When an employee joins a company, the company will usually require the employee to sign an agreement that includes invention assignment and confidentiality terms, commonly known as a Confidential (or Proprietary) Information and Invention Assignment Agreement (CIIAA or PIIAA). A typical CIIAA provides that the company owns and will own any inventions, developments or improvements to inventions made by an employee within the scope of their employment. “Invention” is usually defined broadly to cover technology, software, designs, works of authorship, and processes as well as concepts, ideas, know-how, and other research or confidential information that may or may not be protectable under intellectual property rights, such as patents, copyrights, and trademarks. Confidentiality and non-disclosure provisions in the CIIAA further protect any confidential information of the company provided to or created by the employee in the course of their employment.
Intellectual property assets are valuable to a company’s business, and potential investors or acquirers will want to have confidence that the company does, in fact, own all the intellectual property assets it claims to own. Executed CIIAAs are important for a company to maintain because they provide a clear, documented chain of ownership for the company’s intellectual property assets created by its employees.
Note, however, that an employee cannot assign intellectual property that they do not own. If an employee will be using or incorporating an invention owned by a third party (such as a former employer) into a company’s own inventions, then the company may be required to obtain a license to that third-party invention, including the intellectual property rights associated with the third-party invention. For this reason, CIIAAs typically prohibit employees from incorporating third-party inventions into their work for their employer or require employees to notify and obtain approval from their employers prior to using or incorporating third-party inventions.