Ask HN: I've been asked to sign a IP Assignment Deed as an employee

39 points by mordrax 9 years ago | 43 comments

So I used to work for a company, being one of two employees that created a piece of software.

I was hired as an employee of the company with no share holding, and signed a fairly standard contract where my time and anything I created during the time I was employed belonged to the company.

Just recently, the company is selling it's product and the purchasing company has asked that all employees sign a IP Assignment Deed.

My understanding is that, since I've already assigned all IP to the company that I worked at, I don't have any legal rights to assign my IP to this new entity... well because, I don't actually own any of it.

Is it common for past employees (not shareholders or founders) to have to sign these when products are being purchased? I was made redundant 2 years ago.

iaw 9 years ago |

In order for a contract to be considered enforceable both parties must receive consideration[1]. When you worked at the company your consideration was continued employment.

Were I in your shoes I'd ask for an amount of consideration with what you believe is commensurate with a "reasonable" value. If this is a small sale, something like $10,000. If it's a large sale, $100-200,000.

The point being that if they want you to sign away your ownership rights (real or imagined) they have to give you something in return or it's not a legal contract.

Contracts absolutely require that both parties get something of value out of the exchange.

[1] http://study.com/academy/lesson/rules-of-consideration-in-co...

ajdlinux 9 years ago | |

The words "IP assignment deed" would suggest it's a deed, not a contract, and a deed does not require consideration (though it may include some consideration that allows it to be enforced as a contract if a court finds that the requirements of a deed were not met)

(IANAL, I've had to get lawyers to write up IP assignment paperwork before though)

iaw 9 years ago | | |

I was not aware of this fact. IANAL, but it does look as if the concept of a deed is being abused in this context.

Kind of like where employers call employees "contractors" because they can get away with it. It looks like the purpose of a deed is to announce intention to uphold a promise such as debt repayment in exchange for title.

The idea of a deed of assignment (from googling) is that one party transfers ownership of an object to another party. If OP's earlier contract was valid then this would be extraneous, if OP's earlier contract was flawed then it would be in his/her best interest to negotiate a new contract as a deed would basically be giving away the vested interest they have.

Anyone that makes a moral argument here needs to remember that using the legal tools available to you is not immoral. It may be mean, but it's fair play. Bill Gates and Spyglass, as atrocious as it was, demonstrated this. If the original contract was flawed, then OP actually owns some vested component of the company/product.

Why in the world would OP give away something that has literally just been assigned a value for free? Frequently companies, if in the situation of OP, will leverage their legal rights in this scenario.

I still think OP should negotiate some compensation for anything they sign.

eyeJam 9 years ago | |

That is a dangerous oversimplification of the law of contracts. The doctrine of consideration is very old. Commonwealth courts have made many, many exceptions to that doctrine. It is a okay way of conceptualizing contracts, but it isn't 'good law' and shouldn't be relied on.

(I'm providing legal information, not legal advice; hire a lawyer and please don't rely on legal advice you get from comment sections; if you truly want to avoid lawyers and do it yourself, I would suggest reading E.A. Farnsworth's "Contracts")

vacri 9 years ago | |

For those not in the know, this is what 'peppercorn' contracts are about, where one side pays $1 (the 'peppercorn', ie: not worth much) in exchange for the other side's stuff. Usually it's done for things that are considered an overall net liability.

Terr_ 9 years ago | | |

Amusingly, peppercorns have at some times/places been worth their weight in gold.

mdotk 9 years ago | |

deeds don't need consideration

sokoloff 9 years ago |

First of all, you don't HAVE to sign anything now. It is very common in due diligence to try to chase down details like this.

If you feel like cooperating, but are just uncertain of your standing, you can sign a quitclaim assignment, essentially stating that whatever IP claims that you might have (which might be none), you assign to the new entity.

If you don't feel like cooperating, you could ask for compensation now in exchange for signing or just tell them to cram it with walnuts.

ChuckMcM 9 years ago |

In general, there probably isn't an issue. However, it is very important that you understand anything you sign. In IP assignments the thing I am most careful about is the indemnification clause or clauses. It is fairly boilerplate to include language that says "you assert that you have the right to sign off this IP, and if someone later challenges that right you will indemnify they buyer against any infringement action brought against them."

That is what is think of as an "open ended" indemnification which is to say, you sign this over, then later someone sues them for patent infringement. Even though you had no idea somebody had patented the idea, you might be on the hook to pay the legal costs or licensing fees to make the buyer whole again.

So make sure the document doesn't say indemnify anywhere :-) And as others have said consider having a lawyer look at it.

bb88 9 years ago |

Some people have mentioned that you might want to stay on good terms with the company.

The problem is that you're dealing with lawyers, and they want only one thing. They don't really care about you once they have what they want.

The other problem for them is that your legal relationship ended when your employment ended. So they don't have any power, other than what you choose to give to them.

I'm guessing they lost the original contracts and need the Deed to be on solid legal ground.

So I'd make them squirm a bit.

raleighm 9 years ago |

(Not legal advice.) M&A practitioners aren't paragons of virtue but still it'd usually be considered uncool to go to a former employee years after the fact, ask them to sign a doc to facilitate a deal he'd get no upside from, and not offer to pay his legal fees - especially if he's someone the company let go. It's possible this is just a junior associate at the purchaser's law firm insisting on something technically correct but practically low-risk, getting poor supervision, and your former company not shielding you as they should. It's also possible that if the company tells the purchaser you don't want to sign it, the purchaser just says "ok was worth a shot" and that's it. If the purchaser truly does care, it's the company's problem not yours that the documents you signed years ago weren't different. Not something you should incur time, expenses or risk now to fix for them. An example of risk is the scope of the deed being too broad and covering other projects of yours that should be out of scope. You can say no with a clear conscience. If you feel bad about it, something like the following is a totally fair response: "Sorry I can't be more helpful, but I take legal documents seriously and don't review/sign anything unless it's necessary for something I'm currently working on. It's just a personal policy of mine."

colin1006 9 years ago |

If I were in your situation (where I liked the company, and had decided that I didn't want to try to ask for a portion), say that you're not going to sign anything without having a lawyer look over it with you, and ask them to reimburse you for your lawyer. That way if they need you to sign it, then they can pay for your trouble, and you can find out if there's anything important and get all of your legal questions answered (including finding out if you have any bargaining power). If they don't need you to sign it, then they won't pay for your lawyer, and you can go on without signing something you don't understand.

kstrauser 9 years ago |

Did they voluntarily sign any nice contracts for you when they fired you? Sure, your manager was cool and you liked your coworkers, but the company itself fired you. Call it "laid off", "rightsized", "RIFfed", or whatever you choose, but the end result is the same: you were out on the street.

What are they willing to do for you, now that they're asking a favor? I'm not trying to be a hardass, or suggest you try to retire off this one thing. But obviously it's valuable to them or they wouldn't be asking. Why should you - who they fired - do them a large financial favor for nothing?

deedubaya 9 years ago |

If you're no longer employeed by the selling company, it would seem that you have nothing to gain by signing.

jason_slack 9 years ago |

You were made "redundant" 2 years ago.

You don't owe your past employer anything and you sure as hell don't owe anything to a company trying to minimize their headache in the future if something with their deal with your past employer has a hole in it.

I'd just wash your hands of the whole thing and ignore it. If they come back with some $$ then perhaps revisit. Life is to short to be wasted being a 3rd wheel.

gregmac 9 years ago |

It seems like you have nothing to gain, but potentially something to lose by signing. On the other hand, do you have anything to lose by not signing?

IANAL, but from your description it does indeed sound like you have no IP rights to assign.

If they really want you to sign anyway, and you are ok with the terms, at least get compensation for it - that at least gives you an upside.

salsakran 9 years ago |

Chances are they messed up the paperwork somehow. Either the agreement you signed wasn't acceptable to the buyers or they just lost them.

I would definitely run it by a lawyer before you sign anything.

It's unlikely they're being nefarious, but realize that you'd be doing them a favor. It's up to you to decide if that's something you'd want to do.

mordrax 9 years ago |

Thank you all for the wide range of thoughtful responses.

I don't want to leave the impression that this company with a private owner is a bad company. The employer did look out for me when I had difficult family issues and at one point, being way over-burdened with the workload, I told him to either fire me and get a support person at half my salary or give me more resources.

Being laid off there was quite good for me. I felt indebted to keep the product afloat but it was burning me out constantly so after I left, I got a higher paid, much more reasonable hours job with peers that also have passion for coding.

But I still remembered him looking out for me so I want to do the right thing and help him get some closure on this business. To that end, I think getting a IP lawyer to put any of my worries to rest at a small expense to him or the purchasing company is the most reasonable option as someone else had said below.

sauronlord 9 years ago |

This sounds like work to me. Best to provide an estimate and send them an invoice for this project.

200/hr with minimum billing increment of 2 hours PLUS legal expenses to even understand what the heck it is they want you to sign.

Easily a 4-8 hour gig. $800-1500 is a reasonable price to be paid for such a job.

mongol 9 years ago |

What is in it for you? I can not see a reason to bother.

Illniyar 9 years ago |

They want you to sign something after you left? Don't be a fool, you shouldn't sign anything.

Its a hit and miss tactic, some will sign and the lawyers will have a little bit more gurantee, but many won't and it will not hold up the sale.

mdotk 9 years ago | |

agreed, why sign anything after you've left. you don't owe them jack

ImTalking 9 years ago |

Not a chance. The terms of this new deed may be more onerous than the original employment contract, and might land you on trouble if, for example, you did some programming outside of this company while you were employed.

dontJudge 9 years ago |

They are probably following a process on autopilot. Maybe just being extra safe, covering all their bases.

Just ignore it until they offer money for your supposed IP.

amorphid 9 years ago |

If you don't own any of it, at least in your mind, it's interesting that someone is selling the software that you don't own, and asking you to confirm that. If it wouldn't cost you anything you care about, consider countering with "to save time, make me your best offer." See what they do!

solidsnack9000 9 years ago |

> My understanding is that, since I've already assigned all IP to the company that I worked at, I don't have any legal rights to assign my IP to this new entity...

This seems basically right. I would ask them, was something wrong or incomplete about the previous agreement?