CIIA Agreement 101: What It Covers & Why It Matters

In 2018, Alphabet's Waymo sued Uber for a former employee taking proprietary self-driving car tech with him. The conflict ended in a $245 million settlement (source: Reuters). This is the very reason why businesses, particularly those that are tech and innovation-intensive, should give top priority to CIIA agreements. 

A CIIA agreement is more than a contract, it's a blanket covering your firm's confidential data and intellectual property (IP). 

It's not merely a basic NDA (Non-Disclosure Agreement) covering confidentiality only; a CIIAA (Confidential Information and Invention Assignment Agreement) keeps all inventions conceived during work life legally the property of the firm. 

But manually drafting, monitoring, and enforcing such agreements can be time-consuming. 

That's where contemporary contract management software, such as those developed on Microsoft 365, plays a role. 

They assist companies in making agreement processes more efficient, minimizing legal liabilities, and enforcing compliance. 

On this blog, we'll deconstruct all you want to know about CIIA agreements, why they are important, their major elements, how they vary from NDAs, and how best to manage them. 

Key Takeaways 

• A CIIA agreement safeguards confidential information and IP ownership, and thus it is vital for companies. 

• As opposed to NDAs that only address confidentiality, CIIA agreements have invention assignment provisions. 

• Invention assignments are governed by California law and need to be drafted with caution to avoid non-compliance. 

• A contract management system based on Microsoft 365 automates CIIA drafting, tracking, and compliance. 

• The failure to have a CIIA agreement may result in expensive lawsuits and forfeited intellectual property rights. 

What is a CIIA Agreement? 

A Confidential Information and Invention Assignment (CIIA) Agreement is an agreement that safeguards a company's intellectual property and confidential information. 

It guarantees that anything developed by an employee or contractor while working at the company is owned by the company, not the employee. This agreement has two primary functions: 

Protecting confidential information – It guarantees that employees do not disclose or use sensitive company information. 

Granting intellectual property (IP) rights – It makes clear that inventions, ideas, and innovations developed while working belong to the company, not the employee. 

Unlike a Non-Disclosure Agreement (NDA) that is limited to protecting information only, a CIIA agreement extends a step further in that it makes sure the company owns valuable work that its employees create. 

It's particularly important in businesses that live on innovation such as technology, pharmaceutical, and manufacturing where intellectual property is the essence of achievement. 

Why Every Business Requires a CIIA Agreement 

A CIIA agreement is more than a technical formality - it's a key business protection. 

Without a CIIA agreement, employees could leave the business with confidential information or argue they own business-developed innovations, which present unwarranted legal risks.  

1. Preserves Business-Critical Information

Companies run on confidential information such as customer information, business strategies, and trade secrets. A CIIA agreement guarantees that employees know they have a duty to maintain confidentiality over this information even after they leave the organization. 

2. Guarantees Intellectual Property Ownership

When employees create software, products, or designs while they are working, there must be no confusion as to who owns them. Without a CIIA agreement, employees might try to claim these inventions as their own, and lawsuits would ensue. The agreement makes it absolutely clear that anything created for the company is owned by the company. 

3. Increases Investor and Stakeholder Confidence

Investors and stakeholders need to be confident that a firm's intellectual property is legally protected. A robust CIIA agreement shows that the company is serious about protecting IP, which makes it more appealing for investment and partnerships. 

4. Minimizes Legal Threats

Patent infringement and intellectual property claims are costly and time-consuming. Without a CIIA, establishing ownership in an invention turns into a lawsuit. An unambiguous, enforceable contract averts disputes since it specifies ownership and confidentiality obligations from the very beginning. 

5. Preserves a Competitive Advantage

Staff going to the competitor can be a risk if they take worthwhile knowledge with them. A CIIA agreement can incorporate (where enforceable) non-solicitation terms to stop employees from taking clients or co-workers along with them.  

6. Compliant with Legal Best Practices

Intellectual property rights are governed differently in various states. A CIIA agreement needs to be drawn up with care so that it is compliant with state laws while at the same time safeguarding the interests of the company. 

7. Simplifies Offboarding Employees

When the employee departs, the company must get their hands on company-provided equipment, papers, and rights to company resources. An agreement CIIA will establish this transparently and through enforceable contract language, thus protecting against the risk of losing company information or company systems compromises. 

Major Elements of a CIIA Agreement 

CIIA agreement must have some important elements if it is to be effective. Let's outline them:

Confidentiality Clause

This is the backbone of the agreement. This establishes clearly what employee information should be kept confidential, e.g., trade secrets, business strategy, customer lists, or product design. Without this, nobody prevents an individual from stealing confidential company information and using it for a competitor. 
 
Invention Assignment Clause 

This section guarantees that whatever an employee comes up with while working for the company is the property of the company. A new software program, a specialized manufacturing technique, or a pioneering design are all owned by the company and not the individual. This is particularly crucial for technology start-ups, R&D companies, and any organization that survives on ideas.

Prior Inventions Carve-Out

They might have invented something before they came to work in your business. This clause enables them to provide lists of those earlier inventions so that they do not lose ownership. It also protects the company and the employee from unnecessary disputes over ownership.

Non-Compete and Non-Solicitation Provisions

A non-compete clause prohibits employees from working for a direct competitor for a specific duration of time after they leave. A non-compete clause bars them from soliciting clients or co-workers. These clauses are not enforceable in all places (such as in California), but they can be useful in states where they can be enforced.

Return of Company Property

When employees leave, they must return all company materials, laptops, documents, access credentials, and any other proprietary assets. This clause makes it clear there's no gray area about what should be returned.

Consideration Clause

For an agreement to be enforceable in court, employees must get something in exchange, normally their job, salary, or bonuses. This provision makes the agreement stand up in court. 

CIIAA vs NDA: What's the Difference? 

On first impression, a CIIA agreement and a Non-Disclosure Agreement (NDA) may appear the same, both address the protection of company information. But they are used for quite distinct reasons. 

A CIIA agreement (Confidential Information and Invention Assignment Agreement) is intended for employees and contractors. 

It addresses both confidentiality and intellectual property (IP) rights, so that any inventions, ideas, or work produced during employment fall into the company's rights. 

A more limited agreement is an NDA (Non-Disclosure Agreement). 

It's mainly for use with third parties such as suppliers, contractors, or business associates and only aims to keep secrets, it doesn't assign property rights over inventions or ideas. 

California CIIA Agreement: Important Legal Considerations 

California is special in that it has specific laws that apply to Confidential Information and Invention Assignment Agreements (CIIAAs).  

If you're writing a CIIA agreement for California employees, the following are the most important legal considerations to bear in mind.

Employees Retain Their Own Inventions

Under California Labor Code Section 2870, businesses are barred from claiming ownership of inventions created on employees' own time, with their own resources, and not pertaining to the business or research.

Non-Compete Clauses Are Prohibited

California does not allow non-compete contracts for employees, so you can't stop a former employee from working for a competitor.

Be Specific About "Company Time" and "Company Resources"

Because workers maintain ownership of their own inventions, it is vital to determine what constitutes company resources and time.

Employees Must Sign an Acknowledgment

To be enforceable in California, a CIIA must be clear to employees about what they are promising. Courts will invalidate ambiguous or overly broad agreements.

Compliance Matters

California courts are strict regarding employee rights. If your CIIA agreement infringes on any of these laws, it can be nullified in its entirety. 

Managing CIIA Agreements 

A CIIA agreement only works if it's effectively managed. 

Having employees sign it is not sufficient you must ensure agreements are safely stored, easily retrievable, and reviewed on a regular basis. 

Companies tend to neglect monitoring expiration dates, update compliance, and employee acknowledgments, which may result in disputes in the future. 

A well-structured contract management system keeps everything under control, minimizing errors and saving time. 

If you're searching for a smarter approach to managing CIIA agreements, schedule a free demo today and find out how it works! 

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