It is March, and while love celebrated on Valentine’s Day may be in the air for many, breakups are inevitable. In the case of a breakup between an employer and an employee, the departure of an employee with access or knowledge of the employer’s intellectual property (IP) can put the employer at risk for IP theft or exposure. Call the IP theft investigation if you need help. Disputes over IP ownership can have significant negative impact on a company’s value, growth potential, and reputation, even if the company ultimately comes out the victor. Therefore, it is critical to have a well-defined and consistent exit process for departing employees, regardless of whether the departure is amicable or contentious.
It’s Complicated: Ownership of IP can be complicated, so it is important for both sides to clearly demarcate ownership of IP both during the employment relationship and upon its termination. The remote work environment that many businesses are currently operating in raises additional complications, particularly in situations where the activities involved in creating, designing, inventing, or developing the IP took place using the departing employee’s own personal resources (technology, Wi-Fi, home, materials, etc.) as opposed to the employer’s resources. Most employment agreements in the IP space include clauses that explain what rights a person has to any creative ideas they’ve created while at work, and nearly all agreements in this space include a duty to assign work-related IP rights the employer.
Where applicable, identify the inventions that the exiting employee is listed on and agreements that the employee or the employee’s division is involved with, and run a search to see if the employee is listed on any pending applications. If any deficiencies are identified, prepare and execute IP assignment agreements or amend existing agreements to ensure that the employer retains the appropriate IP following the employee’s departure. Failure to do this can have expensive consequences. For example, in Applera v. Illumina, 375 F. App’x 12, 15 (Fed. Cir. 2010), an employee of Company A developed a new DNA sequencing technique and filed a patent on it while employed with Company A.
He allegedly developed the technology on his own time and used a personal laboratory notebook and his home computer to prepare the patent application. He later took the technology to a new employer, and litigation ultimately ensued. The court largely sided with the inventor, holding that the language used in Company A’s assignment clause was loose enough to allow the employee to keep his patent. Arguably, had Company A taken the time to inventory all of the employee’s patents and execute any necessary assignment agreements upon the employee’s departure, litigation may well have been avoided.