Understanding Invention Assignment Agreements

If you are the founder of a small business in the tech industry, an important legal document you need to have in order is an invention assignment agreement. This agreement is essential to ensure your company actually has ownership over its intellectual property. Your IP may include software code, hardware design, visual materials, audio files, writings, etc.

It is quite common for business owners to neglect drafting and signing invention assignment agreements, especially at the early stages of business formation. This often comes back to bite the owners later on when they are seeking capital from outside investors or when they are looking to sell the business. Getting an agreement in place early on in the life of the business is absolutely critical because securing an agreement can be much more difficult (and costly) later on as the company grows. 

Overview of Invention Assignment Agreements

An invention assignment agreement (a.k.a. proprietary rights assignment agreement) is meant to help ensure that ownership of valuable IP is controlled by you, the business owner, rather than a contractor or employee.

The agreement constitutes a contract between your company and whomever is working on research and development. The agreement requires that the employee, contractor, etc. assign all intellectual property rights to the company that were conceived during his or her work with the company. Such an agreement is necessary because intellectual property does not assign automatically to the company. 

The Nightmare Scenario

Unfortunately, this scenario is quite common: You hire an outside software developer who creates a code that underpins your business. If you do not have an invention assignment agreement in place, the copyright to that software will automatically go to the developer. Your company would only be able to reasonably claim a license to utilize the software. Here is a prime example.

Google v. Uber: Battle Over Valuable IP

Google filed a federal lawsuit against Uber alleging it stole trade secrets and intellectual property and infringed on patents related to Google’s lidar systems, according to Business Insider. Lidar is a piece of technology featured in self-driving cars that allows them to visualize and anticipate what is ahead on a road or highway. Google, through its subsidiary Waymo, claims that a former engineer downloaded more than 14,000 files containing valuable and sensitive information about its Lidar technology and transferred those files to an external storage device.

This litigation is likely going to take years to resolve and cost both companies millions in legal fees. 

What is Included in an Invention Assignment Agreement?

This type of agreement generally features three components:

  • Assignment provision;
  • Disclosure provision; and
  • Waiver provision

The assignment provision requires that an employee assign his or her inventions to you, the employer. The disclosure provision requires the employee to inform the employer of the invention. Finally, the waiver provision requires the employee to list all inventions he or she conceived or patented prior to beginning work with your company and waive any right to claim that the invention created during the scope of his or her employment with your company was actually created prior to the commencement of that employment.

The structure and language used in pre-invention assignment agreements will vary from business to business since there is no standardized, uniform agreement. This is why it is critical to speak to an experienced Orlando small business lawyer and have him or her assist in drafting an agreement that meets the needs of your business.

Contact an Orlando Small Business Attorney Today

The Chidolue Law Firm serves small businesses in and around Orlando, Florida and is ready to help you navigate complex business laws and regulations. Contact our office today at 407-995-6567 to schedule a meeting.

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