Should You Sign an Inventions Assignment Agreement?

In many states, employers may require employees to transfer ownerhship of works created during the employment relationship.

If you do creative, engineering, design, or development work, your employer might ask you to sign an invention assignment agreement: a contract giving your employer ownership rights in inventions and intellectual property you develop during your employment. Read on to learn whether these agreements are enforceable, what they require and allow, and whether you should sign one.

What Is an Invention Assignment Agreement?

An invention assignment agreement is a contract that gives the employer certain rights to inventions created or conceptualized by the employee during the employment relationship. Typically, this type of agreement requires the employee to disclose any such inventions to the employer, to “assign” (legally transfer) ownership rights in such inventions to the employer, and to assist the employer in getting a patent on any such inventions.

These types of agreements might include other clauses as well. For example, the agreement might ask the employee to list all inventions the employee created before working at the company (which the employer will not own the rights to). This prevents the employee from later claiming rights to any inventions that are not on the list. In other words, all inventions not listed are assumed to be the property of the employer.

Assignment agreements often include other standard contract language too, such as a provision requiring the losing party in a dispute to pay for attorneys' fees, or an “integration” clause, stating that the written contract represents the entire agreement between the parties (that way, neither party can later claim that they had a separate side deal or handshake agreement that doesn’t appear in the written contract).

Limits on Invention Assignment Agreements

Some states place limits on how far an inventions assignment can go in requiring an employee to give up his or her rights. In California, for example, an invention assignment agreement is not valid as to inventions created entirely on the employee’s own time, without using any of the employer’s resources or property (including intellectual property). (Although there are exceptions where the invention results from the work the employee did for the employer or relates to the employer’s business or anticipated research or development.) California employees who are asked to sign an invention assignment agreement must also receive a written notification of these rules.

A handful of other states, including Illinois and Washington, have similar laws. (See Who Owns Patent Rights? for more information.) If you work in one of these states, make sure any contract you are asked to sign meets your state’s requirements. If you can’t figure out whether the contract is legal, consult with a local employment lawyer before signing.

Should You Sign an Assignment Agreement?

If you are asked to sign an invention assignment agreement, and you anticipate you might create something valuable during your employment, it’s probably a good idea to talk to an experienced employment lawyer. A lawyer can explain how courts in your state have interpreted its intellectual property and employee ownership rules, and he or she can review the contract to see whether it can be enforced.

Among the things to consider in making this decision are:

  • Can your employer require you to sign? If the contract is legal, and you will be hired as an at-will employee(one who can be fired at any time, for any reason that is not illegal), your employer can probably require you to sign the contract as a condition of employment. While the employer can’t force you to sign, it can refuse to hire you if you don’t.
  • Are you likely to invent during your employment? If you are a creative tinkerer, always coming up with ideas and improvements, you might not want to sign away your rights to earn some money off whatever you invent.
  • Can you carve out your inventions? If you do your own work in the same field in which you’ll be employed, you might be able to arrange a side deal. For example, if you are hired to develop fitness apps for smartphones, and you like to spend your free time developing apps that help people manage their time better, you might want to talk to your employer before signing the agreement. Be specific about what you plan to work on during your employment, and ask your employer to carve that type of work out from your invention assignment. A lawyer can help you with this.

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