Why is an invention assignment and confidentiality agreement (ie. CIIAA, PIAA, etc) so important?
We often advise founders to meticulously protect two critical areas – equity and intellectual property (IP). Equity because it defines the ownership, control and economic upside of your venture. IP because it preserves your company’s competitive edge by ensuring that your startup owns its innovations and keeps sensitive information from leaking to competitors (especially important for tech-focused businesses in which IP is the core asset). Additionally, IP because potential investors and acquirers need to confirm that the startup they’re backing actually owns its own IP.
As a result, one of the best ways to protect your startup’s IP is by implementing a solid invention assignment and confidentiality agreement with your workers.
For contractors (e.g. consultants, advisors), invention assignment and confidentiality terms should at least be incorporated into their services agreements.
For employees, these provisions are usually handled in a standalone agreement such as Confidential Information and Invention Assignment Agreement (CIIAA) or a Proprietary Information and Assignment Agreement (PIAA) because of employees’ much deeper connection with the company and its IP.
Regardless of worker classification, the agreement should cover:
Confidentiality. The worker must keep company secrets (ie. trade secrets, client lists, proprietary data, etc) confidential, even after leaving the startup.
Invention Assignment. Any IP (ie. inventions, ideas, work products, etc) created during (and sometimes for a set period after) by the worker’s service belongs to the startup.
IP Protection. Additional safeguards such as returning of company property and materials upon leaving to prevent the misuse – intentionally or not – of sensitive information or non-competition and non-solicit to prevent competition with the company or poaching the company’s business relationships such as customers, other employees, etc.
A well-crafted invention assignment and confidentiality agreement should set clear expectations, minimize misunderstandings, and give your startup legal recourse if its IP is misused. Don’t take this lightly – protecting your IP is protecting your startup’s future.
