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How to Protect Your Company’s Intellectual Property in an Employment Contract

How to Protect Your Company’s Intellectual Property in an Employment Contract

Find out whether you own the intellectual property created by your employers here.

19th December 2018

Employment contracts outline the rights, duties and responsibilities of both the employer and the employee. Specifically, a section in the agreement will provide how intellectual property (IP) is dealt with and who is entitled to it. As a general rule, the employer will own the intellectual property created by its employees ‘in the course of their employment’.

Here are the things you need to know to help you protect your company’s intellectual property.

What Does ‘In the Course of Employment’ Mean

‘In the course of employment’ refers to an act of any kind done during the performance of an employee’s job, usually (but not always) during the period of time specified in the employment agreement. However, ownership is not restricted by where it was created or whether it was necessarily created during working hours. Therefore, what is important to identify is whether the employee has a duty to create IP as part of their employment duties. So, an employee who creates IP but was not hired with the intention to do so will own that created IP.

The only exception to this would be through specific wording to the contrary in the employment contract. You would need to explicitly show your intention as the employer to allow employees to keep certain IP that they have created.

Furthermore, it is necessary to implement accompanying non-disclosure agreements and non-compete clauses to prevent employees from manipulating/competing against your IP. Draft these clauses broadly but accordingly to prevent any potential exploit by your employees against past, present or future IP.

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Moral Rights

Even though you own the IP of your employees, the creators have moral rights to their work. This means you need to correctly attribute the work to the creator, not attribute the wrong person to the work, and the work must not be treated in a derogatory way. If you wish to waive these rights it is necessary to obtain the creator’s consent. These moral rights may also not apply if you act reasonably in line with legislation and industry practices.

How to Further Secure Your Intellectual Property

Here are some measures you can enforce in your company to protect your intellectual property:

Implement a ‘need to know policy’:

  • This will prevent the flow of information between departments while confining information to only what is necessary for the performance of an employee’s job.

Enforce an employment commencement and exit protocol:

  • A commencement protocol identifies when an employee began working. This will help resolve any dispute about intellectual property created prior to employment;
  • An exit protocol provides the employer with surety that the employee has left all intellectual property with the company. This also identifies the employee’s future obligations under their employment contract regarding confidentiality and competition.

Restrict certain access:

  • Limit access to the physical company premises as well as online databases and computer systems.

Conclusion

Subject to any wording to the contrary, IP created by employees vests in the employer. It is important to clearly stipulate this in your employment agreements to negate any potential disputes and implement additive measures within your business to protect your IP.

Need more information? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace. 

Author
Jakub Grzybowski

Jakub is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws at Macquarie University. His main interest is on the integration of legal and technological services.