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You Are Hired.Coolie!

Part II
Pre-Invention Assignment Agreements - PIAA
Employers require the employees to sign a pre-
invention assignment agreement, as part of their
employment contract, to assign any invention the
employee may invent during his/her tenure in the
organization.
A pre-invention assignment may also be part of
employee manual or in other employee guidelines




Understanding PIAA
It essentially has six different clauses
1. Pre-Invention Assignment Clause (PIAC)
2. Invention Disclosure Clause (IDC)
3. Power of Attorney Clause (PoAC)
4. Holdover Clause (HoC)
5. IP Forfeiture or Waiver Clause (IPFC)
6. Assignment of Prior Inventions (APIC)

Excerpts from a Pre-Invention Assignment
Agreement
I acknowledge and agree that in consideration of
employment by the Organization, all inventions that
(a) I develop using the Organizations resources and
capabilities such as labs, machines, supplies,
facilities, time, people or trade secrets, or
(b) result from work I perform for the Organization, or
(c) relate to the Organizations current or expected
future research and development,
are the sole and exclusive property of the Organization.
I agree to assign, and hereby does assign, all such
Inventions to the Organization.
Invention Disclosure Clause
It is not uncommon to include invention disclosure
clause in the pre-invention assignment agreement as
an employer may not be able to own an invention by
the employee unless the existence of the same is
disclosed by the employee.

Sample Invention Disclosure Clause
During the term of my employment at XYZ organization, I will
promptly inform the Organization of the full details of all
inventions that I conceive, individually or collectively with
others), and which (a) are developed using Organizations
resources and capabilities or (b) result from work I perform for
the organization or (c) relate to the Organizations current or
expected future research and development.

The scope of the invention disclosure clause could be
limited, as indicated above, or it could broadly cover
anything that the employee invent during the term of
employment, including an idea.

Power of Attorney Clause
PoA Clause enables the employer to file for a patent
and enjoy the administration of patent rights without
the need for obtaining the signature of employees in
relevant documents.

Sample PoA Clause
I hereby appoint the organization, its authorized
officers and agents as my agents and attorneys to
execute and file such documents to further the
prosecution, issuance and enforcement of patents,
as if executed by me, especially if the organization
is unable to obtain my signature on any relevant
document due to my mental or physical capacity or
any other cause.
Post-Employment Invention Assignment Clause
The objective of post-employment invention assignment is
to prevent employees from leaving the organization without
disclosing the invention and trying to patent the same after
exiting the organization within a reasonable time. Post-
employment invention assignment is also known as
Holdover Clause.

Sample HO Clause
I hereby assign to the Organization my entire right, title and
interest in such inventions developed after 6 months of
termination of my employment which relate to the subject matter
of my employment with the Company during the 12 month period
immediately preceding the termination of my employment.

Limitations of HO Clause
It should be reasonable in terms of time, say 6 months to 1
year post-employment period
Should be related to the past responsibilities of the employee
and scope of business (and / or)
Should have been developed using the trade secrets of
previous employer








IP Forfeiture clause
It is possible that employees may have conceived an
invention, patented or yet to be patented, before
joining the organization. Therefore, organizations
may use IP Forfeiture clause (or Waiver Clause) in
order to prevent the claim by the employees that an
invention was conceived before joining the
organization.

Sample IPF Clause
I have listed all inventions in the Exhibit, prior to my
employment at XYZ Organization, that I conceived and
patented or conceived and have an interest to patent. Apart
from the above, any other inventions, not so listed in the
Exhibit, shall be deemed to have been conceived during my
employment at XYZ.
IP Forfeiture Agreement
At my current job I had to sign an IP forfeiture
agreement, and in the blank area where I could name
code that the company could not own, I of course
listed things as my graduate projects, a few pet
projects by name, and the clause "and
miscellaneous current and future open source
projects".

HR reviewed all my stuff and this was not even
contested, so I am covered. Folks, we have to
stand up and push back. There are times to
compromise, but this is one area that is entirely
abused. (www.slashdot.org, 2003).

Failure to sign a IP Forfeiture Clause
Employees may not be able to claim ownership of the
inventions conceived before employment if they fail to
list out any such invention and provide necessary
document support.
If the employee provides no such list, it would be
deemed that the employee has no such prior
invention or they have been assigned to previous
employer or some other third party.

Using Prior Inventions in the Course of
Employment
What if the employee provides the list of inventions
but later makes use of such inventions in the
products or service of the employer?

In such scenarios, the employer may mention in the
pre-invention assignment that the employee agrees
and assigns a perpetual, irrevocable, worldwide,
royalty free license to the employer to exploit such
prior inventions used in the course of employment to
further the interest of the organization.

It includes license to use, copy, modify, create and
distribute works based on such prior inventions and
even to give such rights to other entities.





Ownership of Inventions without and with PIAA
Although many employers enter into PIAA with their
employees as they do not want to leave the ownership
matters to chance, it is possible that disputes related to
ownership of inventions may arise between employers and
employees with or without PIAA.

Even when there is a PIAA between an employer and an
employee, the pre-invention assignment agreement does
not necessarily guarantee ownership of an invention to an
employer as the validity of such an agreement on the
grounds of unconscionability or ambiguity may by
challenged by employees.

Determining ownership of inventions without a formal PIAA
would be guided by certain rules evolved by courts over a
century based on many disputes.

In either case, courts largely use the typology of
inventions and employees to determine the ownership of
inventions

Classification of Inventions
Employees Invention
An invention falling within the scope of employment and
resulting from the present or past duties and responsibilities of
an employee

Service Invention
An invention falling within the scope of the business of an
organization but not necessarily within the scope of
employment of an employee

Free Invention
An Invention not falling within the scope of employment of an
employee and the scope of business of the organization

Classification of Employees
Specific Inventive
Employees who are hired to invent a specific product or
device or process or hired to solve a specific problem (e.g.
Design Engineers and Scientists)

General Inventive
Employees who are hired to perform general research or
design work but encouraged by the employers to pursue their
creative instincts beyond their roles and responsibility (e.g.,
Google or 3M motivating their employees to spend 10% to 20
% of their paid time to work on their pet projects)

Non-Inventive
Employees who are not hired to invent (e.g., A Shop Floor
Worker or a Non-Technical Employee)


Determining Ownership of Inventions
Notwithstanding the type of employees, Service
Inventions and Free inventions which are conceived

Using organizations time and resources may provide the
ownership to the employees but employer is most likely to
have a Shop Right.

Not using organizations time and resources are most
likely to result in legal disputes when the employer makes
claims for ownership or Shop Right.








Shop Right
Shop right entitles an employer to use employees
patented invention and protects the employer from
patent infringement lawsuit by the employee

It is an Irrevocable, Royalty Free, Non-Exclusive,
Non-Transferable Right to use the employee patent.

Non-Exclusive: Employee is the owner of the patent
and s/he can freely license the patent to any third party
even to the competitors of the company

Non-Transferable:
Employer may not be able to use the employees patented
invention when the use is restricted in one or two locations
as it would be deemed to be a patent infringement
Employer cannot sell the license to a third party except in
sale of business as a whole.
Defining Patent
A Patent is a set of exclusive rights conferred by a
government authority for an invention, which could be
product or process or technical solution to a problem.

It provides protection for the invention to the owner of
a patent for a limited period so as to ensure that the
invention cannot be exploited by others without the
consent of the patent owner.
- World Intellectual Property Organization
Assignment of Patent Rights
Patents Acts of many countries provide for reasonable or
equitable remuneration for employee invention. However,
Indian Patents Act 1970 does not have provisions for either
determining the ownership of employee inventions during the
course of work or remuneration.

However, an employer in India cannot automatically apply for a
patent for in invention made by an employee during the course of
work under the contract of service (Unlike the Indian Copyright
Act, 1957 which confers the right of first owner to the employer
by default, unless there is an agreement to the contrary.)

It implies that the employer must obtain from the employee both
the assignment of ownership to the invention as well as the right
to apply for the patent since Section 7 (2) of Patents Act 1970
demands that the assignee should provide the proof of
right to apply for the patent.

It essentially means that the employer Must persuade the
employee to assign the right to invention as well as right to
patent for a consideration. If there is a dispute in defining the
ownership or otherwise, it would depend more on the
employment contract, nature of invention and associated
circumstances.


Unity of Ownership in Patent
Typically, all employees are expected to assign the
ownership of patents to the employer.
However, if the co-inventor is not an employee but an
another firm, like the Satyam Vs Upaid story, the
organization is required to buy the co-inventors
ownership rights in order to have full ownership on the
invention.
The organization also has an option to sell its
ownership rights to the co-inventor for a
consideration.
In the absence of cooperation between the
organization and the co-inventor, neither party would
be able to establish unity of ownership so as to
enjoy the valuable patent rights protected under the
patent act.
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Ownership of Corporate Assets and
Community of Practices
Financial Ownership
Microsoft alumni hate Microsoft. Precisely
because they feel the one thing it offered them
was money and nothing else, they resent that all the
publicity goes to the top people, to one top man, and
they dont get recognition. Also they feel the value
system is entirely financial, and they see themselves
as professionals. May be not scientists, but applied
scientists. So their value system is different (Drucker,
2002).
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Qualifications as the Central Dimension of
Employment Relationship
Employees must have an operational knowledge of
not just one, but multiple specialist areas.

Cognitive-abstract qualifications are becoming more
significant.

Socio-normative qualifications are becoming more
important.

Shift from classical social norms like accuracy, punctuality
and loyalty to modern social norms creativity, customer
orientation, responsibility and cooperation.
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Ownership Vs. Market Capacity - Decoding the
Power Relationship
The basis for power relationship

Marx
Ownership i.e., employer owning the means of
production and employee owning the manpower.

Giddens
Market Capacity i.e., employers ability to
replace an employee than employers ability to
secure a new job and a new employer at the
same or higher wage level.
The conditions of labour market will restrict or
extend the behavior alternatives available to both
parties.


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Ownership and CoP
a corporate asset should be social in origin.
Swiping secrets is odious to both law and etiquette,
and thats a legally enforceable . First you swap
proprietary information all the time; in fact, the
company probably wouldnt prosper unless you did.

Second, the real genesis and true ownership of
ideas and know-how arent corporate. Nor
personal, for that matter. They belong to
something that is coming to be known as
community of practice (Stewart, 1997, p. 95).
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Community of Practice (CoP)
Lave and Wenger (1991) developed and articulated
the concept "Community of Practices

Members of a community are informally bound by
what they do together. from engaging in lunchtime
discussions to solving difficult problems. And by what
they have learned together by mutual engagement in
these activities.
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Example of Community of Practices
"You are an engineer working on two projects within
your business unit. These are demanding projects
and you give your best. You respect your teammates
and are accountable to your project managers. But
when you face a problem that stretches your
knowledge, you turn to your people like Jake, Sylvia
and Robert. Even though they work on their own
projects in other business units, they are your real
colleagues. You all go back many years. They
understand the issues you face and will explore new
ideas with you. And even Julie who now works for
one of your suppliers, is a phone call away. These
are the people with whom you can discuss your
latest developments in the field and troubleshoot
each others most difficult design challenges". -
Wenger (1998)
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CoP Vs Community of Interests
Community of Practices are different from Community of
Interests (CoI)

A community of practice is different from a community of
interest. or geographical community, neither of which implies a
shared practice.

A community of practice is different from a team in that shared
learning and interest of its community members are what
keep it together. It is defined by knowledge and rather than
by task, and exists because participation has value to
members.

A community of practices lifecycle is determined by the value it
provides to members, not by an institutional schedule."
Wenger (1998)