All employees in your company should be required to sign detailed nondisclosure and invention assignment agreements. These agreements provide broad protection for your company’s proprietary information by prohibiting employees from the unauthorized use or disclosure of the information, and by requiring an assignment to the company of all rights and title that the employee may have to inventions created during employment.
Nondisclosure Agreements
Nondisclosure and nonuse agreements are designed to cloak discussions of a company’s proprietary information in secrecy. A nondisclosure agreement should obligate an employee to refrain from unauthorized disclosure of the company’s proprietary information and from unauthorized use of the information. The agreement should also state that the obligation to refrain from unauthorized use or disclosure of the company’s proprietary information continues indefinitely after the employee terminates his or her employment with the company.
You may also wish to consider including the following provisions in your nondisclosure agreements:
- a broad definition of proprietary information that includes personnel information about employees;
- a commitment not to disclose or use third-party proprietary information, including information from joint venture partners or previous employers;
- an agreement that precludes the employee from participating in business activities other than those that the employee is performing for the company;
- a commitment to return all company materials upon termination of employment with the company, including any written or electronic embodiment of proprietary information; and
- an agreement not to solicit coworkers for a defined period after leaving the company.
Assignment of Inventions
An assignment of inventions agreement transfers all rights to inventions made by employees to the employer. Your agreement should require employees to assign to the company all rights to any invention that results from work performed for the company or work that relates to the company’s current business. Any invention made on the employer’s time, or using the employer’s materials, equipment, or trade secrets, should also be assigned to the company.
It is important that your agreement includes an actual assignment of inventions (“I hereby assign to the company…”) rather than an agreement to assign (“I agree that I will assign to the company…”). Although this distinction may seem to be a technicality, an agreement to assign implies that some further act is necessary to document the assignment. As a result, the employee can allege that the actual assignment never took place.
The Tip
Review your employment agreements to ensure all employees have signed nondisclosure and invention assignment agreements. In many cases, your company’s intellectual property is its most valuable asset, so it is well worth taking this small step to secure its value.
