How To Protect An Employer’s Intellectual Property

There are a variety of options that employers can use to protect against employee misuse of their intellectual property.  Some of them automatically apply to employees as a matter of law, but others need to be negotiated as a matter of contract.  In addition to the protections available under patent and trademark law, here are some of the options available to employers to prevent employee misuse of intellectual property:

  • Trade Secret Law: Trade secret law protects information that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  Although employees do not need to be expressly informed that information is a trade secret for the law to apply, it is best to identify information as confidential either by marking documents as confidential, using a confidentiality policy or agreement or otherwise.
  • Duty of Loyalty: The duty of loyalty is a common law rule that prohibits employees from gaining a personal benefit at their employer’s expense.  Duty of loyalty claims typically arise when an employee solicits an employer’s customers for him or herself or for a competitor or otherwise competes against the employer while still employed – for example, by misusing an employer’s confidential intellectual property.
  • Non-Compete Agreements: Non-compete agreements prohibit an employee from competing against an employer for a period of time after termination of employment.  If the employee gains access to the employer’s confidential data, this can help prevent disclosure of the data to a competitor while the information is still fresh in his or her mind.  Non-compete laws vary from state-to-state, so it is important to make sure non-compete agreements comply with all applicable requirements.
  • Confidentiality Policies and Agreements: Confidentiality provisions in employment policies or handbooks help inform employees about what kinds of information needs to kept confidential.  They are most effective when they are tailored to the particular nature of the employer’s business.  In the event of a violation, the provision can be used to either support a trade secret misappropriation claim or a breach of contract claim.  However, employers need to be careful not to make confidentiality policies too broad – for example, by trying to prohibit employees from disclosing their wages.
  • Assignment of Invention Policies or Agreements: Assignment of invention provisions in employment policies or agreements require employees to assign ownership in any inventions they develop while working for the employer to the employer.  This will prevent an employee from later claiming ownership in work product prepared for the employer.
  • Work-For-Hire Policies or Agreements: Under federal copyright law, “works made for hire” are presumptively owned by the person or company for whom the work was prepared.  17 U.S.C. § 201.  This means that an employer presumptively owns any work prepared by an employee that is subject to U.S. copyright laws.  Although this is a legal presumption, it can be helpful to have explicit policies or agreements on this subject for employees who focus their efforts on creating copyrightable materials.

Takeaway:  There a variety of methods that employers can use to protect their intellectual property.  What methods work best for an employer will vary depending on the nature of the employer’s business and workforce.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on September 15, 2014, in Non-Competition and Confidentiality and tagged . Bookmark the permalink. Leave a comment.

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