It’s sometimes very difficult to draft that perfect employee agreement – you know – the kind that fully protects your rights to intellectual property and inventions created by your employees while at the same time encouraging creativity. Many employers mistakenly believe they should make the agreement overly broad – favoring their interests or make it overly restrictive -not fully protecting their interests in order to encourage new inventions; however, courts tend to frown on any type of extreme agreement.
If you make one overly broad, you run the risk of the agreement being unenforceable either in part or in whole. If you make the agreement overly restrictive, you run the risk of employees taking the invention you paid them to make and not letting you reap the benefits from it.
To get to the best agreement, there are some very specific points to address:
- Define the arrangement. Formally and clearly define the consideration, which is what is being exchanged between you and the employee. This is usually continued employment and pay in exchange for work, innovation and creativity. This section should also address additional royalty payments should an invention become wildly successful.
- Define the terms you are using. Terms such as “employment”, “invention”, “trade secrets”, “software” and others should be fully defined so that no one walks away from the agreement with a different idea as to what each term represents.
- Define the scope. You need to address the specific work that is covered under the agreement. For example, should work completed off-premises, with a third-party, or using your resources be considered within scope? In most cases, the answer is yes, although some companies exclude work done on the employee’s time, unrelated to work the company does but that uses minimal company resources, such as using the company-supplied laptop.
- Define the owners of the creation. This is called assignment-of-invention and should be directly addressed. In one case regarding Stanford University, the agreement read that the employer “agrees to assign” instead of assigning rights immediately. This little detail cost Stanford millions of dollars because it implies that the employee owns the invention in the first place.
- Define the creative process. You need to make sure employees are documenting and keeping a record of what’s being invented, what resources are being used and what information is learned during this process. If you, as the employer, own the intellectual property, then you should also have easy access to all of the metadata related to the intellectual property process.
- Define waivers. Most waivers relate to hobbies or off-duty work, but should be very specific on what is excluded. Waivers usually address outside-of-work creations that are not related in any way to the work done for you, are not in competition with your company, and are not created using your resources or your time.
If you need an attorney, regardless of where you live or operate your business, please feel free to call us at 877-868-7239 – we will be glad to help.