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Are Your Employees Inventing on the Job? Tips for Drafting Invention Assignment Agreements

brain_63285190Who owns an employee’s inventions? This is an issue that’s vitally important to many businesses, particularly those in the tech industry. Most companies are taking a proactive step by requiring employees to sign invention assignment agreements as a condition of their employment. Here are some tips for drafting these agreements for the employer’s maximum protection.

If you’re drafting an invention assignment agreement, you want it to offer the most protection and be enforceable if it ends up in litigation.

Always go for a double layer of protection:

  1. Affirm the “work for hire” character of the work performed by the employee, i.e., all work product created during employment with the company is a “work made for hire,” with ownership belonging to the company; and
  2. Provide for assignment of all intellectual property created.

This approach can be very helpful if you end up in front of a jury. Copyright law and the work-for-hire doctrine may be difficult for juries to understand, especially if they’re dealing with an inventor whose hard work and creativity doesn’t accrue to his or her personal benefit. Adding an assignment clause reinforces the effect of the work-for-hire doctrine.

The assignment provision should state that the employee assigns all of his or her right, title, and interest in and to any discoveries, inventions, and improvements that employee made, conceived, or suggested while employed by the company. Be broad and inclusive in your language.

Here are a couple of other tips:

  • Give your assignment provision a one-year “tail.” State that any invention that was made, conceived, or suggested by the employee within one year of termination of employment with the company and that pertains to any confidential information or business activity of the company is irrebuttably presumed to have been made, conceived, or suggested in the course of employee’s employment. This “tail” clause recognizes that there’s a residual benefit to the employee of the things the employee has learned or done at the company’s expense and that creative efforts during the period immediately after separation from the company may have their roots directly in the work that was done for the employer. It also serves to address the potential problem of pinpointing with any accuracy exactly when an item of intellectual property was conceived.
  • Include the mandatory language of Lab C §2870. Section 2870(a) precludes employers from requiring employees to assign inventions that are unrelated to the employee’s employment, i.e., developed on the employee’s own time and without using the employer’s equipment, supplies, facilities, or trade secrets. You must recite the language of Lab C §2870 in your agreement, such as: “This Paragraph does not apply to any invention that qualifies under Section 2870 of the California Labor Code, a copy of which is attached hereto as Exhibit A.”

For the best protection, make sure to combine your invention assignment agreement with a confidentiality agreement that restricts both use and disclosure of confidential information. Expressly define confidential information to include that of third parties such as customers and vendors as well as the employer.

Want to see how a sample agreement looks? Check out the form employee confidentiality and invention assignment agreement in §4.11 of CEB’s Internet Law and Practice in California and Drafting Employment Documents for California Employers §§7.31–7.34.

Related CEBblog™ posts:

© The Regents of the University of California, 2016. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

One reply on “Are Your Employees Inventing on the Job? Tips for Drafting Invention Assignment Agreements”

Great stuff as always, Julie! The law on protection of employers confidential information / trade secrets changes quickly and mostly in the direction of employees. Important for lawyers to learn how the UTSA (Uniform Trade Secret Act) now largely pre-empts all common law tort claims re: misuse of employer confidential information. See Sunpower Corp. v. SolarCity Corp., No 12-CV-694 LHK, 2012 WL 6160472 at *14 (N.D. Cal. Dec. 11, 2012) and cases citing to it. Big changes afoot.

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