As a business, your intellectual property (IP) is everything you’ve worked for. It’s your most valuable asset — your art, creativity and inventions.
Whenever you read in the news about two major companies going to war, it’s usually over IP. Apple has spent most of the last decade in court with Samsung over smartphone patents, snapchat and Instagram got into it over the latter copying Snapchat Stories, and Uber recently settled for $245 million (£188m) with Google-owned Waymo over an engineer — and former Google employee — stealing trade secrets.
When it comes to creative or business advantage, some companies will do whatever it takes to get ahead of the competition. Usually, this involves poaching or hiring employees from rival companies. Sometimes, though, former employees go it alone, setting up a business with stolen plans, contacts or inventions.
Protecting your intellectual property stops this from happening. And if it does happen, it’ll be your business that walks out of court victorious.
What is the definition of intellectual property?
The World Intellectual Property Organization (WIPO) defines Intellectual property as the “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”
So what counts as intellectual property?
Anything you physically create is intellectual property. An idea on its own is not. For example, an idea you had for an app doesn’t count, the app itself does. It has to exist.
As well owning the IP to something you created, you can also own the intellectual property if you bought the rights from the creator or owner.
Typically you’ll see IP protected by copyright (the little © symbol) or trademark (the little ™ characters), or by the design having been registered. For inventions, IP can be protected with a patent.
That’s all fairly straightforward. Where things start to get confusing is in the fact that IP can have more than one owner and belong to people or businesses. This is where problems arise in employment.
How does intellectual property affect employers and employees?
Good news: as a general rule, the employer owns the rights to IP created by employees.
But… (there had to be a but) The IP must be created by an employee under a contract of employment and ‘during the course of employment.’
Now we’re in a bit of a grey area, because an employee could argue that IP was created outside of the course of employment — i.e. outside of work hours or job description (however, work created outside of the job description but done using company time and equipment would constitute as misuse, in which case you could issue disciplinary procedures).
To prevent any kind of dispute over IP, it’s important that you define the terms of employment in the employee’s contract. Make it clear that the scope of their job is to create intellectual property — i.e. inventing, designing or improving products, plans, designs or text.
But wait – there’s more. If the person creating the IP is a freelancer or independent contractor, they are the first owners. In this case, you’ll need to create a contract that clearly states any IP created is transferred to your business.
If you’re working with a freelancer or contractor and that person comes to work for you as an employee, any IP created for you before they became an employee still belongs to them. As a pre-condition of employment, you should ask that any IP rights are signed over to you.
5 things to consider when hiring new employees
Given how messy things can get over intellectual property, it’s essential that there’s no doubt over who owns your creative assets.
Here are some things you might want to implement when welcoming fresh faces into your company.
1. Non-disclosure agreements (NDAs) during the interview process
When discussing the job role with interviewees there’s every chance that you’ll need to share some confidential information — information that can easily be passed on when the candidate leaves the room. Having candidates sign a non-disclosure agreement gives you legally enforceable protection against breaches of confidentiality. It makes it clear to the candidate that the information discussed during the interview must be kept private and gives them an understanding of just how highly IP is valued should they get the job.
2. Include terms in the contract to protect IP
We’ve already mentioned how it’s important to clearly define the scope of employment in your contracts, but there are five terms that you might also want to add.
- Ownership of IP — that all intellectual property created during the course of employment is owned by the employer.
- The signing of all documents related to IP ownership — that the employee signs a document as a record confirming employer ownership
- Confidential information clause — that all confidential information is not discussed with other people or used in any way outside of employment. This should cover all IP created by the employee and their colleagues, as well as client information, marketing plans, financial information and business plans
- Moral rights waiver — that any moral rights to copyrighted work are waived
- Restrictive covenants — clauses that prevent a former employee from competing with your business, joining a competitor, poaching other employees or approaching clients for a reasonable period after employment ends
3. Ask any contractors or freelancers to sign an assignment of intellectual property
Most contractors and freelancers work under the assumption that the IP they’re working on for a client will be transferred once complete. However, it’s good practice to get the agreement down on paper. An assignment of intellectual property is a simple document that confirms the outright transfer of an owner’s IP rights, title and interests.
4. Introduce a ‘need to know’ policy
Not all employees need access to all confidential information. A web designer, for example, won’t need to know information on company finances, while a cleaner won’t ever need to see a client list. A ‘need to know’ policy restricts access to confidential information to authorised personnel.
5. Have an exit protocol
An exit protocol lets you sit down with the employee before they leave the company to ensure that all company property is returned and no copies of files or any other company information are kept.
The interview can also be used to go over the restrictive covenants included in the employment contract.
Protecting the IP of your agency can all seem a bit Men in Black but, short of having a memory eraser, taking the right steps is critical to the future of your business. Make sure your contracts with employees and contractors are clear in the fact that any IP created for your agency is owned by your agency.
If you’re worried that your intellectual property might be at risk or need someone to have a look over your current employment contracts, you can get in touch with our team on 03338802810 for further guidance.
