Keeping your business IP safe: Intellectual property in a disrupted employment environment

This article was co-authored by Bella Baker.

We live in a disrupted world. One impact from this is a gig economy that increasingly favours contractors and freelancers, allowing for more flexible working arrangements. This has also led to the growing trend of ‘portfolio careers’, with corporates and professionals taking on a range of consulting roles, board seats, or multiple part-time contracts, instead of one traditional corporate “9 to 5” role.

This all means information sharing and collaboration is more fluid today than it was 5, 10 or 20 years ago. This can create complicated dynamics for the protection of IP, and rights in the use of and access to IP. The laws surrounding IP rights themselves have not changed in this time. It is however prudent for businesses to be aware how this dynamic environment can impact their IP.

What do the gig economy and portfolio careers mean for ownership and protection of IP?

In Australia, IP created in the course of your employment is owned by your employer.

The position is different with independent contractors. IP rights are in principle a reward for intellectual input and therefore the default position is they are owned by the creator, unless is a contractual agreement to the contrary.

Technological advances and economic conditions have led to businesses using a wide variety of workers who may be either directly employed, employed by another company within a group, or who may be freelance contractors.  In some industries, short-term project or freelance work is common. In other areas, portfolio careers are common with individuals working with different businesses at the same time or in short succession.  All of this causes the direct IP ownership flow from employees (creating IP in the course of their employment) to employers to blur. In addition, when workers are more mobile, information they obtain from one employer or business can more easily flow into their activities for a different employer or business.

This disruption and sharing of information leads to an increase in ‘derivative IP’. Derivative IP is IP that has been developed through collaboration and / or is built upon through multiple iterations, often with different individuals contributing to the IP. With more contractors in a gig economy and more workers taking on several overlapping roles with a portfolio career, this means more instances of IP being derived through multiple iterations with different individuals having input.

This results in a lack of clarity over what has been created by whom, and by extension, where ownership to and rights in the IP rests. This also means greater levels of jointly owned IP and disputes over IP rights.

Key takeaways

As noted above, the basic principles of IP protection have not changed, but the dynamics have become more complicated. To avoid future issues, carefully drafted contractual provisions in relation to all IP created by employees, contractors, freelancers and consultants remain critical.

For a strong IP portfolio, businesses should:

1. Audit: do an audit of the business’s confidential information and intellectual property – what exists, where / how it is stored, who has access to it and are there sufficient safeguards in place to prevent unauthorised access?
2. Implement a clear IP policy: developing an IP policy that applies to everyone (employed or otherwise) within the business and sets out the IP ownership and protection position, appropriate to the business and the way it operates, will avoid uncertainty around IP ownership that may otherwise lead to future disputes.
3. Include IP provisions in all agreements, and especially in employment contracts, service agreements, development agreements, contractor / freelance agreements, and manufacturing agreements: any person operating within or providing services to the business (be that on a full-time, part-time, contract or freelance basis) should have a contract that carefully stipulates the position on ownership, rights in, use of and access to any IP created.
4. Keep an IP register - proactivity is key: a register of IP that appropriately documents what information is in an employee’s possession, what has been created by who, how and when, using what background materials. If disputes arise, a clear evidentiary record has been maintained.
5. Keep a confidential information / trade secrets register: in addition to being clear on what confidentiality obligations are in place, knowing what confidential information is accessible and by who, will help to ensure the protection of trade secrets and confidential information.
6. Monitor: monitor when any sharing of important commercial information and / or trade secrets takes place; and track the movement in and out of the business by those employees or contractors who have had access to this information.