When an employee or contractor leaves a business, they have within their knowledge many of the things that make the business a success – innovative ideas, efficient business systems and procedures, client lists or business and marketing material. When you have spent months or years coming up with these assets, the last thing that you need is for someone to leave with that knowledge and for them to use it him or herself, or share it with their new employer. It is important for any business to protect their IP – often the most important assets that it has.
Putting a fence around your IP
A comprehensive IP management system is the most effective way of protecting your IP to ensure that it remains exclusive to your business, both while and employee or contractor is with the business, and when they leave.
An effective IP management system should include a suite of strategies, depending on the business, including:
- Employment contracts and confidentiality agreements;
- Education programs (including entry and exit interviews);
- Trade mark protection; and
- Patent protection.
Before you start
Before you put the fence up, you have to know what’s in the paddock. Conduct an IP audit – the longer you leave it, the harder it will be…and the more risk you run of allowing former employees and contractors to walk out the door with valuable information. Figure out exactly what IP you have and record it in a database.
Knowing what comes in and what goes out
Once you know what you have, you can keep check of what knowledge your employees bring, what they are creating and what they take with them. Entry and exit interviews are important tools for keeping track of who knows what information.
Protecting your tricks of the trade
All employees and contractors are potential inventors and creators. When you engage a new employee or contractor, have them sign an employment agreement that assigns all IP created ‘in connection with their employment’ to your business. The employment agreement should also include a confidentiality clause that prohibits the employee form disclosing valuable company information.
If an employee is at a senior level or working on a highly confidential project, a restraint of trade clause – which may restrain the employee for working within the same industry for another competitor within a certain amount of time from leaving the your employment, often for a sum of money – may also help protect your business. However, restrain of trade clauses will be unenforceable if they are unreasonable. These clauses must be carefully drafted to have effect and you should obtain legal advice regarding whether it would be appropriate in your circumstances.
Confidentiality agreements are often used to protect ‘trade secrets’ – IP that is not protected by patents, copyright or trade marks – such as a secret recipe, or other business secrets - such as a potential patent idea - that does not yet have other legal protection. Often, confidentiality agreements are seen as the most effective way to protect these secrets, but they must be watertight and bound employees to secrecy both during and after employment.
Brand power
Your business logo, brand or image differentiates you from your competitors and is how customers recognise your business. Don’t be one of the businesses that underestimates brand power. A trade mark is the best way to protect your brand and to ensure that you have exclusive use for the words, pictures or images associated with your business. Trade marks can be words, pictures and even colour, and are registered in 42 different classes – such as clothing and footwear, confectionary and giving the registered owner exclusive rights to use those words, picture or images in those classes.
It is important to be aware that a business name does not offer the same protection as a trade mark. A business name is merely a registration with the relevant state authority to operate a business under that name. A trade mark is the only way to ensure you have exclusive rights to use the name, logo or associated images.
The new inventors
If you have a new innovation, then a patent is the best way to protect it. A patent is a right for any device, substance, method or process that is new, inventive and useful. You must apply for a patent, and once you have obtained one, will have the exclusive right to commercially exploit the patent for the life of the patent, which is usually 20 years.
Patents must be new and inventive and you have to prove that the idea was yours first. So, be careful who you talk to. If you demonstrate, discuss or sell your invention before you file a patent, you run the risk of losing the opportunity to patent it. Confidentiality agreements, or at least very a comprehensive confidentiality clause in employment agreements, are particularly important to protect your ideas.
Patents are a complex form of IP protection and require expert advice from a patent attorney. The claims that you make in you patent application will define what legal rights you will have for your innovation.
Conclusion
The task of managing you IP, particularly if it is largely in the form of ideas, can seem daunting. The thought that a former employee or contractor can walk out the door with those ideas is even more daunting. You can protect this information with an effective IP management strategy that identifies what IP you have and which employees possess certain knowledge, and utilises a variety of legal protections such as comprehensive employment and confidentiality agreements, trade mark and patent protection, to ensure that when your employees walk out the door, your IP doesn’t go with them.
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