invention and assignment agreement

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Employee proprietary information and inventions assignment agreements: what they do, and what could happen without them

The typical onboarding process for a new employee at nearly all companies in most industries includes a requirement for the employee to sign an agreement regarding confidentiality and ownership of inventions, copyrights and other intellectual property.  This article explains the purpose of such an agreement and consequences that result from a failure to have such agreements signed by each employee.

What is a PIIA?

The agreement goes by many names, but tech-savvy companies often refer to them as PIIAs (or ''Pee-as'' for short). PIIA is the acronym for the most common name for these agreements, ''proprietary information and invention assignment'' agreements.  The typical form of agreement addresses two main areas: confidentiality and ownership of intellectual property. 

The agreement requires that an employee maintain the employer's non-public and proprietary information confidential and contains language similar to what you would see in a non-disclosure agreement ( see more about non-disclosure agreements ). 

The agreement also requires that the employee agree that whatever the employee creates, discovers, develops or invents while employed with the company is owned by the company. Companies that are in the business of developing products or technology that are protectable by copyright (as is the case with most software companies) can rely on the work for hire doctrine under US copyright law, which automatically gives the employer ownership of copyrights in works of authorship ( eg , software, manuals and documentations) written or prepared by an employee within the scope of his/her employment. The work for hire doctrine, however, does not apply and ownership is not automatically vested in the employer in the case of other intellectual property rights, most notably in the case of patents (see our article providing an overview of  intellectual property rights and a more detailed discussion about  copyrights and  patents ). 

Therefore, the PIIA is the employee's agreement that everything created by the employee for the employer is owned by the employer, and if the employer needs the employee to do anything or sign any document to confirm that the employer owns all the rights in the intellectual property developments, the employee agrees in the PIIA to do so.

PIIAs will also often include non-solicitation clauses and, for those employees working in states where non-competition clauses are enforced, the agreement may also include a non-compete clause (see our article discussing  non-solicitation and non-competition clauses ).

Does the company really own everything the employee creates?

If an employee can show that he or she created intellectual property on their own time and without the use of any of the employer's facilities, equipment, supplies or trade secret information and if the intellectual property did not relate at the time of development to the employer's business or actual or anticipated research or development, then the employee would continue to own such intellectual property. 

In some states, such as California, Washington, Texas and Illinois, this exception is expressed in a statute that requires that the PIIA include a notice of the exception.  Such statutes favor the employer in that the burden of showing the exception applies is typically on the employee.

What happens if I don't have my employees sign PIIAs or if the PIIAs don't include all the bells and whistles?

Whenever a company goes through a financing, whether it is a seed round or an institutional VC round, or if the company is going to be acquired, the investors or acquirer will conduct due diligence. One of the issues that they will review is whether or not all the employees have signed PIIAs and whether or not those PIIAs require employees to assign to the company ownership of all intellectual property rights to developments created by the employee. Investors and acquirers want to make sure that the company owns its intellectual property, products and technology. 

Depending on where the company is in its lifecycle, the due diligence may focus on all employees, former and current, or it may just focus on the former and current employees that have been involved in research and development or engineering activities. (The failure of the company to obtain a PIIA from an employee strictly in an administrative capacity will generally not create a material issue). If due diligence identifies a problem with the PIIAs, or reveals that PIIAs were not signed, investors and acquirers may require that the company obtain signed PIIAs (or the equivalent) after the fact, which may necessitate the company having to pay the employees something in exchange for signing the agreement so that it is binding or, worse yet, give a former employee leverage to ask for something more. Giving someone leverage on the cusp of a financing or an acquisition may not end well for the company.

While PIIAs may seem like a routine document that is available from numerous online sources, it is essential that an employer have a form of PIIA that includes provisions that is enforceable and current and will withstand scrutiny from investor and acquirer's counsel. If you have questions about your form of PIIA, or if you want to make sure that you have forms of PIIA that will be enforceable for your employees wherever they may be located, within or outside the United States, please contact a member of our Technology, Data and Commercial practice .

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Legal Templates

Home Business Assignment Agreement CIIAA

Confidential Information and Invention Assignment Agreement Template

Use our confidential information and invention assignment agreement to protect the work employees produce on company time.

Updated February 5, 2024 Written by Josh Sainsbury | Reviewed by Brooke Davis

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.

What Is a Confidential Information and Invention Assignment Agreement?

When to use a confidential information and assignment agreement, limits on invention assignment agreements, how to write a ciia agreement, is a confidential information and invention assignment agreement enforceable, confidential information and invention assignment sample.

A confidential information and invention assignment agreement is a legal contract that gives an employer certain rights to inventions. These inventions refer to all the work that employees create during their employment with company resources, on company time, and for the company.

This agreement requires the employee to disclose inventions to the employer and “assign” ownership rights of the invention. The document will also state that the employee must assist the employer in obtaining a patent on the invention, when applicable.

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.

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.

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.

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.

This sample CIIA template can help you get started on drafting your own. Download it below as a PDF or Word File:

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The document above is a sample. Please note that the language you see here may change depending on your answers to the document questionnaire.

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