Employee Intellectual Property Assignment Agreements – October 2024

Some employees are hired specifically to innovate and improve an organization’s technology. Most improvements are incremental changes that improve performance, efficiency, or productivity.

Before engaging such employees, prepare a written agreement so the invention for your company will be entitled to claim exclusive ownership if it becomes a patented product. Simply paying someone to create a patentable item does not automatically convey ownership. The employee or consultant’s contract must provide that the company has ownership of the patent, copyright, or trade secret. The right to use the invention should also be licensed via the same or a separate agreement.

Select Trademarks Carefully

After drafting your trademark(s), run a search to confirm they are available and not already taken. Your new mark needs to be available and protectible against a cease-and-desist notice. It should be somewhat different, not confusingly similar. If it is, you may be exposed to a cancellation action in the trademark trial and appeal board. The cost of such litigation is slightly less than standard district court litigation. You will need to weigh the cost of a cancellation/enforcement proceeding against the marketing and branding costs required to switch to a different trademark.

Protect Your Trademarks

If you foresee only regional use, file your trademark application with the Texas Secretary of State. For broader use, file your trademark applications with the USPTO. Prosecuting those applications to obtain state or federal trademark registration will be a cost of doing business. You want to enter commerce using a trademark that adds value and is distinct enough to prevent others from using it via statutory remedies.

What If Inventions or Copyrightable Material Have Been Created Without a Written Agreement?

Without a written agreement, the default position is that an invention or copyrightable material created by your employee or consultant will be their property. They will own the resulting patent, despite you having paid the labor and materials to create the innovation.

Best Practices

We advise that, when hiring people to invent something, your contract requires them to assign their rights to your company for any patent or copyright. The assignment agreement should address the technology, consideration (such as wages, special bonuses, or portions of profits), and state that your company owns any resulting trade secrets, patents, or copyrights.

Such agreements should be confidential. Have employees sign the IP assignments within the employment agreements during the onboarding process, before they start working. If you are behind on this, work to catch up as soon as possible.

State laws vary on what legal elements are required to make such contracts valid. It is always a good idea to include a clause operating as a present assignment of future inventions. States that already have statutes governing employee assignments include California, Delaware, Illinois, Kansas, Minnesota, Nevada, New Jersey, North Carolina, Utah, and Washington.

MARCUM FORD PC – Oct. 2024