Which contracts should I have on file between myself, my co-founders, and my employees?

Text Transcript

Stuart Gutwein, Business Law Attorney: There are really three groups of people that you need to be concerned about with contract as it relates to intellectual property when forming and starting your business and operating your business.

The first group is your co-founders. What people often forget to do is get a technology assignment from all of the co-founders as it relates to intellectual property. So generally what happens is people form a business concept, a business idea, and they come up with some technology related to that, and then they go and form an entity. What they forget to do often times is to have a technology assignment to get the technology from those people individually or what can be construed as a general partnership under the law, transferred into this new entity. So that’s the first agreement with co-founders. The second agreement would be your operating agreement, which will have non-competition provisions in it, or those may be contained in a buy-sell or some other agreement. The law also gives fiduciary duty obligations to co-founders to help protect the company from those types of competitive activities.

The second group is employees. So your employees are bound by common law that because of their duties to the company as an employee that the technology that they develop is owned by the company. We’ll still often have technology disclosure requirements for the company, between the company and the employee. We’ll have non-disclosure agreements so that employees are trained when and when not to disclose information to third parties. We’ll have non-competition agreements with them, which will include non-solicitations so they won’t compete with a company, as well as they won’t leave the company and then try to solicit employees from the company to follow them.

The third group is independent contractors. Now independent contractors do not have a common law duty of fiduciary duties or confidentiality owed to the principal for which they work. So what we like to have is a standard form of independent contractor agreement in place so that all intellectual property they develop is covered by a work-for-hire provision so that any technology or patentable or other ideas formulated by the independent contractor will be owned by the company. And we’ll also have the standard non-solicitation, non-competition provisions in those agreements as well.