What to do when an employee steals your IP

Guest post by: Michael Smyth

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What to do when an employee steals your IP

Check your employment agreement The first step is to check the employment agreement to see what clauses you have included to protect you in situations like this. Most employment agreements will contain a confidentiality clause which, as the name suggests, imposes a duty of confidentiality on the employee. The employee remains bound by that clause as long as the information to which the employee had access whilst employed by you remains confidential (i.e. even after termination of employment). Most well drafted clauses will also contain a restriction not to remove confidential information from your premises and this would include emailing client lists to a personal email account or copying them onto a flash drive. Therefore, for en employee to copy customer lists or trade secrets would give you the legal right to claim breach of contract. Where relying on such a clause becomes tricky is where your employee carries information around in his head, such as names and addresses of clients with whom he has had dealings. It is impossible to wipe an employee’s memory so you need to go one step further if you are to adequately prevent an employee stealing your clients. That’s why most employers seek to impose non-solicitation obligations upon their employees. Non-solicitation clauses prevent an employee approaching your clients with the intent of enticing them away from you and often extend to indirect approaches on the ex-employee’s behalf. It wouldn’t, however, apply to a general advertisement which wasn’t targeted towards a specific group of individuals, so it possible that a client could still learn that your ex-employee had moved on and follow them to their new employment. Needless to say, that is what most ex-employees claim when faced with an allegation of solicitation. To prevent this situation or a situation where a client finds your former employee by accident, a non-dealings clause can be useful. A non-dealings clause prevents your former employee having any dealings with your clients, irrespective of who approached who and whether evidence of solicitation is available. Then finally you have a restraint of trade clause which would prevent a former employee working for your competitors. These types of clauses give you the greatest amount of protection and are necessary where it is more than just your client list that you are seeking to protect (for example, trade secrets or other know-how).

About the Author: Michael Smyth RSS for Michael's articles - Visit Michael's website Six years old sounds a peculiar time to start to legal career, but that's the first memory I have of going to my Dad's law firm located in the heart of legal London. So, with law running in the family, the natural choice at University was a law degree. I also had a keen interest in Sports Law and obtained a Post Graduate Certificate in the subject from Kings College London. I came to New Zealand for a year, but like a lot of people I quite liked the place, and I'm still here practising law as a self employed barrister and running three businesses: Approachable Lawyer, Sportscounsel and The Sports Risk Management Group (the last two even allow me to combine my passion for law with my passion for sport). So in my 11 or so years of practice I have read numerous cases, helped many clients out of the mire and set up a number of businesses. That means not only am I a lawyer with an expertise in employment and sport, but I am also a businessman. This gives me a good insight into a number of problems my clients face. I also like to pride myself on my approachability - But don't take my word for it, visit my website http://www.approachablelawyer.com/profile.htm Click here to visit Michael's website More from Michael Smyth The best way to reduce your chances of facing a personal grievance when you dismiss an employee How to negotiate a Guarantee Agreement How to get your customers or clients to pay up Why every business should have a strategy for growth and how to do it How to search your employees computer and email legally

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