Invention Assignment Agreement—Learn Why It Is Important and How To Create It
Intellectual property can be valuable, and keeping it is a priority for any company that wishes to be prosperous. The primary purpose of an invention assignment agreement is to protect the company’s rights to an invention an employee created during their employment.
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An invention assignment agreement ensures that any inventions created by employees on company time and at the company’s expense remain in possession of the company. It is an agreement between an individual contractor or an employee and a company.
All companies, including startups, should utilize this agreement if they want to keep their intellectual property. These agreements mostly work in favor of the employer since they are supposed to protect the interest of the company and not that of individual employees.
Bear in mind that companies can’t take credit for employees’ inventions from before they joined the company. There should be a separate clause in the agreement protecting the employee in such situations.
Employee inventions that are not connected to the line of work of the employer are also not up for grabs by the employer—e.g., a software company cannot claim an employee’s T-shirt design as their own.
The inventions you can protect with an invention assignment agreement include:
- Trade secrets
You can find various invention assignment agreement templates online, but since most of them are inaccurate or too general, you are better off drafting this agreement yourself. We narrowed down the essential elements of this contract, which can be adjusted to your business needs or state laws:
- Names of all parties involved
- The effective date and term of the agreement
- Disclosure of all inventions
- Clear definition of included and excluded inventions
- A list of prior inventions of the employee
- Written records of all inventions created during the employment
- Confidentiality, non-infringement, non-disclosure, and similar clauses
- Notification to other parties
- Return of company property
- General provisions
- Acknowledgment of the terms and signatures from all parties
Invention assignment agreements are generally enforceable, with some exceptions. California, Delaware, Illinois, Kansas, Minnesota, North Carolina, Utah, and Washington state laws impose certain restrictions to protect employees. The restrictions help the employees keep their inventions if they created them independently without using any company resources.
An invention assignment agreement can be unenforceable if:
- Employer doesn’t provide written notice of the state’s restriction to the employer’s rights of obtaining assignments of inventions (California, Washington, Kansas, Minnesota, and Illinois)
- Assignment is procured by fraud
- Assignment is grossly unfair or unconscionable
- Employer waits too long to enforce it
- Employee signed the agreement after the company hired them
If you’re still learning about the invention assignment agreement, then you might be confused by all the nomenclature surrounding it. Other names for this document are:
- Employee invention agreement
- Contractor invention agreement
- Invention rights agreement
There are similar documents that aren’t quite the same, but they serve a similar purpose. For example:
- An IP assignment agreement covers all intellectual property, including inventions, but also artwork, logos, software, designs, and brand names
- An assignment agreement (i.e., contract agreement) is a document that allows the assignment, or passing, of contractual obligations related to intellectual property (including inventions) between two or more parties while safeguarding their legal integrities
The documents mentioned here don’t need to be notarized to be valid.
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