METS Practical Advice: Protecting IP in an Employment Contract

Written by Luke Musto, Associate

We often speak with clients to reinforce the importance of having good practices in place to protect their intellectual property. Particularly for METS companies, where their IP will often be the most valuable thing that they own and develop, and will often even be the basis of the entire business. This could be information, methods or inventions. IP and the development of new IP can generate significant value, so maximising this potential and protecting it should be a key consideration for all METS companies.

One of the ways to do this is to ensure your company has a well-drafted IP clause in all employment contracts. Often the IP clause will be a secondary consideration, overlooked in favour of things like salary, hours, and terms of employment. Of course, these are important for an employment contract, but a well drafted IP clause is essential for METS companies

Why is it important? 

METS companies are regularly at the forefront of development and implementation of innovative new technology and solutions. In “legalese”, this translates to IP being things like copyrights, designs, patents, or copyright, and may extend to things like confidential information, business names, and trade secrets.

In practical terms, IP for METS companies will be things like:

• Computer software
• Designs for tools
• Procedures and operational methods
• Geological information

Given the breadth of what IP can encompass, care does need to be taken in order to protect it.

 What are some essential terms to be included in the IP clause?

• Ownership of IP: This term will ensure that all IP created by an employee during the course of their work will become the property of the employer, such as a new tool, procedure or even data. It is important to ensure against any issues of enforceability by not making the term too broad—the lawyer drafting the contract will be able to advise on this given it will depend on individual circumstances.
• Use of employer’s IP: This term will protect the employer’s IP during the course of the employment, identifying and stating that it belongs to the employer and providing the scope for a license to use the IP in the course of employment.
• Use of third party’s IP: This term will minimise the risk of an employee improperly using IP from, for example, a subcontractor or client. In these scenarios, care needs to be taken by the employee as they will at most only have a license for their own single-time use, or alternatively may not have any rights. Unauthorised use of third party’s IP can lead to legal issues and disputes such as court claims and proceedings. The contract should clearly identify what will constitute third party IP and how it is to be used so as to avoid any complications in the future.
• Protection and security of IP: The contract should also specify means for how the employee is expected to protect the employer’s IP. This needs to be specific and refer to the company’s in-place procedures or security systems.

 Is it possible to continue protecting the IP after employment has ended?

It is not only possible but also common-practice for an employment contract’s IP clause to allow for the continuing protection of the IP once the employment has ended. This will include things like information remaining confidential, the return of IP to the employer, the destruction of IP, and a restriction on use.

Conclusion

When a METS company is hiring a new employee, the focus will often be on getting them started on the job without delay and not getting slowed down by the finer-details of the employment contract. However, the employment contract is a great opportunity for METS companies to address a number of IP concerns and start off on the right foot. Well-drafted IP clauses can protect the company and prevent a number of issues, both in the short and long-term.

Well drafted clauses will take into consideration the work that a company is doing. Often courts will look unfavourably at clauses that are drafted too broad which is why having a lawyer who understands the industry, company, and technology is important. It is also the reason why you will find our legal team spending time with our clients at their facilities. The more we understand our clients business, the better we are able to think of all contingencies and be as specific as possible.

Lastly, when entering new regions, these IP clauses will need to be tailored for the specific market to reflect the local laws.

Harris Gomez Group is an English and Spanish speaking law firm with 25 years experience based in Sydney, with sister offices in Chile and Colombia. We specialise in business, technology and corporations law and cross-border issues. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets. We are proud members of Austmine, Australian Latin American Business Council (ALABC) and Auscham.

To better understand how we can support your management team in the Region, please contact us at hello@hgomezgroup.com