Intellectual property and employees

Employees generate IP necessary for your business to run, they might also have access to and use your IP in the course of their employment. How do you protect your IP?

Common types of employee/IP issues

In our experience, the nexus of IP and employment law centres around the following areas:

  • Client data/confidential information
  • Client relationships
  • Trade secrets
  • Inventions

Confidential information

Your client’s email address is a valuable piece of information.

Employees can and do steal confidential information, usually in the period before they leave their employment or after they are given notice of termination. This could include client lists, trade secrets, marketing data and so on. The expense involved in enforcement after the fact is huge. Here are some ways to protect your IP before there is a problem:

  • Secure the IP so it is not easily transferable, by use of passwords and locked documents. Does your CRM or management software have levels of access?
  • Monitor IT systems. Workplace surveillance, if done properly, is effective in picking up breaches. It also helps with making enforcement easier. By law, you must warn employees that their work emails may be monitored (you cannot monitor their private email accounts). Such a warning should be in workplace policy documents.
  • Have policies in place and comprehensive employment contracts dealing with confidential information.
  • Think about technology and act accordingly. Employees will have confidential information in their mobile phones, cloud-storage and personal email accounts.
  • Develop a culture of information security awareness in the workplace, so employees are aware of their obligations.

Client relationships

In some circumstances, you can stop an employee from taking clients with them when they leave their employment. However, it is extremely difficult to enforce any obligation without written terms in a contract.

In the case of clients or customers, in order to successfully enforce a restraint, the employer must show that the employee:

  • was the human face of its business; and
  • is able to use “some advantage or asset inherent in the business which can properly be regarded as the employer’s property” ; and
  • has “personal knowledge of and influence over” the clients/customers.

(see Stenhouse Australia Ltd v Phillips [1973] UKPC 1)

Inventions/creations

Many assume that copyright (artistic works and publications etc.)  created by an employee in the course of their job is owned by the employer. In obvious cases, this is correct. But what if an employee asserts that IP created whilst they were employed is their own?

In University of Western Australia v Gray, the Federal Court of Australia found that IP created by a university professor in the course of his employment was owned by the professor – and not the university – because, while he was under a duty to conduct research, he was not under a duty to invent. This was despite the invention being in the same area he was employed to conduct research in.

The solution is to ensure your employees have a comprehensive job description which makes things clear. Employment contracts should also contain terms dealing with assignment of intellectual property to the employer.