The federal government maintains authority to regulate intellectual property, and it does so by registering IP through the U.S. Copyright Office and the U.S. Office of Patents and Trademarks. In the current environment of creative digital work, however, the issues over intellectual property rights have become more complex.

Intellectual properties are types of intangible assets, and they form part of the capital valuation of your company. In some cases, the intellectual property has a long history. It may have accrued value over time, such as a well-known logo or slogan. In others, the intellectual property is an unknown or newly discovered technology or asset; one which has not yet been tested in the marketplace. The ability of financial managers to put a dollar amount to the value of intellectual property is immaterial. It is part of the capital of your company. As such, it needs to be protected from piracy and espionage.

Employees, Contractors, or the Business?

One of the most important issues regarding intellectual property in the workplace is the ownership over ideas and the creative expression of ideas. An employee who works at high level creation may be given guidelines for what the specific job entails; if that employee creates something new – not part of the job – during work for the company, who owns that work? An example would be the blockchain, or distributed ledger technology that was invented to keep track of cryptocurrency. While working to find a way to protect cryptocurrency assets, the distributed ledger technology was invented; that technology has provided innovation to multiple industries outside of the one for which it was originally invented.

In most cases, an employee who is working for a company will give right to any intellectual property they create at work to the company. This should be detailed in an employment contract; especially for an employee who is hired specifically to create value through developing intellectual property. Many companies will also detail specific non-competition clauses for those who might leave and go to work for a competitor. For some high-level creators, a company may choose to offer part of a compensation package to include some rights to intellectual property developed during the course of work, though this can be problematic. Other companies may offer employment to someone who brings intellectual property with them. As an example, scientists hired out of research universities. In this case, the ownership and use of the IP, including who has rights for further development, should be clearly spelled out in employment offers.

Contractors

As more independent contractors are entering the workforce, care over access and use of intellectual property is growing. Some contractors must have access to a company’s IP in order to do the contracted job. It must be clear that the IP is not to be disclosed to a competitor; both non-disclosure and non-competition clauses added to contracts are standard.

A business cannot, however, keep a contractor from working for a competitor. Non-competition clauses should be specifically related to the IP, and should not be blanket clauses over an entire industry. If employees have a non-competition clause for a certain amount of time after leaving the job, it also cannot be a blanket clause that covers working for an entire industry, but must be specific to the IP under consideration.

Creative Work vs Ideas

For ideas to be covered under intellectual property rights (e.g., copyright protection or trademarks), they must have been created. This means that an idea has to be brought to fruition in some form, even if that form is intangible.

Suppose an employee of a music company had an idea for an instrument that sounds like a guitar, but is actually a piece of code or an algorithm. If that employee details the idea in a memo for the company, and suggests they begin work on the idea, then that idea now exists in an intangible form. Now imagine the employee actually writes the piece of code, then that intellectual property exists. But if they merely thinks about it, or tells their idea to someone, then the idea is only an idea. Now suppose someone else takes that ball and runs with it. Whomever creates the idea first – even if that is just detailing the idea in writing – has intellectual property rights.

The issue of who has an idea first is problematic in creative circles, where scientists and researchers tend to share ideas and work together. This has led to recommendations that IP is registered with the appropriate federal agency – either the copyright or trademarks and patents office.

If Intellectual Property Rights have been Violated

If a business believes that its intellectual property rights have been violated, it is important to do several things immediately. First, if the intellectual property has been listed as an intangible asset on financial documents, gather the supporting data. If it is suspected that an employee or a contractor has shared or stolen IP, then get copies of their contracts. It would be prudent to have legal help in writing these employment contracts and the various non-compete and non-disclosure clauses before there is a problem. If the IP has been registered with the federal government, the documentation will need to be evaluated by a legal team experienced in protecting IP rights. In many cases, the experienced legal team can quickly get a cease and desist order to prevent further intellectual property or company valuation loss while the issues are being mediated.

Do you have concerns over intellectual property rights, or do you believe your IP rights have been violated? Discuss your concerns with a team of experienced IP attorneys. We will be pleased to speak with you and offer next steps.