This Wisdom of the Crowd (ACC member discussion) addresses the adoption of a patent invention assignment agreement to protect a company's intellectual property, under US law. This resource was compiled from questions and responses posted on the forum of the Intellectual Property and Small Law Departments ACC Networks.*
*(Permission was received from the ACC members quoted below prior to publishing their eGroup Comments in this Wisdom of the Crowd resource.)
Question:
My board of directors has requested we create a Patent Invention or Assignment of Invention Agreement for new employees to sign.
- Do you use a separate agreement or include it as part of a non-disclosure/confidential information/non-compete agreement? Do you have all employees sign it or only employees in areas that would actually create something? If you started using the form after employees were already hired, did you go back to existing employees and have them sign it? Were you successful in getting existing employees to sign it? Do you have a sample agreement you could share?
Wisdom of the Crowd:
Response #1:
- I've usually seen it as part of the employment/consulting agreement as a section. I find that it limits the amount of paperwork and makes it much more convenient. My preference would be to have all employees sign it. If you think about it, even those who work in marketing are creating IP (perhaps nothing patentable). I would. You'd have to do an amendment and make sure there is consideration.1
Response #2:
You'd probably have to research the relevant jurisdictions (bearing in mind that the relevant jurisdiction is going to be the state you'd plan to enforce the agreement -- most likely the state of residence of the employee at the time you're needing to do something about it) to determine if the state is a so-called "blue-pencil" state or not. (Non-compete is one of those limited numbers of topics where most states won't respect the document's choice of law provision, and courts tend to enforce based on the law of the enforcee's residence based on principles of 'fundamental public policy.') Since you'd likely conclude that in theory that's a 50-state problem, you'll also want to consider drafting the non-compete (to the extent you want one at all...) as self-blue-penciling (i.e., give the judge a way to use the document itself to remove or modify parts of the document that may be offensive under the applicable law without tossing the entirety, which in theory would overcome any state that has rejected the blue-pencil notion).
All that said, I think many might wonder if it is wise to mix in that one element -- non-compete -- in the middle of the whole, for the very reason you elude to. There are certainly plenty of pretty safe provisions like confidentiality that are not likely to get your document tossed out that you could mix in with the invention assignment. Then you could still put the non-compete in its own separate document (allowing you to maybe tailor it only to those employees who really merit it, and that would allow you to make all employees across the board sign the less dangerous confidentiality/invention-assignment document without worrying about the non-compete voiding the whole).
Bear in mind that invention assignment provisions have their own 50-state problem, in that many of our states have enacted magic-word statutes that impact the enforceability of those provisions (i.e., you need the magic words in the agreement or else it's potentially non-enforceable). (These all essentially go towards the notion that you can't use an invention assignment agreement to take ownership of "own time" inventions that were done outside the scope of employment.) I've seen many compromises, ranging from an attached schedule that effectively adds the magic words for each of the states at issue, to a drafting method that attempts to incorporate words from the most likely states and otherwise takes a chance that the words will at least meet the spirit of other states' laws and that the judge will have some willingness to look past literal statute readings. I think (no real research to back me up, just random observation...) in most cases folks tend toward the latter notion, which suggests that most think the risks are fairly low, but as always, "Your mileage may vary."
(Your own analysis of the risk might consider your company and its industry -- Are you dealing with engineers who tend to hop from job to job among competing companies that hate each other and might like to find a way to prevent you from filing that patent? The likelihood then of needing to pull out the document to force the former employee to sign off on something is much higher, as is the likelihood the former employee will be backed by expensive lawyers provided by his new employer. But, maybe you look at your pool of employees and figure the likelihood of them moving is low, or that it's unlikely they'll really care to be seen as burning their bridges back to former employment, and that they'd really prefer to get their names on a patent. Those are judgment calls you'd have to make as you pick your strategy.)2
Response #3:
1. Do you use a separate agreement or include it as part of a non-disclosure/confidential information/non-compete agreement?
No and no - except for a few oldtimers who needed to be retrofitted, it's part of the overall employment agreement. To the follow-up question, I believe ours is a separate item in the employment agreement, not part of the confidentiality/noncompete section. You can have both in the main agreement, so it's all in one place, instead of scattered documents. Just make sure they are in separate and clearly labeled sections. That way if a court strikes a section, it will usually leave the rest of the agreement intact.
2. Do you have all employees sign it or only employees in areas that would actually create something?
Everybody, because you never know who will be involved in the inventions.
3. If you started using the form after employees were already hired, did you go back to existing employees and have them sign it? Were you successful in getting existing employees to sign it?
Yes, and yes. One argument for additional consideration is the continued employment, although courts can look askance at that so use it sparingly. NB: One of the persons who needed to be retrofitted was our head of HR! Apparently in the mists of time when he originally joined, the employment agreements contained neither the noncompete nor the assignment language. He joked that he was being used as a good example.
4. Do you have a sample agreement you could share?
This site has some good basic suggestions: http://www.contractstandards.com/document-checklists/inventions-assignment-agreement-analysis/assignment-of-inventions
You might check this article for some useful information: http://digital.law.washington.edu/dspace-law/bitstream/handle/1773.1/1169/8wjlta79.pdf?sequence=4.3
Response #4:
I'd separate them, and then for the majority of your employees, throw the non-compete in the trash. Why pollute the contract you really want to enforce with provisions of dubious enforceability? If you have employees in California, the non-compete is worthless; good luck keeping the inventions.
I can understand putting top sales people under a non-compete on the way in, or have one signed as part of a separation package. But really - every employee under a non-compete? Admins and janitors? Seems over the top, and not worth the effort.
All IMHO, of course.4
4Response from Collin Webb, Assistance General Counsel, Hexagon Group, Norcross, GA (Intellectual Property Committee eGroup, June 21, 2014).