How to successfully protect your IP and trade secrets?

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In this article, we discuss the way in which our Life Sciences Team can assist your business in successfully protecting these assets. Our experienced lawyers are here to help you every step of the way by tailoring employment contracts to protect confidential information and intellectual property, and by advising you on resolving the disputes arising as a result of a breach of contract or infringement of your IP rights.

Protecting Your Business. A significant amount of protection can be afforded by including carefully drafted clauses in the contracts of employees who are privy to such important information.

Geldards’ specialist Life Sciences lawyers recommend taking the following steps:

  • Ensure that there is a widely drafted confidential information clause in the contracts of all employees who have access to confidential information;

  • Include restrictive covenants in employee contracts and, crucially, ensure that these are proportionate, to avoid them subsequently being overridden by the courts;

  • Have provisions in the employee contracts which explicitly state that all intellectual property belongs to you.

Confidential Information

All employment contracts contain an unwritten ‘duty of fidelity’ between the employee and employer. This duty prohibits an employee disclosing any confidential information to other parties during the employment relationship. However, in the absence of a written confidentiality clause in the contract, the duty of fidelity ends when the employment relationship does. The only exception to this is in relation to trade secrets which, in practice, is very limited.

To protect all other confidential information (such as notes, contacts, documents, recording and emails), employers should include a widely drafted clause in their contracts which extends the employee’s obligation to keep it confidential beyond the date that their employment is terminated. Particular care should be taken in respect of senior employees whose role involves high levels of business development and who might seek to take customer, client and supplier contact details with them, either to a competing business or to start up their own venture.

Restrictive Covenants

For a long time, employers had no legal recourse if a former employee immediately started working for a direct competitor or ‘poached’ clients, customers or staff from their former employer after ending their employment. The courts now take a more pragmatic view and allow employers to include clauses into employment contracts which restrict the employee’s actions after the end of the employment relationship. These include:

  • a non-compete clause – which prohibits the employee from joining a competitor for a certain period of time;

  • a non-solicitation clause – which prohibits the employee from enticing away your customers;

  • a non-dealing clause – which prohibits the employee from accepting the business of your customers, even if the customer approaches the employee directly;

  • a non-poaching clause – which prohibits the employee from enticing away your other employees.

A key point, particularly in relation to the non-compete clauses, is that their scope must not be any wider than is necessary to protect the aims of the business, both in terms of geographical reach and length of time. Therefore, careful consideration must be given to these requirements to ensure that the relevant clauses of your contract are enforceable and that your business remains adequately protected.

Intellectual Property

For life science businesses, intellectual property is a key asset, and so it is vital that this is protected as far as possible in an employee’s contract.

Pursuant to the relevant legislation, the rights in respect of patents, copyright, designs and trade marks created by employees in the course of their employment are owned by their employers. Nevertheless, you should ensure that the contract of employment includes detailed clauses that explicitly state this. Examples of such clauses are:

  • an obligation on the employee to notify you promptly of any creation;

  • an obligation on the employee to keep any creation confidential;

  • a declaration by the employee not to register any intellectual property without your permission;

  • an explicit waiver by of the employee’s right to claim ownership of any creation;

  • a power of attorney which enables you to appoint a director to execute documents validly on behalf of the employee.

By including such clauses in employment contracts, life science businesses can protect their assets and ensure continued growth.

Enforcement

The importance of having a clear and comprehensive contract of employment in place cannot be underestimated. Not only does it help with avoiding any potential disputes, but also, it proves invaluable if you ever need to enforce it. Depending on the circumstances, you may be able to protect your rights in various ways. This would likely involve bringing a claim for breach of contract, infringement of your intellectual property rights, and/or passing off proceedings.

Further Information and Advice

If you require any further information or legal advice, please contact Joga Singh or another member of our Life Sciences Team.

RELATED: PROTECTING, DEVELOPING AND EXPLOITING THE IP OWNED BY YOUR LIFE SCIENCES BUSINESS >>

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