An important but all too often overlooked consideration in starting a new business is the assignment of intellectual property rights. Intellectual property is any work or invention that is the product of creativity. The way a creator protects their rights in their creation—and prevents others from using it without permission—is by securing a copyright, trademark, or patent, depending on the type of creation.
An intellectual property assignment agreement is a contract that provides for the transfer and assignment of intellectual property rights from the creator to someone else, often an employer or company. Accordingly, in many businesses, these types of agreements are critical for ensuring that the company—and not the employee—owns the rights to the work or invention related to the business that the employee has created.
The Importance of an Intellectual Property Assignment Agreement
An intellectual property assignment agreement also called an assignment of intellectual property rights agreement, should be a part of every employee's contract packet in certain industries, especially those in creative or technology fields.
For starters, it makes the relationship between the employer and employee clear regarding any creative works or inventions made by the employee during the course of their employment.
For new businesses, an intellectual property assignment agreement is a critical document that potential investors want to see from the get-go. More specifically, they want to see that the business—and not individual employees—will have complete ownership of all intellectual property related to the company they are considering investing in.
Moreover, having such an agreement in place can help keep your business's intellectual property safe from those who would seek to steal it. One type of intellectual property threat is that posed by the entities popularly known as patent trolls.
Components of an Intellectual Property Assignment Agreement
While specific provisions may vary by industry—and the types of intellectual involved in the business—two primary provisions should be included in all intellectual property assignment agreements:
- The requirement that the employee promptly disclose ideas, discoveries, inventions, and related work product to the company
- The stipulation that the company owns the ideas, discoveries, inventions, and related work product of the employee
Some companies also include confidentiality in intellectual property assignment agreements, which prohibits the employee from revealing trade secrets, data, designs, strategies, and other confidential information and knowledge gained through their employment under the specific terms of the contract.
Usually, along with this provision is the requirement that the employee returns any confidential material upon termination of employment with the company.
Non-compete Agreement or Intellectual Property Assignment Agreement
A non-compete agreement can be another document critical to your company's long-term success, and the good news is that you can combine it with an intellectual property agreement simply by including non-compete language in one of the sections.
Generally, a non-compete clause is just what it sounds like: It prohibits the employee from working for a competitor within a certain geographical area and for a certain period of time after leaving the company. The theory behind a non-compete clause is that the company has invested heavily in the employee's development throughout the course of their employment with the company, and it doesn't want the employee to go to a competitor who would benefit from that investment.
If you're setting up a business, you should be proactive in securing your intellectual property rights. Depending on the work product that comes from your employees, you could end up protecting the core of your business for the long haul just by crafting this one, all-important document from the outset.
If you want to ensure you're properly protecting your intellectual property, consider consulting an experienced attorney to guide you through the process of creating this document.