HR can be an important gatekeeper in protecting a company's intellectual property – for employees and contractors alike. Intellectual property includes trade secrets and proprietary information (such as customer lists, formulas and manufacturing processes), copyrights (such as software, photographs, videos, web content and manuals), and patentable inventions (such as a medical device, machine, chemical compound, business method or even a product design).
In some cases, the company is presumed to be the owner of work product created by an employee acting within the scope of their employment. Some job descriptions are clear, but oftentimes, a particular worker's responsibilities are not fully delineated. If the job description is not clear, then ownership of the work product may not be clear. If a bookkeeper creates software in his or her spare time, then the presumption will not apply, and the bookkeeper will be deemed the owner of the software.
The presumption only covers employees, not independent contractors. The company will need contract workers to sign an agreement before the company will be deemed the owner of work created by the contractor. If a worker is receiving an IRS Form 1099, this should be a sign that the company will want to have a separate agreement in place to confirm that the company owns the contractor's work product. Please note, however, that the company's categorization of a worker as an employee or contractor is not controlling, and a court will look at the specific facts to determine whether a person should be treated as an employee or a contractor, including how much control and independence the contractor truly has. This is a similar analysis to determining whether a person is appropriately categorized as an employee or contractor for tax purposes. The most conservative approach, therefore, is to have all employees and contractors sign an agreement confirming that the company owns the rights to all work product.
In addition to individual workers, written agreements are also needed for vendors, such as web development companies, marketing agencies, photographers, social media consultants, software developers, manufacturers and the like. If the vendor is creating something for you, an agreement is needed to confirm who owns the creation.
During the hiring process, HR can help facilitate the company's protection of its intellectual property and the worker's expectations. It is a good idea to have an employee handbook that spells out the policies and procedures of the company. The employee handbook can also include an agreement confirming that work product created for the company will be owned and assigned to the company, as well as confidentiality obligations, but this MUST BE SIGNED by the employee. It is not enough to merely hand the employee a copy.
If a worker has not signed such an agreement during the initial hiring process, or if a worker changes status or title at some point, a separate agreement can specifically address these concerns. Often, the agreement can be broad enough to allow for a worker to be promoted or change departments without having to sign a new agreement, but this won't be the case for everyone. HR's checklist should ensure that you address whether a confidentiality or work product agreement has previously been signed and/or whether the worker's new job title and responsibilities warrant a new or amended agreement.
When a relationship with a worker or contractor ends, HR can also be instrumental in helping secure the company's intellectual property in addition to the company's physical property. Along with collecting the worker's ID badge, computer, and keys, HR can provide copies of any confidentiality or work product agreement to the worker, and can help remind the worker of his or her obligations to protect the company's confidential information and to refrain from using work product that the worker created for the company. If the proper agreements have been signed, then the worker's work product will be company property, just like the computer and keys to the front door. Waiting until the exit interview to have an employee sign confidentiality or intellectual property ownership agreements is too late.
HR can add to its checklist for hiring and firing employees a duty to inquire about intellectual property protection. The specific needs may vary depending on the type of worker and that person's job description. Upon engagement of each employee, contractor and vendor, it is important to assess whether a confidentiality agreement is needed and whether work product ownership should be discussed.
Originally published by HR Notes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
