Non-Compete Agreement or Intellectual Property Assignment Agreement: Understanding the Differences

When it comes to protecting your business`s proprietary information, there are two legal documents that are commonly used: the non-compete agreement and the intellectual property assignment agreement. Both can help safeguard your company`s assets, but they serve different purposes. In this article, we`ll explore the differences between these legal documents and when to use each one.

Non-Compete Agreement

A non-compete agreement is a legal contract between an employer and employee that restricts the employee from working for a competitor or starting a similar business within a certain period of time after leaving the company. The purpose of a non-compete agreement is to prevent the employee from using the company`s trade secrets or confidential information to gain an unfair advantage in the marketplace.

Non-compete agreements can be helpful in situations where an employee has access to sensitive information that could be used to compete against the employer. For example, if a software developer works on a new technology for a company, the non-compete agreement would prevent them from leaving that company and using that technology to start a competing business.

It`s important to note that non-compete agreements have limits. They must be reasonable in scope and duration, meaning they cannot prevent employees from working in their chosen field indefinitely. Non-compete agreements also must be supported by consideration, which is something of value that the employee receives in exchange for signing the agreement.

Intellectual Property Assignment Agreement

An intellectual property assignment agreement is a legal contract that transfers ownership of intellectual property (IP) from one party to another. IP can include things like patents, trademarks, copyrights, and trade secrets. The purpose of an IP assignment agreement is to ensure that the company owns all the IP that is created by its employees.

Intellectual property assignment agreements are particularly important in industries where innovation is key. For example, if a pharmaceutical company has a team of researchers working on a new drug, the company will want to own the patent for that drug. An IP assignment agreement ensures that the company, not the individual researchers, owns the patent.

It`s worth noting that IP assignment agreements should be signed before the employee begins working on any projects that could lead to the creation of valuable IP. Waiting until after the fact can make it difficult to prove ownership of the IP.

Conclusion

In summary, non-compete agreements and intellectual property assignment agreements serve different purposes. Non-compete agreements are used to prevent employees from using company information to compete against their former employer, while IP assignment agreements are used to ensure that the company owns all the intellectual property created by its employees. Understanding the differences between these two legal documents can help businesses protect their valuable assets.