How to Safeguard Intellectual Property Rights in the Workplace: A Practical Guide

By Nafsika Karavida

Intellectual property (IP) is often a company’s most valuable asset. Whether it is an invention or a creative work, the law generally considers the person who made it the owner – and in the workplace context, many times that person is an employee. Without a written agreement, a company could lose ownership of important IP. To avoid this, companies need to establish clear, tailored contracts with their employees, which lay out who owns what when it comes to IP created on the job.

There’s no “one-size-fits-all” solution for these agreements, but there are several key things every company should keep in mind. Let’s break them down.

Some General Things to Keep in Mind for IP Agreements

The best time to enter into an IP agreement is before employment begins. This is because a job offer itself is often sufficient legal “consideration” for an enforceable transfer of IP rights. By contrast, legally speaking, continued employment alone is not usually seen as enough to justify an IP transfer.

Different types of IP – like inventions and artistic works – fall under different legal frameworks. For instance, the rules governing who owns a novel or a film script are not the same as those governing patents. But regardless of the type of IP, the agreement should always be in writing. It should also include a clause requiring the employee to help secure and protect the company’s IP rights, which might involve filing patents or handling any legal issues related to copyright or patent infringement. It is also a good idea to include a well-tailored confidentiality clause to safeguard the company’s confidential information, especially its IP (and trade secrets).

Artistic Work

Artistic work, like designs, films, or writing, is protected by copyright laws on both federal and state levels. If your business – whether it is a publishing house, fashion label, or architectural firm – creates artistic products, your contracts should include a “work for hire” provision under the Copyright Act. This helps ensure that the company owns the work from the start, rather than the employee or independent contractor.

Inventions

When it comes to inventions, patent law requires that the inventor’s name always appears on the patent application. However, even if an employee invents something at work, the company can still own the invention if there’s a written assignment in place. This assignment should transfer ownership of the invention to the company contemporarily – so be sure to use the phrase “hereby assigns” in the contract to make the transfer immediate and legally binding.

Representations and Warranties

A well-drafted IP contract should also include a promise from the employee that they did not infringe on anyone else’s IP (i.e., any third-party’s IP) while creating their work. This can help protect the company from potential legal headaches down the line.

Cooperation and Power of Attorney

Securing IP rights can take time, and it is important that employees agree to keep helping the company even after they leave the company. Your contract should include a clause requiring continuing employee cooperation in filing and transferring IP rights, as well as in handling patent infringements and other legal challenges that may arise. For extra protection, it is smart to include a power of attorney provision so the company can handle any necessary paperwork on the employee’s behalf.

State Laws: A Critical Factor

In addition to federal laws, most states have their own rules about IP ownership and assignment. For example, some states – like California, New York, and Illinois – have laws that draw a clear line between inventions created during work hours and those developed in the employee’s free time without company resources. These laws might prevent a company from claiming ownership of an invention that has nothing to do with its business. To ensure compliance, it’s a good idea to have an IP attorney review or draft your contracts.

Conclusion: Protecting Your Company’s Most Valuable Assets

IP can be worth millions, making it critical for companies to have solid agreements in place with employees who create it. A well-drafted contract will ensure that the company – not the employee – owns the IP and will require confidentiality and ongoing cooperation from the employee. Since the rules vary based on the type of IP and the state, it is always a good idea to consult with an attorney who specializes in both IP and employment law.

This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Senior Associate Nafsika Karavida who counsels both companies and individuals on employment, intellectual property, corporate and transactional and cross-border commercial law. Ms. Karavida is admitted to practice law in Connecticut and New York, as well as in the European Union and Sweden, and before the United States Patent and Trademark Office.