Employers v. employees: Who owns intellectual property?

On Behalf of | Apr 23, 2021 | intellectual property & trade secrets

California business owners worry about protecting their own intellectual property from threats of theft or misappropriation. That is why they take measures to maintain confidentiality throughout the business.

However, they should also consider the reverse situation. What if employees accuse the business of stealing intellectual property? IBM is facing such an issue in New York. So, what steps should business owners take in these situations?

1. Review employment agreements

The first step should be to analyze the legal agreements they have with the employees. It is helpful to check that the agreement:

  • Addresses ownership rights of this property
  • Defines the terms and scope of ownership rights
  • Complies with California and federal laws

It is also common for employers to use Intellectual Property Contributions and Assignment Agreements. These state that property employees create on the job is usually the property of the employer. Employers should review these agreements carefully as well.

2. Examine the circumstances

Even if the employment agreement discusses intellectual property ownership, employers should still make sure they understand the details specific to the employee’s dispute. This means that they should investigate the creation process.

This is helpful to determine who owns the intellectual property in question. For example, employers generally have legal ownership of intellectual property created by employees if:

  • Employees created it for the business
  • Employees used the business’s resources
  • Employees created it within the scope of their work

It is true that in most cases, the employer will have ownership rights. But it is still critical to evaluate the details unique to the circumstances.

3. Encourage employees to reach out proactively

Of course, employers can take proactive measures to avoid such disputes as well. While they should address the terms of ownership rights in the employment agreement, employers should also implement practices that allow open discussion about ownership. That way, companies can manage these concerns before they develop into major legal issues or disputes.