A confidential information and invention assignment agreement (CIIAA) protects intellectual property like trademarks and patents, work products, business ideas, and internal processes.
It prevents the loss of this information by unscrupulous competitors or those seeking to claim the idea as their own. A business has the right to protect its intellectual property when it contributes its funds and resources to ideas or inventions, and a confidential information and invention assignment agreement can provide this protection.
When to Use
You may want to use a confidential information and invention assignment agreement if:
- You own or manage a business and want to protect intellectual property.
- You work in human resources and need to update documents covering intellectual property.
- You want to protect against the disclosure of confidential information related to an invention.
- You want to ensure exclusive ownership of an invention.
Limits on Invention Assignment Agreements
There are limitations to what a confidential information and invention assignment can do. Some of these restrictions are placed by state law. For example, California (California Labor Code § 2870) and Washington (Washington Revised Code § 49.44.140) will not enforce an agreement when the invention was created entirely on the employee’s time and if they didn’t use any employer resources to invent it.
This limitation can deal with complicated nuances, but it is essential to understand that this agreement’s provisions must comply with state law.
The burden of proof usually rests with the employee to show they didn’t use company resources or knowledge in making their invention. Showing this proof may be challenging for the employee, so the agreement will likely remain enforceable despite any challenges by the employee.
How to Write a CIIA Agreement
Follow these steps to write an effective CIIA agreement:
Step 1 – Describe the Invention Assignment
Most contracts will assign intellectual property rights from the employee to the employer. These clauses will precisely define the invention and intellectual property that the company will own.
It should also specify all rights the employee is ceding to the employer. If the employee is to retain a partial interest as part of your agreement, this clarification will also be included here.
Step 2 – Explain the Confidentiality Requirements
This section will explain that any information related to the invention is confidential. It will also warn of the penalties for a breach of confidentiality.
The employee is not permitted to disclose the information except as permitted by the employer or the contract.
Outlining the effect of a breach helps to create an enforceable contract and warn the employee that you are serious. Some CIIA’s may also contain non-disclosure clauses to ensure confidentiality.
Step 3 – Highlight Any Exceptions
Some states require that a confidentiality and invention agreement have exceptions. This usually includes exceptions for employees who did not use company time, intellectual property, or resources in creating their invention.
Failure to include this exception is often damaging to the contract if a state requires exceptions.
Step 4 – Include Non-Compete Clauses
Many CIIAs include non-compete clauses as well. These clauses state that the employee isn’t allowed to enter business in the same industry for a certain period after leaving the company.
This clause prevents an employee from taking inventions they’ve made during their employment to another competitor or using them in a business of their own.
Non-competes have particular legal requirements in many jurisdictions to be enforceable. In certain professions, a non-compete may be against public policy and unenforceable. Make sure that an attorney analyzes your agreement to ensure it’s enforceable.
Step 5 – State the Duration of Agreement
The contract must explain when the employee’s inventions will become the company’s property. Many clauses explain how this will happen automatically at a particular time or the commencement of a specific event.
This is usually when the company employs the employee and can extend the employment for a certain period.
Step 6 – Provide the Governing Law
Provide the name of the state that will govern the agreement. If an issue arises in the future, you can refer to that particular state’s laws for guidance on how to proceed.
Is a Confidential Information and Invention Assignment Agreement Enforceable?
A properly drafted CIIA agreement is legally enforceable. It’s a contract between the employee and the employer and must comply with your state’s general contract requirements. It should typically include:
- Clear terms of the agreement
- Mutual acceptance of the terms
- An offer and an acceptance
- Consideration for the contract
CIIA agreements, in particular, must meet your state’s specific legal requirements. Different jurisdictions may require certain elements to enforce the confidentiality & invention assignment agreement.
