A question of ownership

Most employees will, during the course of their employment, create work containing intellectual property (IP) rights. Sometimes this will be valuable for their employers, not only in areas such as marketing, creative and research, but for all companies where staff produce presentations, marketing materials and create databases. Such work will attract copyright and possibly database right and design right protection.

IP rights generally automatically belong to the employer, as long as the work has been created in the course of the employee’s employment. Employers should, nonetheless, ensure there is a clause in their employment contracts allowing the employer all of the IP rights in work created by their employees.

Not all staff members will be aware of who is an employee and who is freelance. There is a danger that a freelance worker may be creating IP rights – a valuable asset that the business may need in the future.

In respect of non-employees, the first owner of copyright will be the creator of the work, not the company which commissioned the work. Companies should therefore always ensure that all freelance contracts assign the company the IP rights created in their work. Otherwise, companies may find themselves in the same unfortunate position as Dr Martens, which discovered that the copyright in one of its logos had been retained by a freelance designer who then assigned it to one of its competitors.

There are many examples of cases where companies will use third parties to create works for them, but will want the third parties to assign the IP rights in their work. Advertising agencies should be required to assign the copyright in the advertising copy that they produce. Branding consultants should transfer their copyright in any new logo or corporate image that they design. If a company appoints a freelance writer to prepare the narrative for its annual report, it should ensure it assigns the copyright to the company. Similarly, a company will want to own the artistic copyright in any photographs it commissions.

As a matter of course, employment contracts should also contain a confidentiality clause prohibiting employees from sharing any confidential information relating to the business with anyone else. Although a duty of confidence will be implied by law into employment contracts and may also be implied in other non-employment circumstances, it is not advisable to rely on this.

Without including a specific clause in employee contracts setting out employees’ obligations and defining what the company regards as confidential information, the only information that will definitely be protected is that which is so secret it can reasonably be described as a trade secret. The test is high, and accordingly employers should always ensure their employment contracts and terms of engagement with freelance workers contain express confidentiality obligations.

The other vital consideration for employers is to ensure that all employees, from receptionists to executives, are aware of the importance of IP. If employees are aware of the IP that their companies own and how it is infringed, they can be invaluable in recognising and reporting any infringements. Some companies even motivate their employees with incentives for discovering infringements.

Having a written IP policy to guarantee a consistent approach across the business is also wise. Companies should ensure there is a visible chain of command so that everyone in the company knows who has responsibility for everything from particular brands or products to the appointment of freelancers.

If these basic steps are followed, one of a company’s most valuable assets will be better protected.

Geoff Steward is an intellectual property litigation partner at City law firm Macfarlanes

What should an IP policy contain?

  • The policy should explain what rights the company does and doesn’t own
  • which are the core brands
  • what the brand strategy is
  • what activity will not be tolerated (for example competitors using the company’s trademarks, advertising style or packaging)
  • who is responsible for which IP
  • who the external advisers are (for example solicitors and trademark or patent agents)
  • what the licensing or franchising strategy is
  • how the IP work is co-ordinated with the company’s other domestic and foreign offices
  • what to do if any infringements occur

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