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.