As an Inventor, Should I Sign an Invention Assignment Agreement?

An Invention Assignment Agreement, often known as an Intellectual Property (“IP”) Transfer Agreement, is an agreement where one party assigns its intellectual property rights to the other party, either absolutely or subject to compliance with the terms of the underlying agreement.

This means the inventor (e.g. software developer) assigning his/her rights can no longer claim the property as their invention. The property now belongs to the person to whom the rights have been transferred.

Be on the lookout for these obligations!

As the agreement is generally brought forward by the company, an IP Transfer Agreement often favors an ‘assignee’. Here are some clauses to look out for if you are the inventor, or ‘assignor’:

  • Assignment of Intellectual Property - As the inventor, you should confirm what specific rights you are transferring to ensure that the company does not have sole right over any IP you will be using for future products you develop independently. You may choose to exclude your background IP and your IP toolsets from the assignment of intellectual property.
  • Release - Some agreements will include a clause that states the assignor will not bring any legal action in relation to the transfer of their IP. This could prevent you from suing for any breach by the assignee of the underlying contract.
  • Third Party Infringement - The to-be-owner of your IP will often want to ensure that the invention they are receiving does not contain any intellectual property of another third party, or that if it does, there is no breach of the third party’s rights. They want to confirm that they will not have unexpected legal proceedings due to this transfer. The inventor should make sure that by transferring their invention, they are not using any third party IP without permission from the third party.
  • Other Representation and Warranties - Depending on the assignment, the assignor may include a number of representations and warranties, including: (a) no licenses granted to third parties; (b) the assigned IP is original work and has not been copied; and (c) there are no pending legal proceedings in relation to the assigned IP.

Should I sign?

There can be a number of reasons to sign an IP Transfer Agreement, including:

  • You are developing or have developed the work solely for the sale of such work, and the transfer is a condition of payment for the work;
  • You are an employee or shareholder of the assignee company; or
  • You are selling a company and the purchaser has made the IP transfer to the company a condition of the sale.

For examples of IP Transfer Agreements and the clauses discussed in this blog, check out Clausehound’s Small Business Law Library!