Employee and Intellectual Property Considerations
What IP Issues to Address When Setting up a Business
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Table of ContentsWhat are the primary Intellectual Property and Employee Considerations for New Business?Employee and Contractor MattersAt-Will Employment Offer LetterProprietary Information and Inventions AgreementIndependent Contractor Services AgreementIntellectual Property MattersUnilateral and Mutual Nondisclosure AgreementAssignment of Intellectual Property from Founders to the CompanyMemorandum regarding Trademark Matters for a New Company
What are the primary Intellectual Property and Employee Considerations for New Business?
Startups must generally consider the process for contribution of IP to the startup and the protection of IP created by employees or within the business. Each of these procedural steps are discussed below.
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Employee and Contractor Matters
At-Will Employment Offer Letter
The at-will employment letter will outline the rights of employer and employee to end the employment relationship.
- Note: State law differs with regard to the extent to which an employee is at-will.
Proprietary Information and Inventions Agreement
Employees will often develop intellectual property in the course of employment. A detailed invention agreement will outline the ownership rights of the corporation with regard to employee inventions. Lastly, employees will come into contact with proprietary information of the corporation, such as trade secrets or R&D not currently subject to intellectual property protection. This agreement puts employees on notice of the restrictions from disclosure or use of this information outside of the business.
- Note: Often, founders will come into the firm by contributing valuable intellectual property. This is generally covered in the shareholder subscription agreement.
- Sample Confidential Information and Invention Assignment Agreement (Employees): https://www.orrick.com/Events-and-Publications/Documents/1960.rtf
Independent Contractor Services Agreement
This agreement establishes the ownership rights of the corporation with regard to intellectual property created by independent contractors in the course of a project.
- Note: As with employees, independent contractors may contribute to the development of intellectual property.
- Sample Confidential Information and Invention Assignment Agreement (Consultants): https://www.orrick.com/Events-and-Publications/Documents/1961.rtf
Intellectual Property Matters
Unilateral and Mutual Nondisclosure Agreement
This puts employees, contractors, suppliers, etc., on notice regarding the prohibition against disclosure of certain trade secrets or intellectual property.
- Sample Mutual Non-Disclosure Agreement: https://www.orrick.com/Events-and-Publications/Documents/1962.rtf
Assignment of Intellectual Property from Founders to the Company
This may be contained within the subscription agreement or as a standalone document.
Memorandum regarding Trademark Matters for a New Company
The company may resolve to preserve a specific trademark right through registration.