Protecting Your Company’s Intellectual Property Against Employee Claims
by Bob White on May 05, 2011
Companies often pay close attention to certain methods for protecting their property, such as patents, trademarks and copyrights. These methods are extremely important and should always be considered as a part of a company’s overall strategy if they are available. Some companies, however, fail to take fairly easy steps that may provide substantial protection for certain property from claims raised by employees and consultants. Failure to properly assess the risks raised in these situations and to take adequate protective measures may substantially reduce the value of the company’s interest in this property.
These problems often arise when an employee or consultant provides services in connection with the development of an item. An example here would be the development of a new software package. Depending on the specific circumstances of a situation the employee or consultant may be able to assert certain ownership rights in that software package. This could have dire consequences for the company, especially if the software package turns out to have substantial value.
To help mitigate or combat these potential problems, companies should evaluate having employees and consultants enter into written agreements under which they assign all rights in any inventions or other items on which they work to the company. These agreements are commonly called invention assignment agreements, and they can provide substantial protection for a company’s rights in its products. Most technology companies in my experience utilize these agreements, and I believe that almost all companies should consider them.
Under these agreements, the employee or consultant assigns all rights in any inventions or other items on which they work to the company and agrees to aid the company in enforcing any such rights. It is critical to put such agreements in place as early as possible to help prevent an employee or consultant from attempting to assert ownership in the company’s property because of a timing delay. Such agreements should normally be signed at the inception of an employee’s employment or a consultant’s engagement. It is also very important to have the employee list out any property or inventions in which he or she believes that they have a preexisting interest up front. This will help the company to address any such issues early in the process and identify potential problem areas.
It can also be beneficial to have most if not all employees and consultants sign such an agreement, regardless of rank or function. This process can be integrated into a company’s normal procedures when an employee or consultant comes on board. It may also be possible to enact “midstream” agreements after an employee or consultant has already been employed or engaged for some time, but these situations require analysis and it is prudent to enter into such agreements at the inception of the employment or consulting process and certainly before any work is performed.
Companies should closely review their controlling state laws as there are variations in the laws of certain states that could significantly reduce or impair the protection offered by these agreements. Even in states with pro-company laws companies should ensure that they are aware of the protection that invention assignment agreements provide in the company’s specific situation. Federal laws and regulations can also be important here.
Companies should carefully evaluate all steps that are available to protect their property, including the use of invention assignment agreements. This is especially true in technology companies which are developing a number of products or service offerings, many of which are new. In these cases it may be easier for an employee or consultant to convince a court that they should have some ownership interest in a company’s property since they worked on it. Even if the company ultimately prevails in its assertion of ownership of its property in a controversy, this usually requires costly and time-consuming litigation with no guarantee of success. Some up-front planning and the use of invention assignment agreements may provide significant benefits.