HOW TO PROTECT YOUR IP

This note is the first in a series of three in which we consider the types of intellectual property which can be created by your employees and consultants and how to ensure that IP created by them is protected for your organisation.

In this note, we focus on the types of IP which can be created in normal operations. The second and third notes centre on distinguishing between employees and consultants as well as focusing more specifically on how a company can maximise its protection surrounding technology and patents.

Background

The ability to improve your company’s balance sheet through exploiting its IP has never been more important. These challenging economic times meant that companies need to explore all possible avenues when it comes to maximising revenue and protecting valuable assets. The move to increased home working during the pandemic brings with it many risks of IP assets being lost.

Coupled with the need to exploit and protect your IP is the potential for use and ownership disputes, in particular where the IP has been created by an employee or consultant. Throughout this series of three notes, we will provide some practical tips on how you can reduce this risk.

By definition, IP is anything which is created as a result of intellectual effort and which creates a right that protects ideas and information that may be of commercial value. It is an intangible asset which exists in almost all creations and inventions, whether registered or not. The rights afforded to the owner of that IP can be extremely powerful, and may include exclusive rights to prevent others from using the IP without their consent.

Realising the value of your IP, which may at first glance have been ignored or missed, can produce significant rewards. Establishing who owns it is taking up a great deal of our litigation team's time.

Rights will vary between the various types of IP. The most common which may arise through employees or consultants are:

Patents

Often the most lucrative for a company.  Patents provide their holder with a 20-year monopoly right and exist where there is an invention of a product or process, often using novel technology.  For an idea to be patentable it must be an original idea which would not be obvious to someone skilled in that field. It must be a process which is capable of industrial application. In other words, there must be a way in which the invention can be put to practical use.

Patents have the potential of being particularly rewarding as they can offer your company a competitive edge over the market. Just as there may be tremendous value in your company using the patented invention, there may also be a huge benefit to preventing a competitor using it.

We will return to patents, and particularly ownership of patents, in our final note in this series.

Designs

Designs can be both registered and unregistered. A registered design is a legal right which protects the overall visual appearance of a product or part of a product in the country or countries in which the design is registered. This means that protection is given to the way a product looks. The appearance of a product may result from a combination of elements such as shapes, colours and materials.

Registered designs are owned by the person who has them registered. You should ensure that your company, if applicable, has designated people who deal with registered designs registers them on behalf of the company, ensuring they are registered in the company’s name.

Unregistered designs are also protectable in the UK. The term “design right” refers to the specific legal protection offered to unregistered designs. Design rights give the owner automatic protection for the internal or external shape or configuration of an original design, ie. its three-dimensional shape. Design rights allows the owner to stop anyone from copying the shape or configuration of the article, but do not protect the two-dimensional aspects, for example surface patterns.

Design rights do not need to be registered and arise as soon as an original design is created. That being the case, the person who creates the design will own the design right. If created in the course of employment, the designer’s employer will be the first owner of the design right.  By contrast, if created pursuant to a commission the default position is that the designer will be the first owner.

Copyright

Copyright exists in relation to artistic, dramatic, literary and musical works and in sound recordings, broadcasts and typographical arrangement (in other words, style, composition, layout and general appearance of the works).  Copyright prevents the unauthorised copying of the whole or substantial part of the works. In the UK, there is no need to register the right for it to subsist; it exists automatically upon the creation of the works.

Copyright is often found in things such as instruction and training manuals created on behalf of the company. Another example would be the copyright which exists in a logo or trade mark created for your company.

The default legal position remains that the author of the works is the owner of the copyright in it, unless the author is an employee. Copyright will automatically vest with the employer if the works are created in during the course of employment.

It is important to bear in mind that this copyright exception applies in relation to employees only and not automatically to works created by consultants or contractors. Again, we will return to this issue with consultants in the next note in this series.

Confidential information, trade secrets and database rights and know-how

Certain information will possess a quality of confidence and can be of significant value to your company, for example sales figures, pricing data or customer lists.

Database rights exist where publicly available information has been created in such a way that there has been some thought put in to organising, collating and analysing it, such as customer lists.

Information can be protected both by database rights and because it is confidential information. The right in confidential information exists to prevent the disclosure of confidential information without your consent.

The value of confidential information, trade secrets and know-how is lost if it is made available to others or to the public, in particular to competitors.  Confidentiality therefore relies on ensuring your employees and/or consultants keep the information private. Knowing that your employees and consultants are aware of the confidential status of certain information is therefore key.

Although there is an implied duty of confidence on employees, companies should always make the position clear in written terms with employees and/or consultants. After all, confidential information is difficult to contain once it has been leaked. Enforcement against an employee responsible for leaking information is a very busy part of our practice.

Trade Marks

It is less common that a logo for a trade mark is created in the normal course of employment. However, should a company wish to register such a logo as a trade mark, they should always make sure it is registered in the name of the company rather than the employee/consultant. The same applies to domain names.

It is also important to check that any copyright existing in the registered mark, belongs to the company.

Here are our top tips for your company to maximise the chances of IP, created by your employees and belonging to you:

• Always have written contracts of employment with staff, particularly those who are involved in creative/ inventive roles, making clear that any inventions (which may be protected by patents) and, copyright etc created by the employee in the course of their work, belong to the employer;
• You should have clear, unambiguous policies in place concerning what happens to confidential information when it is removed from the workplace by employees. You should also have policies in place which provide that all confidential information requires to be returned by employees when they leave your company’s employment;
• Use job specifications to augment the contract of employment, again making clear that such intellectual property will belong to the employer, that creative employees are being trusted with inventive roles and that IP rights are expected to result from them carrying out their role. Ensuring that adequate training for employees is carried out will also ensure they are aware of their duties and the rights your company acquires as a result of their engagement;
• At the initial stages of any project, consideration should be given to the IP which may be created and who will own it. Even if that is not done, once valuable IP is identified you should take early steps to head off a dispute and ensure that ownership is not being claimed by those working for you;
• Put measures in place to avoid disclosure of confidential information and other sensitive intellectual property, such as patentable inventions which have not yet been applied for. For example, it is common for employees to provide covenants to prevent disclosure.