Brand Story
24 Nov 2021, 00:13 GMT+10
A fact pattern we see all too often is a former employee claiming an ownership interest in or over software or intellectual property (IP) developed by or for a former employer. Typically, this occurs with the former employee attempting to exploit a real or perceived ambiguity in his or her employment relationship with the employer-i.e., ambiguity regarding the former employee's status as either an employee or an independent contractor.
Alternatively, or in addition, the former employee attempts to exploit a lack of or a perceived weakness in an IP assignment clause in his or her employment contract. Fortunately, there are a couple of relatively easy, common sense "best practices" that can help employers reduce their risks in this area.
Whether an employee, as a legal matter, is an "employee" or an "independent contractor" turns on a number of factors:
While none of these factors are determinative alone, they are meant to assess the employer's right to control the manner and means by which a work is accomplished. See, e.g., Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989); see also Restatement (Second) of Agency § 220.
Put another way, and especially in the absence of an employment contract clearly defining the employment relationship, they can determine whether the employer or employee "owns" software or IP created by the individual within the scope of their job.
The need for strong IP assignment clauses in employment contracts cannot be overstated. Early in the employment relationship, employers need to make clear that any software or IP developed by either an employee or an independent contractor, during and within the scope of employment, belongs to and is owned by the employer. Moreover, the employment contract should contain affirmative duties for an employee or independent contractor to document and disclose any and all software, inventions, creations, works, etc. that are developed as part of the employee's or independent contractor's job.
Further, for independent contractors, they should be required to list or otherwise disclose any of their own IP that they have or intend to incorporate into any software or IP created on the job. Finally, as companies grow, incentive programs can help the company capture (and, ideally, protect) important ideas, inventions, creations, know-how, etc.
When hiring someone as an employee or an independent contractor, having a written employment agreement in place, which covers and defines the employment relationship, is critical. Moreover, including a strong intellectual property assignment clause in the employment agreement should go a long way to ensuring that whatever software or IP an employee or independent contractor develops within the scope of their employment remains with and the property of the employer.
Finally, upon separation from the employer, all employees or independent contractors should execute an IP assignment agreement, reinforcing that any software or IP the employee created within the scope of their employment and during the time of their employment remains with and is the property of the employer.
About Martensen IPAt the intersection of business, law and technology, Martensen understands the tools of IP. Martensen knows the business of IP. We understand the tech market, especially when the government is a customer, and we know how to plan, assess, and adjust. Patents, trademarks, copyrights, trade secrets, licenses are our tools.
Martensen IP Media ContactMike Martensen | Founder(719) 358-2254
There is no offer to sell, no solicitation of an offer to buy, and no recommendation of any security or any other product or service in this article. Moreover, nothing contained in this PR should be construed as a recommendation to buy, sell, or hold any investment or security, or to engage in any investment strategy or transaction. It is your responsibility to determine whether any investment, investment strategy, security, or related transaction is appropriate for you based on your investment objectives, financial circumstances, and risk tolerance. Consult your business advisor, attorney, or tax advisor regarding your specific business, legal, or tax situation.
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