How Should I List Existing "Inventions" for an Invention Assignment Agreement?
I’ll start by mentioning the obvious: Invention assignment agreements differ in important ways. The effect of the agreement may also differ, depending on state law. So you want to be sure that you understand your agreement and/or get legal advice on its particular terms and the relevant state law. That’s not a boilerplate warning. The details can be really important to you.
That said, there are three basic approaches here. Which you take depends a lot on your circumstances. I’ll try to give some pointers below that may help you think it through.
The first approach is to disclose everything in painstaking detail. The language of the typical invention assignment agreement defines the things your assigning and/or disclosing in very broad terms. So you’ll never really give a full disclosure. It just isn’t possible. But you can make a valiant effort.
There are two basic advantages to this approach. The first is that it’s what the contract technically calls for. There’s something to be said for that, but bear in mind that it’s not really what the contract is after. More about that below. The second is that dumping a large amount of useless information into your disclosure can have the effect of obscuring a few tidbits that might raise eyebrows if you disclosed them on their own. If you’re doing it for the second reason, remember that your employer may well feel unhappy later on about having missed the disclosure and you may have to defend what you did. So don’t get cute. Disclose the sensitive stuff clearly and just hope no one has the patience to get to it.
There are also two basic downsides to this approach. The first is that it’s painful for you to do. The second is that it’s potentially painful for your new employer. Most people don’t use the disclosure form to make a huge data dump. So you’ll stand out if you do. Some employers will take it in stride. Others will be annoyed. Although the terms of a typical inventions assignment agreement technically call for you to make massive disclosures, they’re really aimed at preventing you from claiming that some major innovation you start commercializing within seconds after leaving the company was really developed before you ever arrived. The broad definition of “invention” is designed to discourage you from trying to slip your innovations through a loophole in the language. The upshot is that, although they’ve theoretically asked for it, your employer may still be annoyed if you deliver a voluminous amount of irrelevant information.
People are sometimes inclined to take the volume approach because they’re concerned that the language of the agreement might forfeit their rights to anything they forget to write down. There are several reasons this isn’t as big a concern as you might think. First, if you’re in California, Labor Code § 2870 puts significant limits on what your employer can claim, regardless of the contract. Basically, they can’t claim anything you developed before you arrived or anything that’s unrelated to their business (unless you used their facilities to develop it). That won’t necessarily prevent a fight over when you developed something closely related to the employer’s business, but if you have good evidence of the timing (e.g. timestamped e-mails), you’re pretty much in the clear. If you didn’t disclose, maybe you breached the contract, but the remedy is unlikely to be forfeiture of your property (in most situations, it’s unlikely there would be a remedy that would justify suing you). Second, employers aren’t asking you to sign these things in order to grab your stuff. They’re asking you to sign them to prevent you from grabbing their stuff. Yes, I know, they’re worded very broadly. That’s because narrow wording invites bad behavior. Alas, we live in a world where opportunism is a significant problem. So, as a practical matter, employers rarely invoke these agreements unless they have pretty good reason to believe the employee is trying to leave with some company IP. Rarely doesn’t mean never, but you’re playing the odds in everything you do and the odds are pretty good here.
The second approach is to disclose the things you think are most important. Generally speaking, that means projects that (1) you might want to pursue commercially in the future, and (2) your employer might be able to claim if you developed them while employed. One advantage of this approach is that it’s what the contract is really getting at. As discussed above, although the disclosure clause is technically asking you for an impossible data dump, it’s really trying to get you to make a record of things in which the employer might really be interested. The advantage of this approach is that it tends to avoid misunderstandings: You’re giving the employer fair warning of the issues as you see them and a fair chance to talk them over with you in advance.
The downside to this approach is that it can highlight things that you’d prefer your employer wouldn’t know about. For example, maybe you’re taking the job now to pay some bills, but your real plan is to leave and join your buddies in a startup as soon as you can get a working prototype done and see some investor interest. In that case, shoving your project under your employer’s nose might have the unwanted consequence of indicating that you aren’t very dedicated to your new job.
Many people take this approach out of laziness. Leaving that aside, there are sometimes good strategic reasons not to disclose, even if you have something the contract asks you to disclose. Sometimes you just don’t want your employer to know about your side projects. That may be because you’re worried they’ll ask you to pursue the project as their employee, rather than on your own. It may also be because you’re worried they’ll take the side project as an indication that you’re less than dedicated to your job (or don’t plan to be there for long). Technically, if the contract requires you to disclose inventions and you don’t, you may have breached the contract. Practically, the consequences of that breach, in and of itself, aren’t likely to be severe, since the employer normally won’t be able to show that your breach harmed it (e.g. you really took the job to conduct industrial espionage and disclosure of your side project would have clued them in to that motivation).
That said, if you’re worried your employer might want to run with your innovation, you should think long and hard about pursuing it while you’re employed. Even in California, a properly drafted invention assignment agreement can and often does allow your employer to lay claim to any innovations related to its current or planned business, even if you only worked on them at night and on weekends. In other states, the innovation might not have to be related to the employer’s business. So whether you disclose or not, don’t get cute. If you have a side project that the invention assignment agreement would allow the employer to claim and you think the employer might really be interested, either find another job or put the project on ice. Do not try to pretend that your co-founder was doing all the development while you were employed. No one will believe you.
Trade Secrets and Patentable Inventions
Generally speaking, a trade secret is anything that you take reasonable measures to keep secret and that has commercial value because it’s kept secret. The classic example is an algorithm. You come up with a great way to compress video and use it to create a video compression program that’s better than anything else on the market. If you keep the algorithm to yourself, i.e. you’re the only one who knows how it works, people will pay you to get the benefit of your program’s function.
Trade secrets are legally protected. You can sue someone who steals them from you and they could even go to jail for it. But they’re only legally protected so long as you keep them secret.
That means you have to be careful about what you disclose and how you disclose it. It’s often possible to disclose that you have a trade secret without disclosing the secret itself. To return to the above example, you could list a video compression algorithm (or, better yet, “method”) without disclosing the secret details. In cases where that’s not possible, careful non-disclosure is the only practical option. You could ask the employer to sign an NDA but that won’t usually go over well.
Patents give you a limited term monopoly to certain inventions if you file the details publicly (so everyone know what you invented). For an invention to be patentable, there can’t be a history of it in public. So if you spill the beans in public, you can make your own invention unpatentable. Generally speaking, you have one year to apply from the first date on which your invention is published. In this context, you should take a paranoid attitude to what constitutes publishing. So until you’re ready to file a patent application, you should treat patentable inventions like trade secrets.