Agreement in which the ownership rights of intangible creations of the mind (e.g. art, designs, software, trade secrets) are transferred
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Proprietary Information and Inventions Agreement Template
A PIIA agreement is a specific type of IP assignment agreement often used between an employer and employee. This particular template is a raw output of Ontra's PIIA generator built on Documate.
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Intellectual Property (“IP”) is an umbrella term for tangible and intangible creations of the mind - work products or inventions that would considered protected from use by another without the creator or owner’s permission (e.g., art, manuscripts, trade secrets, source code, designs, automated processes, customer lists, software programs, etc.). A creator can (but not always do) apply for trademarks, patents, copyrights and trade secret protection. Generally, the creator is the sole IP owner until there is a transaction; there are few exceptions to this rule, such a joint venture without a cooperative agreement. An Assignment Agreement transfers the IP ownership rights from the creator (“Assignor”) to the purchaser (“Assignee”).
An IP Assignment Agreement is critical in determining who owns the rights to use the work product and keep the profit associated with that work product. An IP Assignment is particularly crucial in technology startup firms because it is the legal basis for investor funding. An IP Assignment is also necessary in any profession where an individual is hired for research and development as the agreements assign the ownership from the employee to the employer in advance. Unauthorized IP use will result in a lawsuit (e.g., patent infringement!). Sometimes, the Assignment Agreement is not done properly and the courts will consider the transfer to be a license only (i.e., the creator retains ownership and only grants limited permission to use).
In an employment context, an IP Assignment Agreement must be individual and separate from an employment contract; it is typically referred to as a Confidentiality and Inventions Assignment Agreement (CIIAA) or Proprietary Information and Inventions Assignment Agreement (PIIAA). If an IT Assignment Agreement is not executed in advance, an employer can only receive a “shop right” to use the work or invention as if it received a non-transferrable, nonexclusive license. However, the federal courts rule employment agreements and handbooks can be sufficient to transfer IP rights when those documents include an express assignment. The federal courts also recognize IP rights are transferred when an employee is specifically “hired-to-invent” and succeeds in that invention while employed.
As an owner or employee, it is important to consider what is being signed over - is it one specific invention or conglomerate of future experimental ideas? The Agreement should be specific so that creations made prior to the sale or employment and/or any other creations made unconnected to the employment are not included and ownership is retained. As a purchaser or employer, it is important to ensure that the Agreement is comprehensive to include the transfer of all ownership rights contemplated by the payment price.
An IP Assignment Agreement is a contract - it needs an offer, acceptance, consideration (i.e., exchange of value between the parties), and to be signed in writing. State law is applied to interpret contracts, particularly in the context of employment agreements. However, for transfers of federally protected IP (e.g., trademark, patents, copyright), federal law governs whether there is a proper assignment and in some cases, documents must be filed with the United States Patent and Trademark Office (USPTO). Moreover, at least nine (9) states have enacted specific statutes governing employee invention assignment agreements (CA, DE, IL, KS, MN, NC, NV, and UT); failure to include those statutory provisions invalidate the agreement.
IP Assignment Agreements are a delicate balance of purpose, scope and specific definition to be enforceable; too narrow or ambiguous will allow creations to stay with the inventor. If these terms are not clearly delineated, that entire agreement is unenforceable. A comprehensive IP Assignment Agreements should include the following clauses (with samples for reference):
Clearly state what creations are and/or not included in the transfer; it is beneficial to attach addendums to further specify.
Intellectual Property: any and all intellectual property and tangible embodiments thereof, including without limitation inventions, discoveries, designs, specifications, developments, methods, modifications, improvements, processes, know-how, show-how, techniques, algorithms, databases, computer software and code (including software and firmware listings, assemblers, applets, compilers, source code, object code, net lists, design tools, user interfaces, application programming interfaces, protocols, formats, documentation, annotations, comments, data, data structures, databases, data collections, system build software and instructions), mask works, formulae, techniques, supplier and customer lists, trade secrets, graphics or images, text, audio or visual, works, materials that document design or design processes, or that document research or testing, schematics, diagrams, product specifications and other works of authorship.
Intellectual Property Rights: collectively, all rights in, to and under patents, trade secret rights, copyrights, trademarks, service marks, trade dress and similar rights of any type under the laws of any governmental authority, including without limitation, all applications and registrations relating to the foregoing.
Prior Inventions: all inventions, original works of authorship, developments, improvements, and trade secrets which were made by the Assignor prior to the date hereof, which belong to the Assignor, which relate to the Company’s proposed or current business, products or research and development, and which are not being assigned to the Company; either specific in an attachment or, if no such list is attached, the Assignor represents that there are no such inventions. The Assignor hereby grants to Company a present, non-exclusive, royalty free, irrevocable, perpetual, world-wide license to make, have made, sublicense, modify, use and sell such Prior Invention as part of or in connection with the Company’s products and technology currently under development or in production.
Clearly set out the scope of the assignment to be the operative IP transfer for total ownership. This may be the most important part of the contract; it can be narrowed to a single creation or broadened to include anything created during a certain period of time whether definite or indefinite. The federal courts follow the Filmtec Corp.-Arachnid rule to determine if there was an automatic assignment (i.e., present tense verbs) or a mere promise to assign (i.e., passive verbs in indefinite or future tense):
Automatic (✔️) vs. Mere Promise (❌)
✔️ agrees to grant and does hereby grant and assign
❌ will assign or agrees to assign
✔️ hereby conveys, transfers, and assigns
❌ shall be the property of … and all rights thereto will be assigned
✔️ grant, bargain, sell, transfer and deliver unto Assignor … any and all of Assignee’s right, title and interest
❌ shall be the property of Assignee, and shall be assigned
✔️ Assignee assigns all of his or her right, interest, or title in any invention to the Assignor
❌ such inventions and discoveries belong to the Assignee
The Parties herein agree that in pursuance of this Agreement and in consideration of the payment received hereunder, and other good and valid consideration the receipt and validity of which is hereby acknowledged. Assignor hereby conveys, transfers, assigns, delivers, and contributes to Assignee all of the Assignor’s right, title, and interest of whatever kind in and to the intellectual property, together with the goodwill of businesses related to the intellectual property, services in respect of which the intellectual property is used, and under any registration, if any. Assignor further agrees that all intellectual property (a) developed using equipment, supplies, facilities, or trade secrets of the Assignee; or (b) result from work performed by Assignor for the Assignee; or (c) related to the Assignee’s current or anticipated research and development will be the Assignee’s sole and exclusive property and are hereby assigned by Assignor to the Assignee. This assignment shall survive the termination of the Agreement for any reason.
A perpetual assignment requires a provision to include the intention whether the Assignee can make future transfers to third-parties, which is always limited in scope as to the original agreement. Conversely, there is typically no future transfer rights in a fixed term assignment agreement.
Assignor’s prior written consent is required for any transfer of assign of any right, title or interest in the Intellectual Property, or any ancillary rights derived therefrom, by Assignee to any third-party. Any purported transfer of assignment in violation of this provision shall be deemed null and void.
The Assignor guarantees the Assignee is informed of all IP created for the contract, and warrants ownership and authority to transfer the ownership to the Assignee; otherwise, the Agreement can be legally terminated.
Assignor represents and warrants that: (1) Assignor is the absolute owner of the entire right, title and interest in and to the subject matter assigned hereunder; (2) the Assignor has the sole right and authority to enter into this Agreement and grant the rights to the subject matter assigned hereunder; (3) the subject matter assigned hereunder is free of any liens, encumbrances, security interests, and restrictions on transfer; (4) the Assignor has not previously granted any rights or licenses in the subject matter assigned hereunder to any third-party; (5) to the best of Assignor’s knowledge, the subject matter assigned hereunder does not infringe on the intellectual property or moral rights of any third-party; and, (6) there are no legal actions, investigations, claims, or proceedings pending or threatened, or any basis for any of the foregoing known to the Assignor, relating to the subject matter assigned hereunder.
Assignor will promptly inform Assignee of the full details of all inventions, discoveries, improvements, and innovations, whether or not patentable, copyrightable, or otherwise protectable, which are conceived, completed, or reduced to practice (whether jointly or with others) and which: (1) relate to the Assignor’s present or prospective business, or actual or demonstrably anticipated research and development or (2) result from any work Assignor does using any equipment, facilities, materials, trade secrets, or personnel of the Assignee or (3) result from or are suggested by any work that may be done for Assignee.
Assignor has no other obligations to any other party inconsistent with the Agreement, including but not limited to any consulting agreement, employment agreement, or other agreement or obligation that conflicts with, or would prevent the Assignor from fully performing the Assignor’s obligations hereunder. During the period of this Agreement, Assignor shall not enter into any such agreement or obligation with any other party that would be inconsistent with the terms of this Agreement.
A guarantee for Assignor to help fix any procedural documents (e.g., clearances) or legal proceedings necessary for the Assignee to own the IP rights. The Assignee should be appointed to complete all necessary documents and administer IP rights without the Assignor, regardless if Assignor is unavailable or unwilling.
Assignor further covenants that on the request of the Assignee, it will execute all documents, papers, forms and authorizations, and take such other actions as are reasonably requested by the Assignee, that may be necessary for securing, completing or vesting in the Assignee full right, title and proprietary rights in the subject matter assigned hereunder. Assignor further agrees that if Assignee is unable, for any reason, to secure necessary signatures pertaining to the Intellectual Property assigned hereunder, the Assignor irrevocably designate and appoints the Assignee’s duly authorized officers and agents as the Assignor’s agent and attorney-in-fact, to act for and in the Assignor’s behalf and stead to execute and file any documents with the same legal force and effect as if executed by the Assignor. This power shall survive the death, dissolution or legal incapacity of the Assignor, and shall be valid for all obligations of the Assignor as laid down in this Agreement.
A perpetual clause to prevent losses, unauthorized access, use of disclosure of information to third-parties. The provision alone or paired with Non-Disclosure Agreements (“NDAs”), is a litigation asset to expediently obtain an injunctive order in case of breach.
The Parties hereunder (including agents, representatives, and employees) shall hold and maintain in strictest confidence all Confidential Information relating to and/or arising from subject matter assigned hereunder and shall not disclose the said information to any third-party, except when necessary for the performance of obligations under this Agreement, or requested by a statutory, government, or regulatory authority. Notwithstanding the foregoing, Confidential Information shall not include information in public domain, or which comes to the knowledge of the public through no fault of the Parties. The Parties agree to enter into a Non-Disclosure Agreement the terms of which shall supersede, and which shall survive termination of this Agreement.
Specifically spell out what happens for a party if the contract is breached. This clause is a shortcut to agree in advance to: stop any breach (i.e., injunctive relief); finish the contract obligations (i.e., specific performance); and/or must pay an immediate sum of money (i.e., liquidated damages); and, recovery of attorney’s fees and costs associated (because the court system does not automatically assign this cost). Surprisingly, many IP Assignment Agreements forget to include a remedy provision.
Assignor acknowledges and agrees that Assignee has no adequate remedy at law for a breach or threatened breach of any of the provisions of this Agreement in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and in recognition thereof agrees that in the event of such breach or threatened breach, the Assignee shall suffer irreparable harm that cannot be adequately compensated for by money damages. Assignor agrees that in addition to any remedies at law available to it, the Assignor shall be entitled, without notice to Assignor, to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction, or any other equitable remedy that may then be available. Any requirements for the securing or posting of any bond with such remedy or remedies are hereby waived. Assignor agrees that the Assignee may pursue any remedy available to it concurrently or consecutively in any sequence, and that nothing in this Agreement shall be construed as prohibiting the Assignee from pursuing any other remedies at law or in equity that may be available to it, or any other rights that it may have under any other agreement. Assignor expressly waives any claim or defense that the Assignee has an adequate remedy at law or in damages. The Parties agree that, in any suit, action or proceeding arising out of or seeking enforcement of this Agreement, the prevailing Party shall be entitled to reimbursement in full for its reasonable attorneys’ fees and costs, witness fees, disbursements and any other expenses of litigation or negotiation incurred in connection with such suit, action or proceeding, unless such payment is otherwise prohibited by law.
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