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Going Digital? Don't Forget an Invention Assignment Agreement

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By George Khoury, Esq. on September 07, 2016 7:00 AM

In today's modern era of the internet and energy drinks, small businesses come in all shapes, forms, and types of tangibility. Businesses today can exist solely in the digital sphere, selling digital products that people only use in digital worlds. Businesses that don't have a presence in the digital world want in. But before businesses hire that pricey developer to start developing, an Invention Assignment Agreement should be signed.

Developing code is not just a science, it's an art. Like photographers, developers and coders are the copyright holders and owners of their code. So before your business hires on that coder to build the next revolutionary Thneed, make sure you know who owns what from the outset.

What Is an Invention Assignment Agreement?

Basically, an IAA is an agreement between employer and employee (or contractor), that provides that all inventions made by an employee/contractor while working for the employer belong to the employer (sample agreement). These agreements are also commonly referred to as an Assignment of Proprietary Rights or just simply a Developer Agreement.

In the world of coding, programming, web building, and so forth, an IAA is required in order to prevent problems down the road. The most common example is when a business hires a developer without having them sign an IAA first. After building something great for the company, the developer then leaves.

A year later, investors are looking at putting money into the company, but find out that the developer and not the company own the rights, or perhaps both have equal rights, to the invention. Investors must take into consideration that the now-gone developer could just sell his rights to the competition, or even give it away for free. Clearly, not getting that assignment of rights at the outset can create big time problems down the road.

When to Sign an IAA?

Employers should seek to have all employees sign an IAA upon hire. If employers seek to have employees sign an IAA after employment has commenced or after a product, invention, or program has been produced, then the company better be ready to pay. All contracts require consideration (a.k.a. money), and asking an employee to sign a new contract requires providing consideration.

An IAA is one of the few things more important than a raincoat in San Francisco. Don't hire developers without protection. Your business's future depends on it.

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