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Many businesses invest large amounts of money, time and energy into developing their intellectual property (IP). It is a stressful and distressing situation to find your IP being stolen or unfairly used. It is even worse when the person doing it is an employee or a recently departed employee. However, you can take steps to limit the damage and include specific clauses in your employment agreements to protect your business’ interests.

This article will cover what to do if an employee is stealing your IP, whether they still work for your business or if they have left. It will also look at what clauses you should include in your agreements to protect your IP.

A Current Employee Is Stealing Your IP

It is a serious issue, most likely amounting to misconduct, if an employee is stealing your IP. There are different examples of what this could like, from disclosing confidential information to a competitor to secretly using your business’ IP to develop their own rival company. You should follow a disciplinary process or investigate if you believe that one of your current employees is stealing IP. 

Of course, the correct steps depend on what information you have, and the severity of the potential theft. As a first step, you can consider sending them a letter outlining your concerns. You should give your employees a chance to respond and to seek advice if necessary. It is a good idea to consider discussing the situation with an employment lawyer. 

A Former Employee Is Stealing Your IP

However, if a former employee has taken your IP or provided confidential business information to a rival business, your options differ. In most cases, your first step should be to send the former employee a letter reminding them of their obligations. Specifically, you should request them to return any confidential information or IP they have taken, and cease using your IP. 

Ideally, this step will resolve the issue, with the employee alerted to their ongoing obligations. Likewise, they should be concerned about any follow-up legal action from your business. If they continue to use your IP, you should have a lawyer issue a more formal letter.

Suppose the breach is more serious or urgent, and your business has experienced significant loss due to the use of your IP. In that case, you may need to seek a court order to ensure that the former employee immediately ceases using your IP. At this stage, you should certainly be discussing your situation with a lawyer. Your options may include a lawsuit seeking compensation for any losses incurred from the theft. 

Protecting Your IP: Intellectual Property Clause

To protect your IP from employees (current or former) stealing or using it for outside purposes, you should ensure that you include an IP clause in all employment agreements. This clause should set out that anything the employee invents, develops, creates or makes as part of their job or in their working time is the IP of your business. 

There are other potential protections to consider depending on the circumstances of your business’ operations and employees. For instance, your employees might use business equipment for their own work after hours. In this case, it is a good idea to draft a separate agreement about who owns and benefits from anything produced in that time. 

Finally, you should always remind departing employees to keep your business’ IP secret. These clauses outlive the employment, so you should inform your employees that they still cannot breach their IP obligations even if they no longer work for you.

Protecting Your IP: Confidentiality Clause

Confidentiality clauses are a useful addition to an IP clause. They are vital to include if your employees have access to confidential information as part of their work. This clause should explicitly state what information is ‘confidential’ and should be kept private. Confidential information can be defined to include:

  • commercial agreements;
  • trade secrets;
  • information about financial affairs;
  • business methods and systems;
  • information and records about clients or potential clients;
  • computer software and data; or 
  • any other information not known to the public.

Key Takeaways

There are immediate steps to take if an employee is stealing your business’ IP. If they are a current employee, you should consider investigating the alleged misconduct. Create a disciplinary process to follow if the claims are true. If they are a former employee, you should issue a letter requiring them to stop using your IP. You may potentially threaten further legal action should they continue to do so. It is key to include IP and confidentiality clauses in your employment agreements. These clauses will provide further protection to your business’ valuable IP.

If you have any further questions about protecting your business’ IP assets from employees, contact LegalVision’s IP lawyers on 0800 005 570 or complete the form on this page.

FAQs

When should I include an IP clause in employment agreements?

It is useful to include an IP clause whenever an employee can create, invent or develop anything novel or new as part of their job (or using work equipment). An IP clause is also useful when an employee will have access to the use of the business’ IP when carrying out their job.

When should I include a confidentiality clause in employment agreements?

Whenever an employee has access to confidential information. This can be defined broadly, and is usually considered information that may harm your business’ competitiveness in the market if it gets out, or that you would not like a competitor or the general public to know.

What do I do if a former employee has stolen IP from my business?

In most cases, you will want to send them a letter outlining your concerns and demanding that they abide by their confidentiality and IP obligations to you (even though they have left).

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