How to protect your business’ confidential information and IP

We are super excited to be a part of HR Monthly’s vlog series. Our first vlog looked at this topic, but just because we’re lawyers and we like writing much more than we like talking on camera, we decided to set out some of the key points from our vlog on this blog post.

 Photography / RestrictedData

Photography / RestrictedData

BEFORE EMPLOYMENT

Before employment even begins with a new starter, it’s important to think about what you can do to protect your business’ confidential information and IP. The first and most important thing an employer can do is to have well drafted employment contracts that contain the following types of clauses:

  •  Confidential information clauses – Define what confidential information is in your business and make sure that the employment contract sets expectations for how confidential information should be used (or not) and protected, both during and after the employment relationship. This information needs to be supported by a culture, practices and systems that protect its confidentiality or it may lose its confidentiality.
  • Intellectual property (IP) clauses – Define existing company IP and its ownership and make sure the clause sets out a positive obligation on the employee to disclose any ideas or developments. These clauses should also appoint the employer as the employee’s attorney to assign all IP rights, in relation to any rights which do not automatically vest in the employer at law. Employees should also consent to any act or omission which would otherwise infringe their “moral rights” under the Copyright Act 1968 (Cth).
  • Workplace surveillance clauses – These clauses are essential in States where workplace surveillance laws mandate how surveillance in the workplace can be carried out, otherwise you’re at risk of not being able to rely on any evidence obtained through such surveillance in any proceedings.  
  • Gardening leave clause - This can be a very effective way of keeping a former employee out of the market by requiring that they not attend for work or contact clients, suppliers, employees and contractors, during their notice period.
  •  Post-employment restraints – Clauses which seek to prevent an employee from competing or soliciting clients, suppliers, employees and contractors after the employment relationship ends are also worth considering for senior employees.  It’s best to seek legal advice on what might be reasonable and enforceable in the circumstances, and get some help drafting the provisions, before you go down this route.

For more senior employees, you might consider a deed of confidentiality to strengthen your position. The deed will survive any claims that repudiation of the contract by the company has released the employee from their obligations and the limitation period under a deed will always be longer than under a standard employment contract.

DURING EMPLOYMENT

During employment, it’s vital to consider how the business’ confidential information and IP might be affected by changes in business activity and by changes in working arrangements. Don’t “set and forget” your contracts. Refresh them when the business and its activities, products and services change and likewise when an employee’s role changes (which will more than likely, also be accompanied by increased access to commercially sensitive information).

TERMINATION OF EMPLOYMENT

Once employment has come to an end for any reason, don’t think that your rights to have your confidential information and IP protected have come to an end. You can remind departing employees in their termination or separation letters of their enduring obligations in this regard.

SUSPECTED BREACH

If you suspect a breach of any of the express contractual provisions, you must act quickly.  Even without decent express contractual provisions, you may have recourse under the Copyright Act 1968 (Cth), the Corporations Act 2001 (Cth) and in equity for breach of fiduciary duties or common law obligation of confidence.  The key is to act fast and seek legal advice. Breaches by former employees can be extraordinarily damaging to your business and can, most of the time, be avoided with the right advice.

If you need any advice in this area, please contact THE WORKPLACE.

To watch our vlog on these issues with Hannah Ellis – Principal and Co-founder of THE WORKPLACE, click here.

The copyright in this blog is owned by The Workplace – Employment Lawyers Pty Ltd.  The content is general information only and is not intended to constitute, or be relied upon as, legal advice.  The use of this blog by any person or company does not create any solicitor-client relationship between the person or company and The Workplace – Employment Lawyers Pty Ltd.