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Going Digital? Don't Forget an Invention Assignment Agreement

Thursday, 19 January 2017

by Erin McAllister, Paralegal

In today's modern era of the Internet, 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 media. But before businesses hire that pricey developer to start developing, an Invention Assignment Agreement (IAA) should be signed.

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

What is an Invention Assignment Agreement (IAA)?

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

In the world of coding, programming, and web building, an IAA is critical 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 considering putting money into the company, but find out that the developer, and not the company, owns the rights, or perhaps both have equal rights, to the invention. Investors must take into consideration that the developer, who left the company, could have sold his rights to the competition, or even give it away for free. Clearly, not getting that IAA signed at the outset can create problems down the road.

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 strength of the IAA can be greatly diminished. All contracts require consideration (usually money), and asking an employee to sign a new contract requires providing consideration.

Don't hire developers or other employees without IAA protection. Your business's future could depend on it.
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