Protecting intellectual property created by employees
June 6, 2011
The intellectual property produced by employees can be a significant source of competitive advantage for employers, and not just those in the research and innovation industry. The discoveries, inventions and business processes developed by employees can be a valuable asset and thus the rights vested in that property need to be adequately protected. So how can an employer secure intellectual property rights in the work performed by their employees?
In a case heard last year, Fair Work Australia found that the provisions protecting the intellectual property rights of an employer could not be included in an Enterprise Agreement as these did not pertain to the employment relationship [Glen Eden Thoroughbreds Pty Ltd T/A Ray White Shailer Park [2010] FWA 7217]. The Commissioner considered that such restraints were more appropriate for inclusion in common law contracts.
Employment contracts contain an implied duty that an employee will serve their employer in good faith, and it has been established at common law that this will generally include an obligation on an employee to make any intellectual property made in the course of their employment available to their employer. There are two major factors that will be considered by the courts in determining whether the intellectual property arose in the course of employment. Firstly, it will be a question of whether the development involved the employer’s time and resources or if the employee did the work in their own time, outside of the workplace. Secondly, it will be relevant whether the employee is engaged for the purpose of producing such work. For example, in the Federal Court case of University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009), it was found that the academic in question was hired to research as distinct from being hired to invent, and it was held that there had been no breach of the implied duty in this case.
There is then the question of the extent to which the employer retains exclusive control over the use of the intellectual property after the employee involved ceases employment. This would be subject to the test of what is reasonable to protect the employer’s legitimate business interests in the same way as any other post-employment restraints.
Employers can avoid reliance upon common law duties to enforce their intellectual property rights by making these obligations explicit in their employment contracts. It is also prudent to do so to avoid unnecessary disputation and ambiguity with employees.
If you would like advice on your employment contracts, please contact Joshua Shingles.
