Defining intellectual property ownership can be tricky in an employment context.  Ill defined company policies  and contracts regarding intellectual property ownership are often the root of litigation. Updating company policies and implementing contracts which are supported with current case law regarding any intellectual property (trade secret, patent, copyright) ownership will prevent conflicts later down the road.

There are several steps an employer can take to protect its intellectual property assets.

1.     Restrictive Clauses: One way to define ownership of intellectual property rights is to use restrictive clauses in contracts such as non-disclosure agreements and confidentiality agreements. An employer can further use non-solicitation or anti-raiding employee clauses in employment contracts.

Employers in California should be careful on how they define non-solicitation and anti-raiding clauses – too broad of a clause may be found unenforceable in California. Consider limiting these clauses to a reasonable period of time.

2.     Employment Handbook: The employment handbook comes in handy in regards to protecting a business’s trade secrets. A policy which prevents the employee from disclosing a company’s trade secret outside the company is particularly useful if the business has confidential information such as customer lists or research and development.

Further, a company may require the employee to assign any research or development done during the time of the employment to the company. An assignment clause defines who owns the research if the company wishes to patent the research and further prevents the loss of important intellectual property to competitors.

3.     Exit Interviews: When an employee leaves, ensure that the employee has returned all materials (notebooks, electronic devices) that have confidential information. An internal tracking system which tracks notebooks and electronic devices given to employees adds an extra layer of protection and ensures that all material has been returned.

In some jurisdictions, under the “inevitable disclosure” doctrine, employers can prevent departing employees from disclosing intellectual property to their new employer. See PepsiCo, Inc. vs. Redmond, 54 F.3d 1262 (1995).

However, keep in mind that in California, the courts have rejected the inevitable disclosure doctrine and held that the doctrine is contrary to California law and policy because it creates an after-the-fact covenant not to compete restricting employee mobility. See Schlage Lock Co. vs. Whyte, (2002) 101 Cal. App. 4th (1443).

Being aware of potential problems that may arise with intellectual property in the context of employment is the first step in implementing preventative measures and adopting sound policies that may shield the company assets from legal claims down the road.