A Confidential Information and Invention Assignment Agreement (CIIAA) is the contract under which employees agree to keep company information confidential and assign to the company the inventions and other intellectual property they create in their work. In California, a CIIAA must respect several limits: it cannot claim inventions protected by Labor Code Section 2870, it cannot function as a non-compete, and it must preserve employees’ rights to report unlawful conduct. Done correctly, it is one of the most important documents a startup signs.
Investors and acquirers routinely ask for signed CIIAAs from every current and former employee who touched the product. A missing or defective agreement can delay a financing or reduce an acquisition price, and fixing it after someone has left is much harder. Here is what to know.
Who Should Sign a CIIAA?
- Founders. Founders should assign to the company any technology they created before formation that relates to the business, usually in a separate technology assignment, and sign a CIIAA going forward.
- Every employee. Not only engineers. Sales, operations and marketing staff create work product and see confidential information. Signing should be a condition of employment, completed on or before the first day.
- Interns. Even short internships can involve access to source code or contributions to the product.
- Contractors and consultants. Contractors should sign a consulting agreement with confidentiality and IP assignment terms tailored to an independent relationship, rather than the employee form. Using an employee CIIAA for a contractor can blur classification lines. See our post on AB5 and worker classification.
For joint ventures and business partners, a mutual nondisclosure agreement and a collaboration or development agreement that allocates IP ownership are usually the right tools, not a CIIAA.
What a CIIAA Typically Includes
1. Confidential Information
The agreement defines confidential information, such as source code, product designs, customer data, pricing and business plans, and requires the employee to use it only for the company and not disclose it. It should carve out information that is public or that the employee already knew. Confidentiality obligations generally survive the end of employment, and trade secret protection can last as long as the information remains secret.
2. Invention Assignment
This is the heart of the agreement. The employee assigns to the company inventions, works of authorship and other IP conceived or developed during employment that relate to the company’s business or result from the employee’s work. Good agreements use present-tense language (“hereby assigns”) so that ownership transfers automatically when the invention is created, rather than a mere promise to assign in the future. They also include a duty to cooperate with patent and copyright filings and a power of attorney if the employee is unavailable.
3. Prior Inventions
Employees list inventions they created before joining that they want to exclude. If an employee incorporates a prior invention into company products, the agreement typically grants the company a license to use it.
4. Return of Materials
The employee agrees to return company property and data when employment ends and not to keep copies, including on personal devices and cloud accounts.
California Limits Every CIIAA Must Respect
Labor Code Section 2870
An employer cannot require assignment of an invention the employee developed entirely on their own time without using the employer’s equipment, supplies, facilities or trade secret information, unless the invention relates to the employer’s business or actual or demonstrably anticipated research or development, or results from work the employee performed for the employer. Under Section 2872, the agreement must give employees written notice of this rule. A clause claiming “everything you create” is unenforceable to the extent it goes beyond Section 2870.
No Non-Competes in Disguise
Business and Professions Code Section 16600 voids most employee non-compete agreements, and California has strengthened this rule with statutes making unlawful non-competes unenforceable regardless of where they were signed. Clauses barring former employees from soliciting customers are generally unenforceable, and courts have also rejected many employee non-solicitation clauses. Rely on trade secret law instead: misuse of confidential information remains actionable. See California’s non-compete rules.
Labor Code Section 925
For employees who primarily live and work in California, an employer generally cannot require, as a condition of employment, that the employee agree to another state’s law or to litigate outside California, unless the employee was individually represented by counsel in negotiating those terms. Out-of-state templates often violate this rule.
Whistleblower and Workplace Rights
- Defend Trade Secrets Act notice. Federal law gives immunity for confidential disclosures of trade secrets to government officials or attorneys to report suspected violations of law. Employers that omit notice of this immunity may lose the ability to recover exemplary damages or attorney’s fees from the employee under that statute.
- Unlawful acts in the workplace. California law prohibits agreements that prevent employees from disclosing information about unlawful acts in the workplace, such as harassment or discrimination.
- Wages and working conditions. Employees cannot be barred from discussing their own wages or working conditions. Confidentiality definitions should not sweep in this information.
Why a Solid CIIAA Matters
A CIIAA is risk management. It establishes the company’s chain of title to its technology, supports trade secret protection by showing reasonable steps to keep information secret, and answers a standard diligence request. For more on protecting confidential information when people leave, see our post on limiting employees from taking company secrets.
The Takeaway
Have every founder, employee and intern sign a California-compliant CIIAA at the start of the relationship, and use a tailored consulting agreement for contractors. Make sure the agreement uses present assignment language, includes Section 2870 notice, avoids non-compete and broad non-solicit terms, follows Labor Code Section 925, and preserves whistleblower and workplace rights. Then keep signed copies where you can find them during diligence.
Frequently Asked Questions
Is a CIIAA the same as an NDA?
No. An NDA covers confidentiality only. A CIIAA also assigns to the company the inventions and work product the employee creates, which is why investors focus on it.
Can a California employer own everything an employee invents?
No. Labor Code Section 2870 protects inventions developed entirely on the employee’s own time without company equipment, supplies, facilities or trade secrets, unless the invention relates to the company’s business or results from the employee’s work for the company. The agreement must give employees written notice of this limit.
Can a CIIAA include a non-compete?
Not for California employees in most cases. Business and Professions Code Section 16600 voids most employee non-competes, and customer non-solicitation clauses are generally unenforceable. Companies should rely on confidentiality obligations and trade secret law instead.
What if an early employee never signed a CIIAA?
The company should address it before a financing or sale, typically by asking the person to sign a confirmatory assignment supported by appropriate consideration. The longer the gap and the more significant the person’s contributions, the more important it is to fix.
How Sutter Law Can Help
We draft and review CIIAAs, consulting agreements and founder technology assignments, and we help companies clean up missing agreements before a financing or sale. Learn more about our intellectual property practice, or contact us for a free consultation.
This article is general information, not legal advice. Reading it does not create an attorney-client relationship.
