What terms do I include in employment contracts to protect my intellectual property?

For an employer to protect its intellectual property in relation to its employees, every employment contract should deal with the following 6 essential terms.

TermDescription
Ownership of intellectual propertyThat intellectual property created by the employee in the course of the employee's employment, or in relation to a certain field, is owned by the employer.
Signing documents to record the employer's ownership of intellectual property

That the employee will sign any document that the employer reasonably requires (such as a deed of assignment) to record the employer's ownership of the intellectual property created by the employee in the course of employment.

This obligation needs to continue during the employment relationship, as well as after the employment relationship has ended. It may be necessary, for example, for an employee to sign patent application documents after the employment relationship comes to an end.

Confidential information

That in relation to the employer's confidential information the employee will:

  • keep it confidential and will not disclose it to another person
  • not use it in any manner outside the course of employment.
This obligation needs to continue during the employment relationship, and also after the employment relationship ends.
Scope of confidential information

The scope of the employer's confidential information subject to those obligations needs to be broad, and include:

  • the intellectual property created by the employee in the course of employment
  • other intellectual property of the employer's, including that created by other employees, in existence when the employment relationship started, or which the employer has licensed from another person
  • other business information such as customer lists, supplier lists, marketing plans and strategies, business plans, financial information, etc.
Waiver of moral rightsThat the employee waives the employee's moral rights in relation to any works in which copyright subsists (such as computer programs).
Restraint on competition

Some employment contracts include a restraint on competition.

Such a restraint operates to restrain a former employee from competing with the employer, for an agreed duration, over a specified geographical area.

If the extent or scope of the restraint is too broad, operates for too long, or operates over too large a geographical area, the restraint will be invalid, and the employee will not be bound by it.

But to the extent that the restraint is reasonable, operates for a reasonable period, and over a reasonable area, it will be valid.

These restraint obligations need to apply not just during the employment relationship, but also after it ends.

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