Recruitment

The Importance of Employee-Invention and IP Agreements

By Jon Hyman

Apr. 17, 2014

Taco Bell is defending claims by two former interns that they invented the Doritos taco nearly 20 years ago. They now want to be paid part of its billions dollars in sales, ABC News reported.

The pair and their former employer will likely end up in court over who invented what, and when.

My question is whether Taco Bell required the interns to sign an “inventions” agreement. If they did, then even if the intern’s story is true, they will have little legal leg on which to stand.

A typical employee inventions agreement accomplishes the following:

  • It defines that all rights to any inventions, innovations, developments, designs, etc., related to the employer’s business, and conceived, made, or developed by the employee while working for the employer, belongs to the employer and not the employee.

  • It includes a promise that the employee will execute any documents necessary for the employer to perfect its ownership interest in any such inventions, etc.

  • It provides the employee the opportunity to list, for exclusion, any patents held, or inventions, etc., conceived prior to employment, or for specific assignment to the employer for consideration paid.

These agreements are usually part of a larger confidentiality agreement, or non-competition agreement, but also can be standalone. The point is to avoid any dispute over who created what. If you provide employees the opportunity to list existing ideas and inventions, and to promise that anything they invent while working for you is yours, and not theirs, then nobody should go loco if one of their ideas hits it big, and the employer keeps it.

Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at JHyman@Wickenslaw.com.

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