Protecting Intellectual Property From Employees

A hot-button issue for businesses all over the country is the Federal Trade Commission’s proposition to end non-compete clauses in employment contracts, but this isn’t necessarily cause for alarm. There are many ways a business can protect its intellectual property assets without having to resort to non-compete clauses. 

Employment Contracts That Utilize Copyright Laws

Every employee contract should explicitly state that the creative and intellectual property developed by the employee either on the clock or using company equipment belongs to the company. This is called the “ownership of discoveries” clause. Unless specifically outlined in the employee contract, businesses are also protected by copyright laws by default through the “made for hire” doctrine. The Copyright Act states that the business or employer is the sole owner of copyrighted material if it’s made by an employee or contract hire. 

There are two main qualifiers within the Copyright Act that determine whether the business owns the copyrights to employee-completed work. The first is that the work was completed or prepared by an employee within the scope of their daily tasks (essentially the reason they were hired). The second includes project work that has been requested to contribute towards a collective task. For example, if an operations team has been tasked with creating an employment manual, all work contained within the manual and the supplemental work required to create it, even if it’s outside their typical scope of work, is still owned by the business. 


How to Protect Intellectual Property From Disgruntled Employees

When an employee decides to leave or is terminated, a common fear of business owners is whether the employee will somehow steal or damage company assets. There are a few ways to protect your business. The first method is through an exit interview. The exit interview will give you the opportunity to meet with the departing employee and have them sign documents verifying that they have not taken any proprietary information. 

If the former employee has already done significant damage, there are a few avenues for legal recourse that exist outside of individual employee contracts. One common method is to file a complaint under the Computer Fraud and Abuse Act (CFAA). The law was created in 1986 to address hacking as a federal crime and prohibits unauthorized individuals from accessing privileged data. In the event that the information was shared with a new employer or third party, you may be protected under the Defend Trade Secrets Act, which allows the original owner of the information to sue for damages. 

If you have concerns about an employee who is leaving or one that you may have to let go, give our office a call. Enlisting the guidance of experienced and efficient legal counsel is one of the best ways to protect your business and its intellectual assets. Contact us today to schedule a free consultation.

Integrated General Counsel