Investors rarely ask only whether a startup has “NDAs.” What they usually want to know is whether the company actually owns the code, inventions, know-how, and improvements being created by the people building the business. A proprietary information and inventions agreement — usually shortened to PIIA — is one of the documents that helps answer that question.
This article focuses on the diligence issues and drafting decisions that matter most, not on copying a long national template word-for-word.
In This Guide
- What a PIIA does and does not do
- The clauses diligence actually cares about
- State-law and role-based flags
- Implementation checklist for onboarding
- Copy/paste starter form
- Common mistakes
- Bottom line
What a PIIA Does and Does Not Do
A strong PIIA usually covers four core themes:
- Confidentiality. It defines the company information that must be protected and how it can be used.
- Invention and work-product ownership. It makes clear that company-related work created within scope belongs to the company to the extent permitted by law.
- Pre-existing IP disclosure. It forces the new hire to identify anything they are excluding from assignment.
- Operational cleanup. It covers further-assurance obligations, return of property, and similar implementation mechanics.
What it usually does not do is clean up pre-incorporation founder IP by itself. That is why a separate technology assignment agreement is often still needed. The technology assignment handles the past; the PIIA handles the ongoing employment relationship.
The Clauses Diligence Actually Cares About
1. Clear confidentiality language
The company should define confidential information broadly enough to protect real business assets without drafting something so vague that it becomes hard to apply or enforce.
2. DTSA notice
Trade-secret agreements should not ignore the federal immunity notice issue. A startup that wants a modern PIIA should treat the DTSA notice as standard, not optional.
3. Prior-inventions schedule
This is one of the most practical sections in the document. If a hire shows up with side-project code, open-source packages they developed independently, or other background IP, the company needs to know what is being excluded and whether continued use will require a license or separate approval.
4. Assignment plus “work made for hire” support
Copyright language and assignment language should work together. Do not assume that one concept solves every ownership problem by itself.
5. Further assurances and recordkeeping
Many diligence problems are not about whether the company conceptually owns the IP. They are about whether former personnel are still needed to sign filings, declarations, or recordation documents years later.
6. Return-of-property and access obligations
When a relationship ends, the company wants an operational off-ramp: device return, credential cleanup, record return, and no casual retention of files “for the portfolio.”
State-Law and Role-Based Flags
A national startup team almost never gets to use a one-size-fits-all restrictive-covenant section forever.
- Employees versus contractors. Contractors usually need their own IP-assignment structure and should not simply be handed an employee PIIA and told it is close enough.
- California and similar states. Invention-assignment scope and non-compete concepts need special care. Remote hires can pull state-law issues into the agreement even if the company is incorporated elsewhere.
- Founder-employees. Founder status does not eliminate the need for clean ongoing invention-assignment paperwork.
Implementation Checklist for Onboarding
- Signed before the employee gets meaningful access to code, customer data, or product plans.
- Paired with an offer letter and any equity documents that tell a consistent story.
- Exhibit A reviewed for pre-existing IP instead of left blank by habit.
- Any continuing obligations to prior employers identified and escalated early.
- Separate contractor paperwork used where the relationship is not actually employment.
Copy/Paste Starter Form
The form below is intentionally concise. It is meant to be copied into an internal drafting file so the team can discuss structure and issue-spotting before state-law customization.
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(educational starter only)
Date: __________
Company: ________________________________
Employee: ________________________________
Role / Department: ________________________
1. Confidential information.
Employee will protect the Company’s confidential and proprietary information, use it only for Company business, and not disclose it except as authorized or as permitted by law.
2. Permitted disclosures and whistleblower rights.
Nothing in this agreement prohibits lawful reporting of suspected violations of law or disclosures protected by applicable whistleblower rules.
The Company provides the notice required by the Defend Trade Secrets Act regarding immunity for certain protected disclosures.
3. Prior inventions / pre-existing IP.
Employee must list any pre-existing inventions, code, content, or other IP that is excluded from assignment on Exhibit A.
If nothing is listed, the parties are treating Exhibit A as blank.
4. Assignment of work product.
To the maximum extent permitted by law, Employee assigns to the Company all right, title, and interest in inventions, works of authorship, code, documentation, processes, and other work product created within the scope of employment or relating to the Company’s business.
5. Further assurances.
Employee will reasonably cooperate with patent, copyright, trademark, and other filings needed to protect assigned work product.
6. Return of property and access credentials.
On request or at separation, Employee will return Company devices, files, credentials, records, and other property and will not retain Company confidential information except as allowed by law.
7. Restrictive covenants.
Any non-solicit, non-compete, or other post-employment restrictions must be tailored to the applicable role and state law.
Do not assume one national clause works everywhere.
8. Signatures.
COMPANY: ________________________________
Name / Title: ____________________________
EMPLOYEE: _______________________________
Print name: ______________________________
EXHIBIT A – PRIOR INVENTIONS / PRE-EXISTING IP
List any pre-existing code, inventions, content, designs, or other IP the employee is excluding from assignment:
__________________________________________________________________
__________________________________________________________________
EXHIBIT B – CONTINUING OBLIGATIONS
List any agreements with prior employers, clients, or other parties that could affect the employee’s work for the Company:
__________________________________________________________________
__________________________________________________________________Common Mistakes
- Using a confidentiality agreement without an assignment engine. Confidentiality alone does not guarantee ownership.
- Skipping the prior-inventions schedule. The blank exhibit is often where later disputes begin.
- Assuming the founder tech assignment solved everything forever. Ongoing employee-created work still needs clear assignment language.
- Forgetting state-law review for restrictive covenants. Remote teams make this mistake constantly.
Bottom Line
A PIIA is one of the simplest ways to make later diligence easier. The best version is signed early, paired with the right founder and contractor documents, and tailored enough to respect state-law limits without losing the core ownership and confidentiality protections the company actually needs.
Related Montague Law Resources
- The Startup Hiring & Equity Paperwork Playbook (From Formation to Late-Stage)
- Technology Assignment Agreement Template for Startups
- How to Protect Your Startup’s IP Before It’s Too Late: The Technology Assignment Agreement
- Startup Legal Mistakes Checklist: A Founder-Friendly Guide to Staying “Fundable” and Out of Trouble
- Startup Venture Financing Explained: From SAFEs and Notes to Series A and Beyond
Helpful Official Sources and Forms
- 18 U.S.C. § 1833 (DTSA immunity notice)
- U.S. Copyright Office Circular 30: Works Made for Hire
- USPTO Assignments Recordation Branch
- U.S. Copyright Office Recordation
Need help with startup documents, equity structure, or diligence cleanup? Schedule a time with John Montague.
This article is for general educational purposes only and is not legal, tax, HR, or accounting advice.
