confidentiality and assignment of inventions agreement

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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Confidential Information and Inventions Assignment Agreements (CIIAA)

Also known as Proprietary Information and Inventions Assignment Agreements (or PIIAAs), Confidential Information and Inventions Assignment Agreements ensure that intellectual property and other proprietary rights created by employees during the course of their employment are assigned to the employer.

Effective CIIAAs assign intellectual property to the company and also contain nondisclosure, nonsoliciation, and (in some cases) noncompetition clauses (beware, though, that in some states, such as California, noncompetition clauses in these types of agreements are not enforceable and, accordingly, should not be included). Inventions or intellectual property created by the employee prior to beginning their employment are carved-out from the assignment by this type of agreement.

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• Glossary: Inventions Assignment Agreement An inventions assignment agreement is a typical feature of an independent contractor or employee agreement where the worker agrees to assign any intellectual property arising from the worker's services to the company.

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Confidentiality And Invention Assignment Agreement

Jump to section, what is a confidentiality and invention assignment agreement.

A confidentiality and invention assignment agreement is an agreement put in place to create protections around developing technology and intellectual property. Typically used by companies, this agreement ensures that a company retains the rights to any proprietary information or intellectual property that employees may be developing on behalf of the company.

Confidentiality and invention assignment agreements have two parts. The first part deals with confidentiality and creates terms and conditions around what a party may or may not publicly or privately disclose in regards to their work for the company. The second part, the invention portion, deals with the development of new technology, products, or other proprietary information that an employee may create as part of their job.

Common Sections in Confidentiality And Invention Assignment Agreements

Below is a list of common sections included in Confidentiality And Invention Assignment Agreements. These sections are linked to the below sample agreement for you to explore.

Confidentiality And Invention Assignment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.29 9 dex1029.htm CONFIDENTIALITY, NON-INTERFERENCE AND INVENTION ASSIGNMENT AGREEMENT , Viewed October 13, 2021, View Source on SEC .

Who Helps With Confidentiality And Invention Assignment Agreements?

Lawyers with backgrounds working on confidentiality and invention assignment agreements work with clients to help. Do you need help with a confidentiality and invention assignment agreement?

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Partnering with business clients to keep their greatest asset - their employees - from becoming their biggest liability. Mark accomplishes this by working with in-house counsel and human resource professionals of several Fortune 50 companies, as well as many smaller public and privately held profit and not for profit organizations, to provide advice and counsel on the day to day employment and workforce practice issues encountered by those organizations. For over fifteen years Mark has been Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization. He is licensed and practices in both Texas and Colorado and has focused his practice for the last 20 plus years on defending companies in employment and labor related matters. During this time Mark has had extensive experience in handling and responding to a wide range of local, state and federal employment issues that impact the management and operations of businesses in a wide range of industries. Mark's experience includes appearances before state and federal agencies and regulatory boards, litigation in both state and federal courts, defense of class actions and appearances before courts of appeal. While Mark regularly handles matters in litigation, he has a high regard for handling every issue with the best interest of the client’s business. Mark is a published author and regular speaks on labor, employment and workplace practice topics. Whether it be an investigation by the Occupational Safety and Health Administration (OSHA), the Wage & Hour division of the U.S. Department of Labor, or other state agency; an Equal Employment Opportunity Commission (EEOC) or state agency charge claiming a violation of local, state or federal employment or labor laws; or the need for direction on a hiring, termination or business operational issue involving employees, Mark has extensive experience in handling these and many other employment and labor issues.

Forest is a general practice lawyer. He provides legal advice regarding small business law, contracts, estates and trusts, administrative law, corporate governance and compliance. Forest practiced complex commercial litigation in Florida for eight years, representing clients such as Host Marriott, Kellogg School of Business, and Toyota. Since moving to Nashville in 2005, he has provided legal advice to clients forming new businesses, planning for the future, and seeking funding through the use of equity and/or debt in their businesses. This advice has included the selection of business type, assistance in drafting and editing their business plans and offering material, reviewing proposed term sheets, and conducting due diligence. Forest is a member of the Florida, Tennessee, and Texas Bars; in addition. Forest has held a Series 7, General Securities Representative Exam, Series 24, General Securities Principal, and Series 63, Uniform Securities Agent State Law.

28+ years experience. Licensed in Colorado and New York. Areas of expertise: estate planning, wills and trusts; trademark law; patent law; contracts and licensing; small business organization and counseling.

Ralph graduated from University of Florida with his JD as well as an LLM in Comparative Law. He has a Master's in Law from Warsaw University , Poland (summa cum laude) and holds a diploma in English and European Law from Cambridge Board of Continuous Education. Ralph concentrates on business entity formation, both for profit and non profit and was trained in legal drafting. In his practice he primarily assists small to medium sized startups and writes tailor made contracts as he runs one of Florida disability non profits at the same time. T l Licensed. in Florida Massachusetts and Washington DC this attorney speaks Polish.

Yoann E. A. L.

For over 15 years, I accumulated both hands-on technical and business experience as an IT engineer and entrepreneur, enabling me to understand your challenges probably better than anyone else on the legal market! My California-based full-online practice focuses on: - Intellectual Property (Copyright / Trademarks) - Privacy / Data Protection - Commercial matters (e.g. service contracts) - Corporate (e.g. incorporation, restructuring)

Melanie Cunningham specializes in helping entrepreneurs remain creative and expansive by establishing the foundation of their business and protecting and maximizing their intellectual property. It’s her belief that entrepreneurs and micro and small business owners play a critical role in our communities, which propelled Melanie to return to private practice after more than a decade working for global financial institutions. Melanie’s practice is dedicated to delivering excellent legal support and protection to this vital, but an often underserved, community. Melanie credits her business training and the skills developed as a senior compliance officer with enabling her to help small business owners have a legally compliant business, while proactively advising clients during the growth process. She’s helped diverse entrepreneurs do business in a way that focuses more on collaboration than competition. Melanie has counseled small business owners in determining what is protection worthy (helping them obtain trademarks and copyrights) and making contact on their behalf in the case of infringement.

Christopher B.

Former litigator now focusing on transactional business work

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Invention Assignment Agreements – How to Avoid Pitfalls

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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 .

How to Draft an Invention Assignment Agreement

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Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom. Also note: This is not legal advice.

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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Free Invention Assignment Agreement Template for Microsoft Word

Download this free Invention Assignment Agreement template as a Word document to help you in providing confidentiality, privacy, and licensing clauses

Invention Assignment Agreement

As a condition of my becoming employed (or my employment being continued) by or retained as a consultant (or my consulting relationship being continued) by [Insert Company Name] of [Insert Company Address] or any of its current or future subsidiaries, affiliates, successors or assigns (collectively, the “Company”), and in consideration of my employment or consulting relationship with the Company and my receipt of the compensation now and hereafter paid to me by the Company, I agree to the following:

1. EMPLOYMENT OR CONSULTING RELATIONSHIP.

I understand and acknowledge that this Agreement does not alter, amend or expand upon any rights I may have to continue in the employ of, or in a consulting relationship with, or the duration of my employment or consulting relationship with, the Company under any existing agreements between the Company and me or under applicable law. Any employment or consulting relationship between the Company and me, whether commenced prior to or upon the date of this Agreement, shall be referred to herein as the “Relationship.”

2. AT-WILL RELATIONSHIP.

I understand and acknowledge that my Relationship with the Company is and shall continue to be at-will, as defined under applicable law, meaning that either I or the Company may terminate the Relationship at any time for any reason or no reason, without further obligation or liability.

3. CONFIDENTIAL INFORMATION.

(a) Company Information. I agree at all times during the term of my Relationship with the Company and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, firm, corporation or other entity without the written authorization of the Board of Directors of the Company, any Confidential Information of the Company which I obtain or create. I further agree not to make copies of such Confidential Information except as authorized by the Company. I understand that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, business plans and strategies, Internet addresses and web pages, research, product plans, products, services, suppliers, customer lists and customers (including, but not limited to, customers of the Company on whom I called or with whom I became acquainted during the Relationship), prices and costs, markets, software, developments, inventions, laboratory notebooks, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, licenses, finances, budgets or other business information disclosed to me by the Company either directly or indirectly in writing, orally or by drawings or observation of interfaces, parts or equipment or created by me during the period of the Relationship on behalf of or within the course and scope of my performance of services to the Company, whether or not during working hours. I understand that “Confidential Information” includes, but is not limited to, information pertaining to any aspects of the Company’s business which is either information not known by actual or potential competitors of the Company or is proprietary information of the Company or its customers or suppliers, whether of a technical nature or otherwise. I further understand that Confidential Information does not include any of the foregoing items which has become publicly and widely known and made generally available through no wrongful act of mine or of others who were under confidentiality obligations as to the item or items involved.

This Agreement is in compliance with the Defend Trade Secrets Act and provides civil or criminal immunity to any individual for the disclosure of trade secrets: (i) made in confidence to a federal, state, or local government official, or to an attorney when the disclosure is to report suspected violations of the law; or (ii) in a complaint or other document filed in a lawsuit if made under seal.

(b) Former Employer Information. I represent that my performance of all terms of this Agreement as an employee or consultant of the Company has not breached and will not breach any agreement to keep in confidence proprietary information, knowledge, or data acquired by me in confidence or trust prior or subsequent to the commencement of my Relationship with the Company, and I will not disclose to the Company or induce the Company to use, any inventions, the confidential or proprietary information or material belonging to any previous employer or any other party.

(c) Third Party Information. I recognize that the Company has received and in the future will receive confidential or proprietary information from third parties subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm, or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.

4. INVENTIONS.

(a) Inventions Retained and Licensed. I have attached hereto, as Exhibit A, a list describing with particularity all inventions, original works of authorship, developments, improvements, and trade secrets which were made by me prior to the commencement of the Relationship (collectively referred to as “Prior Inventions”), which belong solely to me or belong to me jointly with another, which relate in any way to any of the Company’s proposed businesses, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, I represent that there are no such Prior Inventions. If, in the course of my Relationship with the Company, I incorporate into a Company product, process or the machine a Prior Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Invention as part of or in connection with such product, process or the machine.

(b) Assignment of Inventions. I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all my right, title, and interest throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable or registrable under the copyright or similar laws, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time in which I am employed by or a consultant of the Company (collectively referred to as “Inventions”). I further acknowledge that all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets which are made by me (solely or jointly with others) within the scope of and during the period of my Relationship with the Company are “works made for hire” (to the greatest extent permitted by applicable law) and are compensated by my salary (if I am an employee) or by such amounts paid to me under any applicable consulting agreement or consulting arrangements (if I am a consultant), unless regulated otherwise by the mandatory law of the state of [Insert State].

(c) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of my Relationship with the Company. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, laboratory notebooks, and any other format. The records will be available to and remain the sole property of the Company at all times. I agree not to remove such records from the Company’s place of business except as expressly permitted by Company policy which may, from time to time, be revised at the sole election of the Company for the purpose of furthering the Company’s business.

(d) Patent and Copyright Rights. I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, mask work rights, moral rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordation’s, and all other instruments which the Company shall deem necessary in order to apply for, obtain, maintain and transfer such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement until the expiration of the last such intellectual property right to expire in any country of the world. If the Company is unable because of my mental or physical incapacity or unavailability or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney, in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters patent or copyright registrations thereon with the same legal force and effect as if originally executed by me. I hereby waive and irrevocably quitclaim to the Company and all claims, of any nature whatsoever, which I now or hereafter have for infringement of any and all proprietary rights assigned to the Company.

5. RETURNING COMPANY DOCUMENTS.

I agree that, at the time of termination of my Relationship with the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any aforementioned items developed by me pursuant to the Relationship or otherwise belonging to the Company, its successors or assigns. I further agree that to any property situated on the Company’s premises and owned by the Company, including disks and other storage media, filing cabinets, or other work areas, is subject to inspection by Company personnel at any time with or without notice. In the event of the termination of the Relationship, I agree to sign and deliver the “Termination Certification” attached hereto as Exhibit B.

6. NOTIFICATION TO OTHER PARTIES.

(a) Employees. In the event that I leave the employ of the Company, I hereby consent to notification by the Company to my new employer about my rights and obligations under this Agreement.

(b) Consultants. I hereby grant consent to notification by the Company to any other parties besides the Company with whom I maintain a consulting relationship, including parties with whom such relationship commences after the effective date of this Agreement, about my rights and obligations under this Agreement.

7. SOLICITATION OF EMPLOYEES, CONSULTANTS AND OTHER PARTIES.

I agree that during the term of my Relationship with the Company, and for a period of twelve (12) months immediately following the termination of my Relationship with the Company for any reason, whether with or without cause, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or take away such employees or consultants, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for myself or for any other person or entity. Nothing in the previous sentence shall apply to hiring any employee or consultant through general, non-specific solicitations. Further, for a period of twenty-four (24) months following termination of my Relationship with the Company for any reason, with or without cause, I shall not solicit any licensor to or customer of the Company or licensee of the Company’s products, in each case, that is known to me, with respect to any business, products or services that are competitive to the products or services offered by the Company or under development as of the date of termination of my Relationship with the Company.

8. REPRESENTATIONS AND COVENANTS.

(a) Facilitation of Agreement. I agree to execute promptly any proper oath or verify any proper document required to carry out the terms of this Agreement upon the Company’s written request to do so.

(b) Conflicts. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to commencement of my Relationship with the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict with any of the provisions of this Agreement.

(c) Voluntary Execution. I certify and acknowledge that I have carefully read all of the provisions of this Agreement and that I understand and willfully and faithfully comply with such provisions.

9. GENERAL PROVISIONS.

(a) Governing Laws. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of [Insert Relevant State], without giving effect to the principles of conflict of laws.

(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and merges all prior discussions between us. No modification or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in my duties, obligations, rights, or compensation will not affect the validity or scope of this Agreement.

(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.

(d) Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators, and other legal representatives and will be for the benefit of the Company, its successors, and its assigns.

(e) Survival. The provisions of this Agreement shall survive the termination of the Relationship and the assignment of this Agreement by the Company to any successor in interest or other assignees.

(f) Signatories. This Agreement shall be signed on behalf of the Company by [Insert Name of Company Represetative] and by me. This Agreement shall take effect immediately after being signed by both parties.

(g) Advice of Counsel. I ACKNOWLEDGE THAT, IN EXECUTING THIS AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

_____________________________________________________________

By: ___________________________________ Date: __________________

EMPLOYEE/CONSULTANT:

TO CONFIDENTIAL INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT

LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP EXCLUDED FROM SECTION 4

Description:

□ No inventions or improvements □ Additional Sheets Attached

TERMINATION CERTIFICATE

This is to certify that I do not have in my possession, nor have I failed to return, any devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, flow charts, materials, equipment, other documents or property, or copies or reproductions of any aforementioned items belonging to _________________, its subsidiaries, affiliates, successors or assigns (together with the “Company”).

I further certify that I have complied with all the terms of the Company’s Confidential Information and Invention Assignment Agreement signed by me, including the reporting of any inventions and original works of authorship (as defined therein), conceived or made by me (solely or jointly with others) covered by that agreement.

I further agree that, in compliance with the Confidential Information and Invention Assignment Agreement, I will preserve as confidential all trade secrets, confidential knowledge, data, or other proprietary information relating to products, processes, know-how, designs, formulas, developmental or experimental work, computer programs, databases, other original works of authorship, customer lists, business plans, financial information or other subject-matter pertaining to any business of the Company or any of its employees, clients, consultants or licensees.

I further agree that for twelve (12) months from the date of this Certificate, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or take away such employees or consultants, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for myself or for any other person or entity. Nothing in the previous sentence shall apply to non-specific solicitations. Further, for a period of twenty-four (24) months from the date of this Certificate, I shall not solicit any licensor to or customer of the Company or licensee of the Company’s products, in each case, that is known to me, with respect to any business, products or services that are competitive to the products or services offered by the Company or under development as of the date of termination of my Relationship with the Company.

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NONCOMPETE, NONSOLICITATION, CONFIDENTIALITY, AND INVENTION ASSIGNMENT AGREEMENTS IN CALIFORNIA

CAN I LEAVE MY PRESENT EMPLOYER TO START MY OWN COMPANY OR JOIN A COMPETITOR EVEN IF I HAVE SIGNED A NONCOMPETE, A NONSOLICITATION, A CONFIDENTIALITY, OR AN INVENTION ASSIGNMENT AGREEMENTS IN CALIFORNIA?

Consider the following scenario: You’re a California resident and offered employment by a California or a foreign employer. As a condition of your employment, you’re asked to sign one or more of a noncompete, a nonsolicitation, a confidentiality, and an invention assignment agreement. After a few months or years, you decide to quit and start your own business that competes directly with your employer. What, if anything, can your employer do to prevent you from leaving and competing with it? The short answer is: Not Much!

I. Noncompete, Nonsolicitation, and Confidentiality Clause

In general, any agreement that violates the Cal. Bus. Prof. Code § 16600 is illegal, therefore, invalid, unless one of the statutory exceptions (Cal. Bus. Prof. Code §§ 16601, 16602, and 16602.5) [1] or the trade secret common law exception apply. Section 16600 “invalidates provisions in employment contracts that prohibit ‘an employee from working for a competitor after completion of his employment or imposing a penalty if he does so unless they are necessary to protect the employer’s trade secrets .’”  Edwards v. Arthur Andersen LLP,  44 Cal.4th 937, 945-46 (2008) (quoting  Muggill v. Reuben H. Donnelley Corp.,  62 Cal.2d 239 (1965) (Emphasis added). This provision “evinces a settled legislative policy in favor of open competition and employee mobility.”  Id.  at 946. “In California, ‘every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.’ Cal. Bus. Prof. Code § 16600.”  Applied Materials v. Advanced Micro-Fabrication Equip , 630 F. Supp. 2d 1084, 1089 (N.D. Cal. 2009).

Even the so-called common law exception is on a shaky ground as the Court in Power Integrations, Inc. v. De Lara , No. 20-cv-410-MMA (MSB), at *25-27 (S.D. Cal. Mar. 26, 2020) analyzed the law as follows:

“On one hand, some decisions have found that to the extent that an exception applies, it applies in the context of a tortious wrong independent of any contractual relationship.  See Ret .  Grp ., 98 Cal. Rptr. 3d at 593. In  The Retirement Group v .  Galante , the California Court of Appeal determined the following distinction between contract and tort: We distill from the foregoing cases that section 16600 bars a court from specifically enforcing (by way of injunctive relief) a  contractual  clause purporting to ban a former employee from soliciting former customers to transfer their business away from the former employer to the employee’s new business, but a court may enjoin  tortious  conduct (as violative of either the Uniform Trade Secrets Act and/or the Unfair Competition Law) by banning the former employee from using trade secret information to identify existing customers, to facilitate the solicitation of such customers, or to otherwise unfairly compete with the former employer. Viewed in this light, therefore, the conduct is enjoinable not because it falls within a judicially-created “exception” to section 16600’s ban on contractual nonsolicitation clauses, but is instead enjoinable because it is wrongful independent of any contractual undertaking.

On the other hand, the court has also held that “under  Edwards , Business and Professions Code section 16600 generally prohibits the enforcement of a nonsolicitation agreement in all cases in which the trade secret exception does not apply.”  Wanke ,  Indus .,  Commercial ,  Residential ,  Inc .  v .  Keck , 147 Cal. Rptr. 3d 651, 670 (Ct. App. 2012) (referring to  Edwards , 189 P.3d 285, which “[did not] address the applicability of the so-called trade secret exception to section 16600 . . . .”). However, because  Edwards ‘ did not involve the “so called trade secret exception,”  Edwards , 189 P.3d at 291 n.4, its statements regarding the existence or the applicability of a trade secret exception is dicta. Additionally,  Edwards  noted that “[w]e conclude that section 16600 prohibits employee noncompetition agreements unless the agreement falls within a  statutory exception .”  Edwards , 189 P.3d at 291 (emphasis added) (citing Cal. Bus. & Prof. Code § 16600);  see also Dowell v .  Biosense Webster ,  Inc ., 102 Cal. Rptr. 3d 1, 9 (2009) (same). In detailing how California Courts have not embraced the “Ninth Circuit’s narrow-restraint exception,” the  Edwards  court stated that “[we] leave it to the Legislature, if it chooses, either to relax the statutory restrictions or adopt additional exceptions to the prohibition-against-restraint rule under section 16600.”  Id . at 293. This language, the explicit statutory language of “[e]xcept as provided in this chapter,” and the California Legislature’s intent plainly exclude judicially-created exceptions to § 16600. Cal. Bus. & Prof. Code § 16600. Therefore, this Court declines to find that a trade secret exception to § 16600 exists to the extent that Plaintiff alleges a breach of contract cause of action.

II. Invention Assignment Clause

In general, invention assignment agreements that are limited to the duration of the employee’s work with the employer are enforceable regardless if the invention is based on the employer’s confidential information. Mattel ,  Inc .  v .  MGA Entm’t ,  Inc ., 782 F. Supp. 2d 911, 946 (C.D. Cal. 2011) (“As long [as] the assignment [of ideas and inventions] does not extend to post-employment work, it is generally enforceable.”) However, if the invention assignment agreement extends beyond the length of the employment, they must be limited to those based on the employer’s confidential information. Conversion Logic, Inc. v. Measured, Inc. , Case No: 2:19-cv-05546-ODW (FFMx), at *12 (C.D. Cal. Dec. 13, 2019) (citing, Winston Research Corp .  v .  Minnesota Mining & Mfg .  Co ., 350 F.2d 134 (9th Cir. 1965). (“Intellectual property assignment provisions in employment contracts have been upheld when limited to inventions that are based on the employer’s confidential information.”)

Any provision which obligates the employee/shareholder to assign all his/her inventions even after he/she is no longer an employee of the Company is invalid. Furthermore, if it obligates the employee/shareholder to assign all his/her inventions related to the business of the company without limiting them to those “that are based on confidential employer information” Conversion is invalid. See, Conversion Logic, Inc. v. Measured, Inc. , Case No: 2:19-cv-05546-ODW (FFMx), at *12 (C.D. Cal. Dec. 13, 2019) (citing, Winston Research Corp .  v .  Minnesota Mining & Mfg .  Co ., 350 F.2d 134 (9th Cir. 1965). (“Intellectual property assignment provisions in employment contracts have been upheld when limited to inventions that are based on the employer’s confidential information.”)

If you need help regarding leaving your present employer to start your own business or joining a competitor, or other related intellectual property matters, contact Ahmadshahi Law Offices today and get an initial consultation.

Michael M. Ahmadshahi concentrates its practice on patents, trademarks copyrights, trade secrets and other intellectual property and business law. Call us toll free at (800) 747-6081 or direct at (949) 556-8800 or email [email protected] and let us help you with your IP and business matters.

[1] Although, the applicability of the statutory exceptions has not been analyzed, it is unlikely they would apply as they pertain to the sale of a business entity or the sale of a shareholder, partner, or a member selling all of his/her shares/interest that would include the goodwill of the entity.

Mr. Ahmadshahi’s area of practice is Intellectual Property Laws including Patent Prosecution and Litigation, Trademarks, Copyrights, Unfair Business Practices, and Business Litigation. He is also an entrepreneur and an inventor.

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