Intellectual Property Clauses in Employment Contracts: What You Need to Know

As businesses and organizations grow, they rely more on their employees to bring new ideas and innovation to the table. However, with this growth comes the need to safeguard intellectual property, which is why most employment contracts now include clauses that address intellectual property rights.

Intellectual property refers to creations of the mind such as inventions, designs, literary and artistic works, symbols, names, and images used in commerce. These properties can be protected by patents, trademarks, copyrights, and trade secrets. When employers and employees create intellectual property, there is a need to outline who owns what, and employment contracts address this issue.

Here are some key points to keep in mind when reviewing intellectual property clauses in employment contracts:

1. Clarify ownership

Intellectual property clauses in employment contracts should clarify who owns the intellectual property created during the course of employment. If an employee creates something that can be protected by intellectual property laws, it is important to determine if this creation was done on their own or in the context of their job.

Employers typically want to own any intellectual property created in the course of employment by their employees. This means that if an employee creates anything of value in relation to their work, the employer will own it. However, employees may be able to negotiate some ownership rights, particularly if the creation was entirely their own and not related to their job.

2. Be clear on definitions

Intellectual property clauses often use technical language and legal jargon, which can be difficult to understand. It is important to understand what specific terms mean, such as how intellectual property is defined, what constitutes “work for hire,” and what is considered a “trade secret.”

3. Address non-compete clauses

Employment contracts may include non-compete clauses, which prevent employees from working for a competitor or starting their own business in the same field for a specific period of time after leaving their current employer. These clauses can impact an employee’s ability to use their intellectual property in a future venture. It is important to clarify how these clauses impact intellectual property ownership and what options are available to the employee.

4. Consider the impact on future employment

When an employee creates intellectual property during their employment, it is important to consider how that property will impact future job prospects. Employers may require employees to sign confidentiality agreements, which limit an employee’s ability to discuss or disclose their past work with future employers. Be sure to consider how this may impact future career opportunities.

In conclusion, intellectual property clauses in employment contracts are essential in safeguarding businesses and organizations from innovation theft. It is important for both employers and employees to understand the terms outlined in the contract and how it affects their rights and ownership of intellectual property. As a professional, I recommend that anyone who is unsure about the terms of an intellectual property clause in their employment contract should seek legal advice.