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10-September-2007
Securing your investment in innovation
Many companies say that their employees are their greatest asset. Creative employees can develop the innovative new products and services that turn businesses into market leaders.
Unfortunately, an employee’s interests are not always the same as those of his or her employer, particularly if the employee develops something of great value, in which case the employer may end up sinking thousands of pounds into an entitlement action to get hold of the right to the invention. Equally, if the employee wishes to terminate their employment, there is a danger that they could go to a competitor and present to them on a plate an innovation that you believe to be rightly yours.
The principle intellectual property rights (IPRs) arising from industrial R & D are likely to be patents, design rights and confidential information. Patents protect novel inventions capable of industrial application, while design rights protect the design of industrially-produced objects. Copyright may also be significant as it is the principal form of protection for computer software. It will also protect documentation ancillary to inventions, such as research notebooks, specifications, and working diagrams. As between employer and employee, the relevant rights are as follows:
Patents
In the absence of any agreement to the contrary, the default statutory position is that an employer will own the rights in inventions created by its employee where the invention was created in the normal course of the employee’s duties. If the invention was created by the employee outside of his normal duties, it will still belong to his employer if he has been specifically charged with a particular task or duty which results in the invention.
In addition, if a senior employee (such as a director or senior manager) who is not specifically employed to invent but develops an invention during the course of his duties as an employee (whether or not those duties were normal for him) then the rights in that invention will again belong to the employer as a result of the “special duty” that senior employees are deemed to owe to their employers to further the employer’s interests.
However, employers will not own an invention which has been created by an employee outside the scope of his employment duties or which the employee might not reasonably have been expected to make in the course of his duties. So, for example, if the tea lady at a motor manufacturer invents a new advanced braking mechanism while waiting for the kettle to boil, the invention will belong to the tea lady.
Copyright & Design Right
The first owner of copyright in a work is generally the author of the work. However, copyright in literary, artistic and other works made by an employee in the course of his employment belong to the employer, unless there is any agreement to the contrary.
Equally, the first owner of a design right is the designer of it, unless it was created in the course of the designer’s employment in which case the employer owns the rights.
Good Practice
The key battleground in IPR entitlement actions between employer and employee often revolves around what actually constituted the “course of employment” of the employee. It is therefore good practice to ensure that employment contracts which describe an employee’s role are drafted in fairly wide terms, and that duties under a particular project are specifically defined.
It is also good practice to include provision in employment contracts to expressly provide that all IPRs created by the employee are to be the property of the employer. This makes it much more difficult for the employee to show that there was any agreement to the contrary.
It should be noted however that any term in an employment contract providing for the automatic future assignment of any inventions created by the employee to an employer will be unenforceable (despite this fact, many employment contracts still contain these provisions).
Confidential information
Some important aspects of research may not be protectable by IPRs but may nevertheless constitute trade secrets that are protectable as confidential information. It is notoriously difficult to prevent ex-employees using information that an employer may regard as confidential, especially where the employer has made little effort to maintain secrecy.
Creating a culture of confidentiality around R&D can both prevent it leaking out to competitors in the first place, and also help to establish what information was confidential if it is leaked. Some fairly simple but effective steps to take include locking R&D labs when not in use, putting up “No photograph” signs, putting copyright and confidentiality notices on written materials, and (for particularly sensitive projects) restricting lab access to named employees who have accepted written confidentiality obligations.
ENDS
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