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Intellectual property is rapidly becoming the most valuable business property in the U.S. One simple way to protect a business’s trade secrets, confidential information, copyrights, patents, and other proprietary rights is to require employees to sign a comprehensive employment agreement. Here are a few of the many benefits of an employment agreement:
Inventions are generally owned by the employee who made the invention. Even if the invention is made in the course of the employee’s work, the employer does not own the invention unless there is a written agreement requiring the employee to assign all inventions to the employer. This often comes as an unpleasant surprise to employers after a dispute develops.
2. Non-Competition Agreements
Although sometimes difficult to enforce, a well-written non-competition agreement can provide an employer with significant leverage to prevent a departing employee from using the employer’s trade secrets and confidential information to compete. This agreement and its enforcement also act as a deterrent to other would-be competing ex-employees.
3. Trade Secrets
A non-disclosure agreement included in an employment agreement can protect against employees (current or former) from using the employer’s confidential information for non-company purposes. The agreement can also include a provision prohibiting employees from bringing or using third-party confidential materials, which can safeguard against claims by those third parties.
Although the “work made for hire” doctrine may work to assign ownership of copyrights to the employer for works created by employees in the course and scope of employment, a copyright assignment provision can be included to broaden the protection for an employer.
5. Electronic Files
The law is not settled as to who owns electronic files created by an employee during employment, which were created or reside on non-company property. Examples include work-related electronic files created by an employee on a home computer and business notes and contact information on a mobile phone. The employment agreement can include a clause addressing this issue at the beginning of employment.
6. Physical Property
While employees generally have a duty to return company property at the end of their employment, a provision requiring an exit interview at the termination of employment and employee signature on a form confirming that they have returned all company property can be extremely effective in safeguarding against employee theft or failure to return property.
These are just a few of the many ways in which an employment agreement provides significant value and cost savings to an employer. One last consideration is that, as with any other breach of contract claim, an employer may be entitled to recover its attorney’s fees incurred in successfully asserting its employment agreement against an employee. This alone likely outweighs the cost of the agreement.
If you have not updated your employment agreement in the last 12 months, please contact us today to discuss revising it.
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Klemchuk Kubasta LLP offers an array of services in all areas of intellectual property, including patent, copyright, trademark, trade dress, trade secret and Internet law. Located in Dallas, Texas, K&K supports a client base from individuals and startups to established companies. For more information on the intellectual property practice of K&K, please visit www.kk-llp.com.