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intellectual property theft

Protecting Intellectual Property from Employee Theft

By John DiGiacomo

Business owners who, after an employee dispute or after terminating an employee, have been the victims of intellectual property theft often contact us. Often, the solutions to this problem can be incredibly costly. Here are some quick tips to protect your intellectual property from employee theft before it becomes prohibitively expensive.

  1. Employment Agreements. Make sure that your employees have signed an employment agreement. Though the employer owns copyrightable works created within the scope of employment, a well-drafted employment agreement will contain a work made for hire clause that states that any works that cannot be considered a work made for hire will be assigned to the company. A well-drafted employment agreement will also contain a patent assignment provision that states that all inventions, discovery, improvements, innovations, and ideas created within the employee’s employment with the company are owned by, and assigned to the employer, including any resulting patents or rights to royalties. These provisions will also require the employee to execute any documents necessary to obtain registered patents or copyrights.
  2. Non-Compete Agreements. Many employers often wish to protect their legitimate business interests through a non-compete clause. Non-compete clauses, which are not enforceable in all states, protect an employer’s competitive interests and investment in an employee. These clauses must often be limited by type, time, and geographic scope.
  3. Non-Disparagement Agreements. Many employers also wish to protect their interests by prohibiting ex-employees from disparaging or defaming their business. Though these clauses often run into enforceability issues due to the First Amendment, a narrowly tailored non-disparagement clause can be an effective deterrent to post-employment disparagement.
  4. Confidentiality and Trade Secret Agreements. Employers also may want to protect their businesses with confidentiality and trade secret provisions, which may be contained within an employment agreement. These provisions protect against the disclosure of confidential information, such as company strengths and weaknesses, salary information, and marketing plans, which may be of use to competitors. Additionally, these clauses can also protect against the theft of trade secrets, such as recipes or research and development efforts.
  5. Non-Solicitation Agreements. These agreements or clauses protect a business from an ex-employee’s attempts to poach an existing employee, customer, or supplier. Though these clauses can have limitations, they can be effect tools to protect an employer’s interest in retaining its employees and customers.
  6. Access Controls. A simple way to protect against intellectual property theft is to implement access controls through company policies. Security policies, acceptable use policies, email policies, password policies, and computer intrusion policies can help protect against the theft of company assets, such as software, source code, and domain names. Additionally, the implementation of these types of policies may protect against a third party claim of negligence in the event a rogue employee causes harm to a third party vendor, customer, or contractor.

Of course, the most effective way to protect against intellectual property theft is to regularly audit your intellectual property portfolio and your policies to protect it.

If you would like an assessment of your intellectual property portfolio, contact the intellectual property attorneys at Revision Legal for a risk analysis.

Editors note: this was originally published in October, 2015. It has been updated for clarity and comprehensiveness.

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