Employment · Template

Employee confidentiality and IP assignment agreement — India

There is a gap between what most founders believe about employee IP and what the law provides. Copyright in work made in the course of employment does vest in the employer. A patentable invention does not — it stays with the inventor until it is assigned. One document closes both gaps, and it has to be signed before the work is done rather than after it turns out to be valuable.

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When you need this

Before an engineer, designer or writer starts on anything the business intends to own
When an employee is working on something patentable, or on anything a diligence team will ask about
When an investor or acquirer asks you to show a clean chain of title over the product
When someone has been working for months on a handshake and there is nothing on record
When a new joiner has come from a competitor and their prior obligations need to be declared before they start

What this document must contain

A definition of confidential information that names your actual categories — Source code, customer lists, pricing, unreleased roadmap, financials, personal data you hold. A definition drafted so broadly that it covers public facts is easier to attack than one drawn narrowly around what you really need protected.
A present assignment of future rights — You cannot assign in the ordinary way something that does not exist yet. The clause has to operate as a present assignment of rights arising in the future, or all you hold is a promise to assign — a contractual claim rather than title.
A further-assurance obligation that survives the exit — Patent prosecution needs the inventor’s signature on forms, sometimes years later. Without an obligation that outlives employment, a departed employee’s signature becomes a negotiation at the worst possible moment.
An express duty to disclose inventions — An assignment reaches only what you know about. Without a disclosure obligation, the employee decides what the company hears about.
A moral rights acknowledgement — The author’s special rights under the Copyright Act are personal and are not transferred by an assignment. The workable answer is an acknowledgement plus a covenant not to exercise them so as to obstruct ordinary commercial use and modification.
A prior-obligations and third-party materials warranty — The employee confirms they are not breaching an obligation to a previous employer and will not bring in code or material somebody else owns. This is what stops you inheriting a dispute that was never yours.
A confidentiality survival period, and no restraint on future employment — State how long confidentiality runs after exit, and say plainly that nothing here restrains the person from working. A document that protects information reads very differently from one that tries to lock up a career.

The law that governs it

Copyright Act, 1957 — s. 17 — In the absence of an agreement to the contrary, the employer is the first owner of copyright in a work made in the course of the author’s employment under a contract of service. That is the reassuring half of the position — and it reaches copyright only, not inventions, and turns on the engagement being a contract of service rather than for services.
Patents Act, 1970 — An application for a patent is made by the true and first inventor or by their assignee. The employment relationship does not by itself make the employer the inventor, so title must come from an assignment. An employment contract silent on inventions can leave a company without the right to file on its own product.
Copyright Act, 1957 — s. 57 — The author retains special rights — to claim authorship and to restrain distortion or mutilation prejudicial to their honour or reputation — independently of any assignment of copyright. These cannot simply be bought out, which is why the clause manages their exercise rather than pretending to transfer them.
Indian Contract Act, 1872 — s. 27 — Confidentiality and assignment obligations are not restraints of trade and survive the employment. A non-compete bolted onto the same document is void to the extent it restrains lawful work, and its presence weakens the credibility of the clauses that would have been enforced.

Common mistakes

Assuming the employment relationship transfers everything, and discovering in diligence that a core patent sits with someone who left two years ago
Getting the assignment signed after the invention exists, and after the employee has worked out what it is worth
Wording it as an agreement to assign at some future point, which leaves you holding a claim instead of a right
Bolting a two-year non-compete onto the confidentiality clause and putting the credibility of the whole document at risk
Never asking a new joiner what they owe a previous employer, and importing that problem along with them

Frequently asked questions

Doesn’t everything my employee makes automatically belong to the company?

Partly. Copyright in a work made in the course of employment under a contract of service vests in the employer under s. 17 of the Copyright Act, 1957. Inventions are different: a patent application is made by the true and first inventor or their assignee, so without an assignment the employer has no filing right. The two regimes are not the same and only one of them is automatic.

Do I need a separate IP agreement if the employment contract already has an IP clause?

Not strictly, provided the clause does the actual work — a present assignment of future rights, a disclosure duty, a further-assurance obligation that survives exit, and the moral rights position. A separate deed is common because it is easier to produce in diligence and easier to keep identical across a whole team.

Can I take the moral rights as well?

No. The special rights under s. 57 of the Copyright Act, 1957 are personal to the author and are not extinguished by an assignment of copyright. What you can do is record an acknowledgement and a covenant not to exercise them in a way that obstructs the company’s ordinary commercial use of the work.

Does this cover contractors and interns too?

No — and that is exactly the trap. The first-ownership rule in s. 17 follows a contract of service. A freelancer works under a contract for services and keeps copyright unless it is assigned in writing, and an intern’s status is ambiguous enough that you should never rely on inference. Use the freelance agreement and the internship agreement for those engagements.