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How can businesses protect their IP following the termination of an employee?

18th October 2023 by Alana Penkethman

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When it comes to protecting intellectual property (IP), business owners are constantly on their toes to ensure that their assets are safeguarded. However, once an employee leaves a company, the risk of infringement increases drastically. In today’s competitive landscape, every business must take necessary measures to avoid losing their cherished assets and maintain the integrity of their brand.

Following are the measures Laceys would recommend;

Registering your IP

It is important you recognise what IP you have and take steps to protect it to include registering any trade marks, product designs, patents and domain names. Even software, if it meets the requirements, could be registered as a patent as it protects the technical idea of the way the software works. By registering your IP you will be recognised legally as the owner and provides you with stronger grounds to enforce your IP against infringers who could well be an employee seeking to exploit your IP following termination. You must continue to make new applications to cover expansions of your IP (such as territories, product development and / or goods services you offer) to ensure you maximise your protection and it covers everything you do without leaving gaps which could be stolen. A successful IP claim can provides a variety of remedies against an infringer.

Confidentiality Causes

Every contract of employment should contain confidentiality provisions. These clauses ensure that employees don’t share any confidential information about your business, including trade secrets, product designs, and proprietary software. It’s important to ensure that these agreements cover all confidential information that you wish to keep secret and define the consequences of violating it.

IP Ownership

When creating an employment contract, it’s crucial to specify who owns the IP created by the employee during their employment. You should also include a clause that transfers ownership of any IP created by the employee during their employment to your company. This eliminates any confusion about ownership of IP, prevents disputes, and ensures that you retain full control over your company’s IP.

Restrictive Covenants

Restrictive covenants limit the ability of employees to compete with their former employer for a specific duration. Including express terms within employment contracts at the outset of employment can safeguard your business by preventing employees from working with competitors, using the company’s proprietary knowledge, or soliciting clients or employees after they have left. However, before implementing a restrictive covenant, it’s crucial to ensure that it’s enforceable in the jurisdiction your business operates.

Non-Disclosure Agreements

One of the most effective ways to protect your business IP is by incorporating non-disclosure agreements (NDAs) into your employee agreement forms. NDAs legally forbid employees and contractors from discussing any confidential information related to your company, with the general public or a competitor. This can include, for example, commercial business plans, company policies, trade secrets, employee information, and patent and trade mark information before filing. An NDA can provide a business owner with the necessary legal remedies to prevent an employee from disclosing valuable IP information, even after they have left the company.

Educating Employees

Good communication throughout employment is essential in safeguarding IP. Employees must understand the value and significance of your IP and the legal ramifications of IP infringement. Regular training sessions can also help employees understand the types of data that need to be protected and the consequences of disclosing confidential information to unauthorised parties.

Update Contracts

Make sure your employment contracts are reviewed regularly. As your business evolves, and your employees progress, your IP protection needs might also change. It’s crucial to review and update your employment contracts as needed, ensuring that your IP remains safeguarded.

Exit Interviews

Exit interviews offer an opportunity to discuss why an employee decided to leave, their future plans, and what they plan to do with the information they have about your business after they leave. This is an excellent time to encourage and remind employees of their obligations within restrictive covenants. It’s also a time to review password changes and determine whether you need to revoke access to sensitive IP. It is always worth considering exercising your discretion to place the employee on garden leave during their notice period, so as to limit access to IP.

Businesses are constantly at risk of losing their IP, but there are steps business owners can take to protect themselves from the risks that come with employee termination. Implementing restrictive covenants and exit interviews, together with educating employees, are all essential steps to ensure your business the protection it deserves. Protecting IP is the responsibility of every business owner, and it’s crucial for them to continuously stay current on the latest protective measures available. The ability to prevent the loss of IP ensures the continued success of your business in the long run.

If you would like to find out more about the above points, then please contact either our IP specialist Tiff Elmer at  t.elmer@laceyssolicitors.co.uk or 01202 377 814 or our Employment specialist Alana Penkethman at a.penkethman@laceyssolicitors.co.uk or 01202 377 872