Your company is dynamic and growing. Your staff create designs and drawings that in effect, are part
of your stock in trade. Naturally you want to protect your intellectual property rights. So who owns IP
rights? You, your staff, or the people you contract? By Ben Hopps
Whose IP right is it anyway?
Q. Our business involves providing
solutions, coming up with ideas, and
occasionally a patentable invention. I
know that most of this work has
some kind of IP right attached to it,
be it copyright, design rights,
patents etc. Who owns the IP rights
in the work we create?
A. The general rule is that the creator
of a work is the first owner of any IP
right in it. If the work is created
during the course of employment
though, the IP is owned by the
employer. Any contractual provision to
the contrary will usually be given
effect.
Q. Every rule has its exceptions -
what about here?
A. Quite right. There are several but
there are a few key ones affecting
employees. Not all inventions created
during the course of employment are
owned by the employer, and some IP in
commissioned work is owned by the
commissioner. In certain
circumstances an employer or
commissioner can claim equitable
(rather than legal) ownership of IP,
and of course not all contractual
provisions will be enforceable.
Q. Why address IP rights in the
employment contract if they might
not be enforceable?
A. Where it is known in advance that
IP is to be created, it will always be
preferable for the parties to agree who
will own the IP and to make that
agreement part of their contract. It is
well established that a contract can
deal with ownership of IP that does not
yet exist.
Q. So how do I know if a contractual
provision is enforceable?
A. Three words: restraint of trade.
Contractual terms that are in restraint
of trade are not enforceable at all. For
your employees’ contracts that means
november 2007
not drafting any IP clause too wide,
thereby ensuring that your back is
covered. Too wide and the clause will
have no effect.
Q. Can you give an example?
A. Let’s assume someone is employed as
a cleaner by a metrology company. His
employment contract contains a clause
that says something like: ‘If at any time
during the period of your
employment, you should discover,
ascertain or invent any process,
invention or improvement relating to
articles manufactured and or marketed
by the Company or associated
Company, you must disclose the same
to the Company who will be entitled to
any patents or other rights in respect of
it’.
production management
Q. What if this cleaner invented a
laser-based system to detect tool
breakage in his spare time?
A. Well, under the above clause the
patent in the system is owned by the
employer. It would be appropriate for a
metrology company to insert a clause
like this into its employees’ contracts -
indeed if such a clause didn’t exist it is
likely that a court would imply an
appropriate provision to safeguard the
employers legitimate business interests.
Q. Case closed it seems?
A. Not at all. A cleaner is not employed
to undertake research and development
or invent. One would expect a person
employed to do that to be remunerated
rather better than a cleaner. Reference
to associated companies also makes the
clause too wide - it would catch
inventions relating to products which
had nothing to do with measuring
devices. The IP right above is likely to
belong to the employee.
Q. How do I protect my legitimate
business interests then?
A. Well, there are useful tips to follow.
Always remember that any clause is
potentially a restraint of trade and
must refer to some genuine interest of
the company to be justifiable. Regard
should be had to the field in relation to
which you can claim a legitimate
interest. If your company has many
and diverse interests, that should be
limited to the interests of the part of
the company employing that
particular employee. Always think of
the duties of employees and whether it
is reasonable that any creative or
inventive work carried out could
properly be regarded as part of his duty
to the employer.
Q. Earlier, you mentioned equitable
rather than legal ownership. What
did you mean?
A. Although IP rights belong to
MWP
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