Updated: May 21, 2022
Intellectual property created or developed by an employee represent the most valuable assets held by many companies—especially startups. It is common for new hires at many businesses to sign an invention assignment agreement. This agreement, which is often included as part of the larger employment contract, stipulates that any inventions or intellectual property made by an employee belongs to the employer.
Not having your new hires sign invention assignment agreements could lead to your employees walking out with your company’s essential assets on their last day of employment. Not every company needs to implement this type of agreement into its employment contracts, but many do.
Anatomy of an Invention Assignment Agreement
As the employer, your first order of business is to determine what, exactly, you want protected in the assignment agreement. Most companies want to retain ownership of inventions (patents) and original works of authorship (copyrights). Yours might need to cover trademarks (brand identifiers).
Each invention assignment agreement is unique. However, yours should probably include:
- Disclosure of prior inventions. This provision stipulates that any inventions an employee made prior to their employment with your company will continue to be owned by the employee. The employee should also agree not to use any prior inventions in connection with their future job duties without your permission.
- Returning invention documents. Before any employee stops working for you, they are obligated to return any documents related to inventions they made during their course of employment. Furthermore, they agree to not recreate the inventions after they leave.
- Assignment provision. This is the meat of the agreement. By signing it, employees agree to relinquish ownership and control of inventions they create during the course of their employment. Some provisions further require employees to notify employers within a specified period of time after they create something that is subject to the invention assignment agreement.
- Dispute resolution clause. You should be prepared to defend your invention assignment agreement in court if a current or former employee violates it. Some employers include a mandatory arbitration clause in these agreements. It would be smart to also stipulate the legal venue and jurisdiction for deciding disputes related to the agreement.
Limitations on Arizona Invention Assignment Agreements
Relatively speaking, Arizona law is not hostile to invention assignment agreements. However, employers are required to set out such an agreement in writing for it to be enforceable. Additionally, employees are not required to assign ownership for inventions made on their own time and without company property.
Contact a Skilled Arizona Attorney for Proactive IP Management
Invention assignment agreements are common for many Arizona businesses. Requiring new hires to sign such an agreement, however, means that you are asking them to give up certain rights. Some employees would not think twice about this, but others might.
The best way to determine the best agreement for your company is to speak with an experienced business attorney. Monahan Law Firm is dedicated to helping business owners achieve their goals, and we’d love to do the same for you. Call us at (623) 385-3190 to schedule your consultation.