownership immediately vests in the company upon creation or whether there exists a process through which it can be transferred thereto.
• Detail Reporting Requirements. Specify how workers should submit information about their patents or works to supervisors/managers, etcetera, instead of them being kept secret from each other’s eyes alone, ensuring all valuable IPs are made known. Thus, indicate the way and period one is expected to convey.
• Clarify Consideration and Compensation. Find out if there is any amount, reward, or other forms of value being provided to staff in return for such IP that they become the company’s property. Besides a lump sum payment as may be agreed upon under the agreement, it could also involve sharing some part of future profits that emanate from the use of those innovations.
• Introduce Confidentiality and Non-compete Clauses. Some of the things you should add to this paper are clauses dealing with non-disclosure agreements and non-competition after termination. These protect trade secrets from competitors even if an employee leaves one company for another.
• State Jurisdiction and Dispute Resolution . You need to clearly mention where this contract falls in terms of jurisdiction, plus outline how conflicts between parties should be solved once they arise. Methods like mediation, arbitration, or litigation may be used. This helps in avoiding legal complications later on by setting what would happen during disputes within its text.
• Obtain Legal Review . It is important to consider engaging professional legal minds who will confirm their compliance with governing legislation. This can point out places that have been designed ambiguously or might contain loopholes leading to disagreements afterward.
• Get Signatures. When the employee invention assignment agreement has been written and reviewed, it should be executed by both parties. Putting signatures on the agreement is a way of demonstrating comprehension and consent to the terms that have been summarized in the invention agreement. It is also good to have signed copies retained for future reference.

Importance of Writing an Employee Invention Assignment Agreement

Intellectual property (IP) is normally considered the basis for success in online businesses due to their rapidly changing nature. As organizations continue to search for ways of creating new goods, services, and technologies, there has been a growing importance of employees’ input towards these developments. However, ownership and protection of intellectual property rights developed by employees during employment can become intricate. This is where firms exploit employee invention assignment agreements. Here are some reasons why drafting an employee invention assignment agreement is important:

• Protecting Intellectual Property: Employees may disagree with employers over ownership claims if they do not sign EIAAs, resulting in conflicts between them. An EIAA clearly defines who owns what and, therefore, avoids lawsuits.
• Facilitating Innovation: An EIAA encourages workers to provide creative ideas without fear of being discredited or controlled by setting out who possesses such ideas and how they are compensated for through it. Thus fostering an environment conducive to nurturing innovation.
• Enhancing Business Viability: Intellectual property is often at the core of corporate competitiveness. Therefore, this ensures that it does not lose its capabilities in terms of licensing or otherwise using its IP assets while keeping abreast of time.
• Avoiding Litigation: Ownership ambiguities can lead to expensive disputes between employees and companies; however, well-written EIAs eliminate the need for litigation, thus saving resources spent, time used as well and reputational harm suffered.
• Encouraging Innovation: However, while these contracts may favor organizations with respect to ownership rights in inventions, they occasionally contain provisions relating to providing reasonable compensation or recognition to inventors who make substantial contributions towards inventions. This strikes a balance for employees who may feel that their own inventions will be recognized or rewarded even though they are owned by the company.
• Attracting Investors and Partners: Companies with robust IP strategies, including sound EIAAs, are more likely to secure investors and potential partners. It is an indication of the organization’s commitment to protecting its assets.
• Complying with Legal Requirements: The lack of an EIA in some jurisdictions could give employees stronger claims on their intellectual property. Having a comprehensive EIAA in place helps companies to ensure compliance with local laws and regulations.

Key Terms for Writing an Employee Invention Assignment Agreement

• Intellectual Property (IP): Ideas, designs, inventions, and other works which are protected by law.
• Invention Disclosure: A formal report made by an employee specifying a new invention or idea to the employer.
• Prior Inventions: Innovations made by staff before commencing jobs, frequently not covered by the agreement.
• Work for Hire : Legal doctrine implying that the employer has automatic ownership over creations produced during work.
• Assignment of Rights: Employee’s conveyance of intellectual property rights to the employer as provided in the document.
• Exclusivity: The term restricting workers from transferring patents related to other organizations under contract.
• Inventorship: Identification of persons who contributed to the creation of something important for obtaining patents.
• Royalties: The amount paid to employees for inventions generating revenues for the company.
• Derivative Works: Intellectual property developed from existing creations, subject to the terms of the agreement.
• Termination Clause : It spells out what becomes of inventions in case of cessation of employment, including how rights will be passed on.
• Severability: Clause that ensures that if one part of the agreement is found to be invalid, others are still enforceable.
• Waiver : Often, written consent is required for one party to waive any right it has.
• Arbitration: A method of settling disputes outside a court, which is usually stated as this contract’s preferred approach.
• Verbosity: The article provides essential knowledge on drafting an employee invention assignment agreement.

Final Thoughts on How to Write an Employee Invention Assignment Agreement

In today’s knowledge-driven and competitive economy, where innovation is vital for success, organizations must proactively manage their intellectual property assets. An employee invention assignment agreement serves as a foundational document that outlines ownership, protects trade secrets, and fosters an atmosphere of inventiveness. What’s more, businesses can enable themselves to fully exploit their employees’ ingenuity and zeal while protecting their rights by creating a framework for ownership and associated rights relating to intellectual property.

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Form of Employee Confidential Information and Inventions Assignment Agreement

Click here to use the Cooley GO Docs Employee Confidential Information and Inventions Assignment Agreement (CIIAA) Generator.

This document should be signed by each California employee to confirm that the employee will protect any confidential information received as part of his or her employment, both during and after their employment, and that any work and inventions produced while working for the company related to the company’s business belong to the company and not to the employee individually.

Note that this document is intended for use by  US companies with  California employees only .

Check out our related articles  Protecting Your Company’s Intellectual Property ,  Drafting Offer Letters: Keys to Simple and Effective Employment Agreements  and  Tips for Onboarding Employees to Early-Stage Companies .

To learn more about protecting your company’s intellectual property, visit  Create and Protect .

Looking for a Singapore version? Check out our Form of Employee Confidential Information and Inventions Agreement  for Singapore companies.

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Employee proprietary information and inventions assignment agreements: what they do, and what could happen without them

The typical onboarding process for a new employee at nearly all companies in most industries includes a requirement for the employee to sign an agreement regarding confidentiality and ownership of inventions, copyrights and other intellectual property.  This article explains the purpose of such an agreement and consequences that result from a failure to have such agreements signed by each employee.

What is a PIIA?

The agreement goes by many names, but tech-savvy companies often refer to them as PIIAs (or ''Pee-as'' for short). PIIA is the acronym for the most common name for these agreements, ''proprietary information and invention assignment'' agreements.  The typical form of agreement addresses two main areas: confidentiality and ownership of intellectual property. 

The agreement requires that an employee maintain the employer's non-public and proprietary information confidential and contains language similar to what you would see in a non-disclosure agreement ( see more about non-disclosure agreements ). 

The agreement also requires that the employee agree that whatever the employee creates, discovers, develops or invents while employed with the company is owned by the company. Companies that are in the business of developing products or technology that are protectable by copyright (as is the case with most software companies) can rely on the work for hire doctrine under US copyright law, which automatically gives the employer ownership of copyrights in works of authorship ( eg , software, manuals and documentations) written or prepared by an employee within the scope of his/her employment. The work for hire doctrine, however, does not apply and ownership is not automatically vested in the employer in the case of other intellectual property rights, most notably in the case of patents (see our article providing an overview of  intellectual property rights and a more detailed discussion about  copyrights and  patents ). 

Therefore, the PIIA is the employee's agreement that everything created by the employee for the employer is owned by the employer, and if the employer needs the employee to do anything or sign any document to confirm that the employer owns all the rights in the intellectual property developments, the employee agrees in the PIIA to do so.

PIIAs will also often include non-solicitation clauses and, for those employees working in states where non-competition clauses are enforced, the agreement may also include a non-compete clause (see our article discussing  non-solicitation and non-competition clauses ).

Does the company really own everything the employee creates?

If an employee can show that he or she created intellectual property on their own time and without the use of any of the employer's facilities, equipment, supplies or trade secret information and if the intellectual property did not relate at the time of development to the employer's business or actual or anticipated research or development, then the employee would continue to own such intellectual property. 

In some states, such as California, Washington, Texas and Illinois, this exception is expressed in a statute that requires that the PIIA include a notice of the exception.  Such statutes favor the employer in that the burden of showing the exception applies is typically on the employee.

What happens if I don't have my employees sign PIIAs or if the PIIAs don't include all the bells and whistles?

Whenever a company goes through a financing, whether it is a seed round or an institutional VC round, or if the company is going to be acquired, the investors or acquirer will conduct due diligence. One of the issues that they will review is whether or not all the employees have signed PIIAs and whether or not those PIIAs require employees to assign to the company ownership of all intellectual property rights to developments created by the employee. Investors and acquirers want to make sure that the company owns its intellectual property, products and technology. 

Depending on where the company is in its lifecycle, the due diligence may focus on all employees, former and current, or it may just focus on the former and current employees that have been involved in research and development or engineering activities. (The failure of the company to obtain a PIIA from an employee strictly in an administrative capacity will generally not create a material issue). If due diligence identifies a problem with the PIIAs, or reveals that PIIAs were not signed, investors and acquirers may require that the company obtain signed PIIAs (or the equivalent) after the fact, which may necessitate the company having to pay the employees something in exchange for signing the agreement so that it is binding or, worse yet, give a former employee leverage to ask for something more. Giving someone leverage on the cusp of a financing or an acquisition may not end well for the company.

While PIIAs may seem like a routine document that is available from numerous online sources, it is essential that an employer have a form of PIIA that includes provisions that is enforceable and current and will withstand scrutiny from investor and acquirer's counsel. If you have questions about your form of PIIA, or if you want to make sure that you have forms of PIIA that will be enforceable for your employees wherever they may be located, within or outside the United States, please contact a member of our Technology, Data and Commercial practice .

Invention Assignment Agreement

What Is an Invention Assignment Agreement?

Should you have new hires sign one, when to use an invention agreement.

• Employing workers to invent . If you are bringing on employees to invent, create or improve on behalf of your company, you’ll want them to sign an invention assignment agreement before they begin work.
• Employing independent contractors and freelancers . When you contract workers to create solutions that may require copyright or patent protection, consider getting a signed invention assignment agreement. These agreements are often rolled into other contracts and may come as less of a surprise to contract workers.
• Making a business case for safeguarding . If your business relies on innovations, inventions and branded solutions, you might want to make invention agreements part of your standard new-hire paperwork.

When Not to Use an Invention Agreement

• Employing workers as a stable asset . When you bring an employee on in a role not traditionally inventive, there’s no reason to burden the employment relationship with a legal document. Many great employees improve their work environment, processes and programs by incremental efforts.
• Collaborating with partners. Collaborating with other companies or brands entangles the inventive process a little more than traditional employment or contract work. In these cases, an invention agreement simply does not cover the scenario. You will need legal help to develop an appropriate contract.
• Not making a business case for safeguarding . If you have no intention of seeking patent protection for ideas or inventions, you should leave employees free of legal barriers if they want to safeguard their work.

Limitations of Invention Assignment Agreements

What to include in an employee invention agreement, 1. an assignment provision, 2. a disclosure provision, 3. a power of attorney provision.

Amanda Davis

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