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Your employees, their future employers, and your intellectual property - July 2019

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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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Your employees, their future employers, and your intellectual property - July 2019

  1. 1. Join the conversation @brownejacobsonJoin the conversation @brownejacobson Employers, Employees and IP: What you need to know
  2. 2. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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
  3. 3. Join the conversation @brownejacobsonJoin the conversation @brownejacobson We’ll cover • Employment status • Employment contracts: • Restrictive covenants • Confidentiality • Key IP assets • Rewarding employees • Practical measures during employment • The unplanned exit • Questions
  4. 4. Join the conversation @brownejacobsonJoin the conversation @brownejacobson Employment status
  5. 5. Join the conversation @brownejacobsonJoin the conversation @brownejacobson Employment status “Employment status” refers to the three categories providing their services in the job market: • Employee • Worker • Self-employed independent contractor
  6. 6. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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.
  7. 7. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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
  8. 8. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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.
  9. 9. Join the conversation @brownejacobsonJoin the conversation @brownejacobson Restrictive covenants
  10. 10. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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
  11. 11. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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?
  12. 12. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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
  13. 13. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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
  14. 14. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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
  15. 15. Join the conversation @brownejacobsonJoin the conversation @brownejacobson • Research and collaboration • Patents, designs, copyright, knowhow and confidential information • Sales and marketing • Database rights, copyright Key intellectual property rights
  16. 16. Join the conversation @brownejacobsonJoin the conversation @brownejacobson • Building IP review into the design process • A solid recordal system • Clarity on ownership • Controlling communications Capturing and ring- fencing IP
  17. 17. Join the conversation @brownejacobsonJoin the conversation @brownejacobson Employee inventions • Ownership • Compensation for certain inventions of outstanding benefit • Sections 39-41 Patents Act 1977 Rewarding a culture of innovation
  18. 18. Join the conversation @brownejacobsonJoin the conversation @brownejacobson • Enforcement of contractual obligations • A claim for breach of confidence • Infringement of IP rights The unplanned exit
  19. 19. Join the conversation @brownejacobsonJoin the conversation @brownejacobson • 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
  20. 20. Join the conversation @brownejacobsonJoin the conversation @brownejacobson Common challenges in enforcement • Delay • Injunctions (interim, springboard) • PR issues and anonymity
  21. 21. Join the conversation @brownejacobsonJoin the conversation @brownejacobson 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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