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An Invention Assignment Agreement is written contract in which one party (assignor) assigns, grants, or otherwise transfers all right, title, and interest in the assignee’s future inventions to a second party (assignee). In laymen’s terms, an inventor gives up the rights in his inventions. Normally, one would ask what would possess an inventor to do such a thing. And the answer would be, as usual, money.
Invention assignment agreements are often contained within employment contracts. A company hires an employee, pays him, and then requires that all work he does for the company-all inventions he creates-be owned by the company.
The world of invention assignment agreements can be murky. A technology firm, for example, is constantly seek to hire new, fresh talent specifically for the creation of novel, inventive ideas. At the same time, a particularly brilliant employee may lead to the tech firm’s undoing if the employee determines a way to profit from his inventions without having to rely on the company. Or worse, if the employee acquires knowledge through his employment with the company that then allows him to perfect his inventions. Thus, companies look to protect themselves by having employees agree to, along with the assignments, confidentiality provisions and perhaps non-compete provisions contained in one inclusive document.
Other important provisions in the assignment state that the employee will disclose all inventions in a timely manner and that the employee will assist as necessary to help register and secure the patent rights for the inventions. Further, an assignment does not alter the employee’s at-will status. That is, the company may always fire or lay off the employee, but to do so would not change the fact that the employee has given up his rights in the inventions. What is more, the assignment may call for the employee to continue to assign his inventions, if they were conceived during his term of employment but not “reduced to practice” until later, to the company for a time (a “maturation period”) after his employment has ended.
Some companies have tried to take advantage of employees, arguing that “works made for hire” (which is the work product created by the employee in the scope of his employment) should include all inventions that employee develops during his the term of his employment. Thus, if the employee is an engineer who revolutionizes the cell phone industry by developing a new smart phone, his cell phone industry employer might try to argue that new, improved tooth brush that the engineer developed in his spare time also belongs to the company. States and courts have taken a dim view of this approach, however, and usually concluded that the second invention is unrelated and not developed within the scope of the employee’s employment.
An assignment could easily be confused with a license, but the two are distinct instruments. Under a license, the inventor allows a second party to use the invention for a period of time-perhaps a day or a year or perhaps indefinitely. However, the inventor never gives up ownership of the invention. Under an assignment, by contrast, the inventor does give up ownership of the invention. Ideally, the inventor is well compensated in both cases but especially in the latter case.
It is not simply the invention that the employee gives up; it is also the data and information-processes, know-how, trade secrets-that the employee developed to get to the invention. Thus, to assign away these rights is no small matter. The employee must ensure that he is being adequately compensated for doing so and that his livelihood will not be adversely affected by the invention assignment agreement should his employment for the company come to an end.