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When a company wants to protect their intellectual property, they may wish to include an IP assignment clause in their employment agreement . This gives the company the rightful ownership over any invention created by an employee during the course of their employment.

When should I make an employee sign an employment agreement?

A company shouldn’t hire employees on the basis of mutual trust.  A verbal agreement is not enough. Without the correct protection, the employee could become the rightful owner to the IP invented by him or her. These inventions include such things as companies logo, software, and designs. There is no obvious situation where a company should not make an employee sign an employment agreement. As such, verbal agreements should be avoided and employment agreements should utilised.   

By the same token, an employee should sign an employment agreement only after understanding that any creation invented by him/her during the course of employment will very likely be owned by the institution they work for. As such one must not sign an employment agreement without first reading it and understanding it.

Are there exceptions when an employment agreement will not protect a company’s interests?

If an employee invents a product during his spare time, and or, his job does not expect him to create such invention, then the ownership of the invention will remain with the employee and not the company.  

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

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READ MORE: Startup Series Part 1: Intellectual Property

READ MORE: Startup Series Part 2: Using An IP Assignment

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