Employers wanting to secure intellectual property rights to their employees' inventions and avoid any disputes down the road will want to have their employees sign a proprietary information and invention assignment agreement. It's often referred to by the initialism PIIAA, or sometimes as a confidentiality information and invention assignment agreement (CIIAA), an employee intellectual property assignment agreement, or a protection of company interests agreement. The name can differ, but the substance, and the protections, are the same.
These agreements provide for two things: (1) the employee acknowledges their obligations to protect proprietary and confidential information as well as trade secrets of the company; and (2) the employee assigns to the company any and all rights to any inventions created by the employee during the course of their employment with the company.
Proprietary and Confidential Information
The agreement should specify "proprietary and confidential information," as well as trade secrets that are specific to the industry. Do not use generic, boilerplate language. What a software company considers to be proprietary and confidential may differ from what an electrical engineering firm would consider proprietary and confidential. The provisions of this section should require employees to hold such information in the strictest of confidence and prohibit any disclosure.
Assignment of Inventions
For companies to secure intellectual property rights for all inventions, the agreement must include an assignment from the employee to the company of any right, title or interest in any invention made (or conceived) by the employee, alone or with others, while employed by the company. According to Cooley, one key phrase that must be included in this agreement is "in the future." Because these agreements are typically executed when the employee is hired, the employee has not begun working and has not yet had the opportunity to invent anything while employed. The agreement must include language for present assignment of future inventions whereby the employee agrees to assign and and does hereby assign for any future inventions made while employed with the company, thus protecting the company from any future inventions during the course of employment.
Many agreements contain carve-outs, which exclude the employee's prior inventions, which are listed out in the agreement. These need to be carefully drafted to be fair to the employee, with respect to overreaching, and fair to the company for protection, or else certain prior inventions may become subject to the assignment of inventions.
Certain state laws have specific requirements for these agreements. For example, California state law provides that inventions that are made on an employee's own time — with their own supplies, facilities and equipment, without using any of their employer's trade secrets — are owned by the employee, unless the invention somehow relates to the employer's business. Illinois and Washington have similar rules. Thus, special attention needs to be paid to the drafting of these agreements for any exceptions.
So, Should You Have Your Employees Sign a PIIAA?
For certain businesses, in creative fields (such as design and engineering) and medical fields (such as device and pharmaceutical), for example, it would be prudent to have employees sign both agreements. These are fields where proprietary and confidential information and trade secrets would need to be highly protected and the likelihood of invention among employees is high.
If your business is in a field where invention is not probable, a confidentiality agreement would still be highly recommended, as long as such an agreement is tailored specifically to the business. Gathering executed documents upon an employee's hire and protecting the company's interests can proactively help eliminate headaches and potential liability down the road.
This article provides general information, and should not be construed as specific legal, HR, financial, insurance, tax or accounting advice. As with all matters of a legal or human resources nature, you should consult with your own legal counsel and human resources professionals. ADP shall not be liable for any direct, indirect, special, consequential, incidental, punitive or exemplary damages in connection with the use by you or anyone of the information provided herein.
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