Without proper agreements, intellectual property created by employees and contractors may not belong to your company. IP assignment clauses prevent disputes.
Key Takeaways
- Work for hire has specific legal requirements
- Assignment agreements should be signed at hiring
- Consider present tense assignment language
- Address prior inventions
Best Practices
- Include in employment agreements
- Separate contractor IP agreements
- Invention disclosure procedures
- Document chain of title
Work for Hire: Not What You Think
Many founders assume if they pay someone, they own the work. Under US Copyright Law, this is FALSE. Unless a written agreement explicitly states "Work Made for Hire" (and the work falls into specific categories) or assigns the IP, the creator owns it.
We see startups effectively un-fundable because they paid a dev shop $50k to build their MVP but never got an IP assignment. The dev shop technically owns the code. You must have every contributor—employee, contractor, or co-founder—sign a Proprietary Information and Inventions Assignment Agreement (PIIAA).
Pre-Invention Assignments
California and other states limit how much a company can claim. Generally, you cannot claim inventions a worker developed entirely on their own time without company assets. Your IP agreements must legally carve these out (e.g., via a CA Labor Code 2870 notice) to be enforceable.
The "Assignment of Inventions" Loophole
Standard PIIAA (Proprietary Information and Inventions Assignment Agreement) forms assign IP created "during the course of employment." Does this include a SaaS app you built on Sunday morning?
In California, Labor Code 2870 protects employees' inventions developed entirely on their own time without employer equipment. However, the burden of proof is on YOU. Best practice: List your "Prior Inventions" in the exhibit attached to your employment contract to explicitly exclude them from the company's grasp.
Protect Your Business from Costly Legal Mistakes
A handshake deal is fine until things go wrong. Whether you're starting a company, negotiating a contract, or protecting your IP, you need clear legal agreements. Don't risk your hard work.
We offer a free 15-minute consultation to review your business needs.
Get Your Free Consultation NowDo I need to file a patent to own the IP?
Not necessarily. Copyright arises automatically upon creation. However, owning the copyright doesn't protect the "idea" (that requires a patent). It protects the specific code/text.
Disclaimer: This article is for general information only and is not legal advice.