Wednesday, October 21, 2015

Don’t call the whole thing off when negotiating IP rights with employees

Tomaydo-Tomahhdo is a local sandwich shop, and a purveyor of damn fine paninis and wraps. As for litigation, let’s say its lunches are way better. It sued one of its former chefs, claiming that he stole its book of recipes to open a competing catering business. Ultimately, the restaurant lost its lawsuit, which it had framed as a copyright infringement claim. The court concluded [pdf] that there is nothing original in a compilation of sandwich recipes that copyright law protects.

What could this employer have done differently to protect its intellectual property. It could have gotten in it in writing from the employee.

If you place any value at all on your company’s IP, do not rely solely on existing state and federal laws to secure that information from a disgruntled, departing, or otherwise thieving employee. Instead, secure your IP via written agreements with your employees, and do not provide any employee access until he or she signs that agreement.

What should the agreement accomplish?

  • Define your confidential information.
  • Define your exclusive ownership over existing information.
  • Define your exclusive ownership over information created during employment.
  • Define your exclusive ownership over all intellectual property rights.
  • Define your requirement as to the immediate return of all property at the end of employment (including paper and electronic copies), and as to the employee’s non-retention of any copies.
  • Define the scope of remedies (especially the reasonableness of injunctive relief and the payment of attorneys’ fees).

In other words, take control of how you define your rights regarding your intellectual and other property. If you are going to go after an absconding employee, you are much better off relying upon your written agreement than a court’s interpretation of federal or state law.