Protecting Intellectual Property Rights in the Workplace
In today’s expanding business world, with an increasing reliance on consultants, programmers, telecommuters and employees with highly specialized knowledge and training, employers are confronted with the vast and sometimes tangled world of intellectual property rights. Intellectual property rights are commercially valuable products of the human mind, which include copyrightable works, trademarks, patentable inventions, and trade secrets. An employer’s intellectual property, which may include its software, internally created reports, promotional materials and brand name, is usually the company’s most important and sensitive asset. Yet, few employers take the necessary precautions to secure and protect their company’s rights in this area.
Protecting a company’s intellectual property rights, whether in newly developed software programs or internally created office documents, is one of the most important precautionary measures an employer can implement. Companies have a clear financial interest in protecting their sensitive information from being exploited for personal gain by their employees or falling into the hands of competitors. Customized information, such as product pricing formulas, source and object codes for software, marketing strategies and customer lists, are protected intellectual property of the employer that must be safeguarded from piracy and unlawful infringement.
An employer’s rights in newly developed intellectual property will largely depend on whom the work was created by and in what circumstances it was developed. Under the Copyright Act, work prepared by an employee within the scope of his or her employment is a “work made for hire” and belongs to the employer. If, however, the work is created by an independent contractor, such as a consultant, the employer will not retain any rights in the work. In either circumstance, the employer should enter into an agreement to secure and obtain the intellectual property rights in the newly created work.
If the work was created by an employee, the employer should enter into a written transfer and confidentiality agreement with the employee for practical purposes, so that the employee does not feel free to take the internally developed software, reports, or promotional materials to a new job. The agreement should specify that any work created on company time or using company resources belongs to the employer. If the work is created by an independent contractor, the employer should require the individual who created the work and the company he or she is employed by to execute an assignment and a confidentiality agreement regarding the newly developed work.
In securing the intellectual property rights for work created by an employee, both the employee and the employer must sign the “work made for hire” transfer agreement to be valid under the Copyright Act. However, if the work is created by an independent contractor, the Copyright Act provides that only the person(s) assigning the rights must sign the assignment agreement. Whether the agreement is a “work made for hire” transfer or an assignment, the document defining the ownership rights of the intellectual property should be broadly written and should apply to the actual work and any “derivative works” (which are works that are derived from the original work).
To ensure a complete transfer and preservation of a company’s intellectual property ownership rights, the employer should consult an experienced intellectual property attorney. An employee’s departure may further place a company’s intellectual property at risk. Therefore, transfer and assignment agreements, along with confidentiality agreements and carefully planned exit interviews, are necessary precautionary measures that employers must take to ensure that their company’s intellectual property rights and trade secrets are securely safeguarded and protected.
||Samuel J. Frederick is an attorney with Murphy, Brenton, & Spagnuolo, PC, and practices in the areas of intellectual property, business law, and commercial litigation.