Intellectual Property Law
IP & Employment
In an age where intellectual property (i.e. designs, ideas, techniques) can be just as valuable and, in many cases, even surpass the value of physical property (i.e. products, real estate holdings, inventory), it is particularly imperative for employers to cover all bases regarding their intellectual property. Intellectual property agreements can be integrated into the general employment agreement signed between employer and employee or it can stand alone as its own document. In any event, having a solid and detailed IP agreement in place between employer and employee can be crucial to protecting a company’s future and ability to thrive.
A typical IP agreement used in conjunction with employment will often contain four major components - ownership, non-compete, non-solicitation, and non-disclosure. The overall IP concerns of employers generally focus on information that is accessible by employees and IP that is created by employees:
Ownership of Intellectual Property Created
Employers need to clearly define what rights and ownership exist when inventions, ideas, designs, and other creative works are produced by employees and independent contractors. Special consideration needs to be given to works for hire done by independent contractors. While works created by regular employees of the company almost always will be considered the property of the company, independent contractors will automatically be given a copyright for the works they created unless there is a written agreement in place to cover ownership and assignment of copyright. In essence, the independent contractor could create art, designs, written copy, and photographs for your company and you may use the work you hired them to create, but they could retain some control over how the works are distributed and used and would have the right to make derivative works as the copyright owner. Copyright consists of a bundle of rights (the right to copy, make derivative works, right to perform and display, the right to distribute/license) and employers may decide to address each piece separately. For example, they may be willing to grant the right to make derivative works to the employee or independent contractor but retain all other rights. It should be noted that patents are by default granted to the inventor and employers should address that in their IP agreements as well. Additionally, it may be helpful to define what work or inventions the employee created before the commencement of employment to avoid any confusion or costly litigation with previous employers. Many employers nowadays also choose to input a clause that designates ownership in the ideas and inventions of the employee in the time period following separation of employment. This can be helpful in instances where the employee may have used company resources, training, or knowledge to help develop the idea or invention. It is recommended to consult legal counsel that is familiar with both federal and state laws to ensure that your agreement will be enforceable according to both jurisdictions.
Protection of Confidential Information
For more detailed information, see our section on confidentiality agreements (also called non-disclosure agreements). During the course of employment, employees and contractors may come into contact with sensitive information including everything from customer lists and customer financial information to trade secrets and manufacturing processes. Confidentiality agreements protect the customers of the company (financial and personal information) but also protect the vital information belonging to the employer (processes, financial forecasts, internal policies, etc.) and are closely tied to non-compete and non-solicitation agreements. Employers should include a detailed confidentiality clause or agreement as part of their employment agreement.
A non-compete agreement will limit how employees and independent contractors can “compete” with their employer after termination of employment. The main purpose of these agreements is to protect the employer’s business interests by ensuring that the training and time they devoted to the employee is not used against them in a competitive business manner. In essence, the employer is giving consideration to the employee (training, skills) in exchange for consideration by the employee (to refrain from using the training and skills acquired in order to compete with the employer). The non-competition agreement may stipulate a time period, geographic area, and may also prohibit the employee from trying to take advantage of the business relationships they develop with their employer’s customers.
Non-solicitation is tied directly to non-compete contracts. It basically means that the employer does not want the employee to solicit business from their company’s customers during and/or after employment. A simple example would be a remodeling company employee who, during the course of doing work for the employer at a customer’s home, becomes aware that the customer needs additional work done and offers to do it by himself as a “side job.” Some employers have lenient policies on this type of matter but others choose to adhere to stricter policies.
It is important for both sides to consult qualified legal counsel when drafting and negotiating intellectual property agreements. We have worked with both employers and employees/independent contractors in drafting and negotiating these detailed and explicit agreements. Our attorneys have also represented many individuals and businesses in lawsuits and disputes as a result of contract breaches and misunderstandings. Having a solid agreement in place is key to avoiding such issues and ensuring your success should a dispute occur. We are very familiar with the federal and state laws that govern these agreements. Having a signed and written agreement is worth very little if the contract or clauses contained in it are not enforceable and conflict with the laws governing such matters.