Innovation and creativity is driven by your people. How do you as a business encourage innovation, capture the relevant IP assets and reward your innovators? What happens when a key individual leaves the business – how do you ensure that your R&D crown jewels remain legitimately protected? In a market of ever increasing competitive collaboration, setting up the right strategy to ensure the appropriate safeguards are in place and are communicated to your employees is important.

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Employers, Employees and IP:
What you need to know

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Connect with Mark Daniels
mark.daniels@brownejacobson.com
+44 (0)121 237 3993
Employers,
Employees and IP:
What you need to
know
Connect with James Tait
james.tait@brownejacobson.com
+44 (0)121 237 3999

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We’ll cover
• Employment status
• Employment contracts:
• Restrictive covenants
• Confidentiality
• Key IP assets
• Rewarding employees
• Practical measures during employment
• The unplanned exit
• Questions

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Employment status

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Employment status
“Employment status” refers to the
three categories providing their
services in the job market:
• Employee
• Worker
• Self-employed independent contractor

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Employment status
Defining employment status is a
complex and confusing area, but is
broadly about looking at:
• The contract between the parties; and
• The ‘day to day’ reality of the
relationship.

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Why does employment
status matter?
In terms of IP: as an employee, unless
the employment contract expresses
agreement to the contrary, the
employer will own any IP that the
employee creates:
• in the course of the normal duties of his
employment or when undertaking
duties that have been specifically
assigned to him; and

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Why does employment
status matter?
• as long as an invention might reasonably
be expected to result from carrying out
their duties.
In contrast, where a self-employed
consultant creates IP then (unless
otherwise agreed) it will be owned by
the consultant as opposed to the
company engaging their services.

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Restrictive covenants

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What can you protect?
Restrictive covenants impose certain
preventions on the individual following
termination of the contract, in order to
protect:
• Trade connections (e.g. customers,
clients, suppliers)
• Employees
• Goodwill
• Trade secrets and other confidential
information

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A restrictive covenant is a restraint of
trade and is therefore unenforceable by
default, unless the employer can show
that:
• It protects a legitimate proprietary
interest; and
• The protection sought is no wider than is
reasonably necessary to protect the
legitimate proprietary interest.
What makes a restriction
unenforceable?

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Confidentiality issues
• It is an implied term of every
employment contract that the employee
is prevented from disclosing confidential
information to third parties
• “Trade secrets” – information subject to
the highest level of confidentiality – are
protected by the equitable duty of
confidence, which applies during and
after termination of employment

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Confidentiality issues
• However, mere “confidential
information” is not implicitly protected
post-termination. It is therefore sensible
for employers to seek to protect their
confidential information using express
post-termination restrictions

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Confidentiality issues
In order for a confidentiality restrictive
covenant to be enforceable:
• The information must have been
properly categorised as confidential;
• The type of information covered by the
restriction must have been precisely
defined; and
• The duration of the restraint must have
been properly considered

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• Research and collaboration
• Patents, designs, copyright,
knowhow and confidential
information
• Sales and marketing
• Database rights, copyright
Key intellectual
property rights

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• Building IP review into the design
process
• A solid recordal system
• Clarity on ownership
• Controlling communications
Capturing and ring-
fencing IP

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Employee inventions
• Ownership
• Compensation for certain inventions
of outstanding benefit
• Sections 39-41 Patents Act 1977
Rewarding a culture of
innovation

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• Enforcement of contractual
obligations
• A claim for breach of confidence
• Infringement of IP rights
The unplanned exit

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• Lack of express obligations
• Uncertainty about what
information/materials are in
possession of ex-employee
• Confidential information getting
into the public domain
Common challenges
in enforcement

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Common challenges
in enforcement
• Delay
• Injunctions (interim, springboard)
• PR issues and anonymity

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Connect with Mark Daniels
mark.daniels@brownejacobson.com
+44 (0)121 237 3993
Employers,
Employees and IP:
What you need to
know
Connect with James Tait
james.tait@brownejacobson.com
+44 (0)121 237 3999