Your intellectual property, including your trading name, designs, logos and branding, are a valuable part of your business, right? But have you ever thought about how an employee may misuse that information once the employment relationship comes to an end? To give your business’ intellectual property the protection it deserves, employers should make sure that the intellectual property clause in their employment contracts is properly drafted. In drafting the intellectual property clauses, your lawyer should consider a number of essential terms, including the following:

Ownership of Intellectual Property

This term refers to who owns the materials created during the course of employment. Essentially, it ensures that all intellectual property created by employees while at work becomes the property of the employer. It might also cover intellectual property that related to a certain field even if not created during the ‘course of employment’. To ensure this term is not drafted too broadly, consult a contract lawyer for advice.

Signing documents to record the employer’s ownership of intellectual property

This term requires employees to sign any documents that the employer requests (provided this request is reasonable) to make a record of the employer’s ownership of whatever intellectual property the employee has created in the course of employment over which the employer wishes to have ownership.

This term is usually drafted into employment contracts so that the obligation on employees to sign over any ownership rights to the employer applies both during and after employment. Say, for example, with respect to a fashion designer employed by a fashion label; it would be prudent for the employer to get a sign-off on the individual designs, to ensure they are not replicated by the employee post-employment (thereby stealing their important fashion cred!).

An employee may have contributed to the design or functionality of an invention that his or her previous employer now wishes to patent, and may require that employee to give his or her signature on any patent application documents, even once the employment relationship has formally ended. Of course, speak with a lawyer if you’re unsure about whether you have some entitlement to the intellectual property in the invention.

Confidential Information

Confidential information is extremely valuable to an employer. Maintaining its secrecy from competitors in the marketplace is one of the primary concerns of most employers. The Confidential information term should be drafted so that it requires all employees to:

  • Keep the information confidential by not disclosing it to anyone; and
  • Not utilise the confidential information for their own personal or commercial needs, i.e. not outside of employment.

Again, this term should be drafted into the employment contract in such a way that the obligation on employees will apply both during and after employment.

Scope of confidential information

This term should be broadly drafted so that it covers things like:

  • All intellectual property that an employee has created, or contributed to the creation of, in the course of his or her employment with the business;
  • Any other intellectual property that was already owned by the business when the employee started working with the business, including any intellectual property the business licences from others; and
  • Any other business information such as supplier lists, strategic marketing plans, client lists, financial data, etc.

Moral rights waiver

Ordinarily, the creator of any works in which copyright subsists will have moral rights to his or her work. These rights include things like the right to have the work attributed to its creator, not to have the work wrongly attributed, and not to have the work treated derogatorily. It is important that, as an employer, you ensure employees waive these rights with respect to works created in their capacity as employees by agreeing to a moral rights waiver.

Restraint on competition

A restraint operates to prevent employees from setting up competitor businesses for an agreed period of time and in an agreed area.

A restraint term that is drafted too broadly will be considered unreasonable and not upheld by the Court. This is why you will often see restraint clauses that ‘cascade’ from most restrictive to least restrictive. Here, the restraint will only be upheld to the extent deemed reasonable by the Court. Employees that sign a restraint on competition clause will not be restrained if the wording is overly onerous or far reaching. For example, if it operates for too long or over too large an area (e.g. Australia or worldwide) the term will not be valid, so it’s important to engage an employment lawyer in preparing your employment agreements to draft a restraint that is reasonable in light of your business, and the nature of the role.

Conclusion

If you are an employer seeking assistance in drafting or reviewing your employment contracts, particularly the intellectual property clauses within them, contact LegalVision on 1300 544 755 to speak with one of our contract lawyers today.

Emma Jervis

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