Don't Risk IT

Intellectual Property: Protect Yourself as an Employer

Monday, March 24, 2014/Categories: hiring-and-human-resources

In the IT business, your knowledge and expertise is what makes your business successful. Intellectual property is extremely valuable, and protecting it should be a high priority. You trust your employees, or you wouldn’t have hired them. But even so, you never know what the future may hold. That’s why it’s wise to understand what intellectual property is and how you can keep yours safe.

In the IT realm, the term “intellectual property” refers to any idea that has commercial value, especially ideas or products that are copyrighted, patented, or trademarked. If your company develops software, the product you create and the unique code it is composed of are considered intellectual property. If you’re in the business of web design, it could be a one-of-a-kind design you employ as part of the user interface. If you provide network services, it could be the template you’ve developed for your customer proposals, or your complex project flowchart designs or network layout drawings.

If you’ve hired someone to work for you and that person creates intellectual property for your business as a paid employee or contractor, that individual doesn’t own the intellectual property rights. Your company does. The idea is known as “work for hire” or “works made for hire,” and U.S. law guarantees that the employer is the legal author of such works and is entitled to all profits from them, even if the person who created them has his or her name in the credits.

Clarify It with a Contract

In short: If your company created it, and it is unique, it’s your company’s intellectual property. Because it’s an investment in time and money, it’s worthy of protection. How can you be sure your employees understand that? By getting their signatures on a legally binding employment contract.

An employment contract protects your intellectual property rights as well as confidential information that’s proprietary to your company. Once used exclusively for executive or management hires, it’s now standard policy to use an employment contract when employees are hired at any level. These contracts specify that any intellectual property created by someone in your employ is the property of your company. Additional language protects confidential information by prohibiting employees from sharing your company secrets with others outside the company.

If you’re using contractors rather than permanent employees, the same concerns apply. However, in such cases, a different type of contract is required. A subcontractor/independent contractor agreement is designed to protect your rights to your intellectual property, as well as any confidential information the subcontractor is privy to. It clearly defines what is considered intellectual property and specifies that all works made for hire belong to your company, and that confidential or proprietary information cannot be used or shared outside the parameters of the contractor’s responsibilities on your behalf.

Build Trust

Asking your employees and contractors to read and sign off on intellectual property and confidentiality clauses ensures that they understand the concept of intellectual property and agree that your company will own all rights to the work they produce. Such agreements can prevent future misunderstandings as well as potential legal challenges down the line. At the same time, these agreements can build trust between you and the people you hire by establishing clear expectations before work begins, reducing the need for actual enforcement of the contract later.

For standard employment contract and independent contractor agreement templates, go to the Internet’s No. 1 source for IT business contracts:

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