In today’s fast-paced and ever-evolving business landscape, companies across industries face numerous challenges in making decisions about their workforce. Amid these complexities, it’s more critical than ever to identify and safeguard your business’s intellectual property (IP) while managing employees fairly and transparently.
People and intellectual property are among the most valuable assets in any business, and they play a central role in achieving long-term success. Investment in both can yield significant returns, while the loss of either can pose substantial risks. India’s current legal framework increasingly aligns with international conventions, and further integration with the global system is anticipated in the coming years.
When considering staff retention and potential redundancies in any environment, what are the key IP considerations that businesses should keep in mind?
- Identifying Valuable Intangible Assets
Staffing costs remain one of the largest expenditures for most businesses, and rightly so. Employees often develop and carry with them a company’s most valuable asset: its intellectual property, which includes confidential information. This confidential information can encompass pricing structures, manufacturing processes, future business plans, client lists, and other trade secrets.
Also read – Veefin Group appoints Gitesh Karnik as CHRO
Employees also cultivate direct and valuable customer relationships, which are vital to a company’s reputation, workflow, and ability to achieve its goals. Businesses that do not have a comprehensive understanding of the intangible assets they possess should conduct an audit to determine which confidential information is crucial for the immediate and long-term viability of the company. Companies should strive to retain employees essential to the business’s recovery and growth where financially feasible.
Some key questions to consider include:
– Has the company invested in new product and process research and development? If so, which employees are critical to continuing that work? What investment will be lost if these employees leave?
– Are there specific proprietary processes—such as operating certain machines or programs—known only to particular employees? If those employees depart, how much downtime will be lost while others are trained?
– Which employees hold key client relationships? What happens to those connections if the employee moves to a competitor, and how can the company protect its legitimate interests?
- Securing the Future: Protecting IP Rights
Ideally, all employees should have contracts stating that any IP they generate during their employment belongs to the company.
Businesses should review their staff contracts before any employee departs. If the contracts do not include explicit terms assigning IP rights to the company, steps should be taken to secure those rights before the employee leaves. Additionally, businesses should consider whether any further cooperation will be needed from departing employees in relation to the prosecution or defense of IP rights.
- Examining the Implications of Restraint Clauses
Businesses should review the restraint of trade clauses in relevant employment contracts to ensure they effectively protect the company’s legitimate interests and place reasonable limitations on former employees.
If the current restraints are inadequate or outdated, the company may wish to negotiate new restraint clauses with key employees upon their termination of employment.
- Reclaiming and Protecting Confidential Information
When employees leave, employers typically require the return or destruction of the company’s physical property. The same diligence should be applied to confidential information, especially if it is stored electronically in email accounts, portable drives, or the cloud.
Addressing the return or destruction of confidential information, such as customer contacts or specialized company knowledge that an employee implicitly “knows,” can be challenging. However, well-drafted restraint clauses can serve as an effective deterrent.
- Strengthening Business Protections: Enforcing Post-Employment Duties
If a company becomes aware that a former employee has breached their post-employment obligations, taking immediate and decisive action is crucial. Prompt action will have the most impact and is more likely to result in the company being granted relief by a court.
Taking swift and firm action also sends a clear message to the market and remaining employees that the company is serious about protecting its IP rights and enforcing post-employment obligations.
- Embracing New Team Members
On the flip side, some businesses are expanding their workforce and may find themselves hiring employees who were let go by competitors. It is equally important for businesses to be aware of:
– Whether the new employee is bound by any restraints or confidentiality obligations from their former employer.
– Whether the new employee might jeopardize the company’s entitlement to IP they create.
Any legal action the former employer took to protect their interests could be costly for the hiring business, both financially and reputationally.
Since the new national government took office in May 2014, India’s Intellectual Property Rights (IPR) regime has undergone significant changes. The first key development was Prime Minister Modi’s five-day visit to the U.S. starting September 27, 2014. On September 30, a joint statement from the Prime Minister’s Office and the White House announced the formation of an annual high-level Intellectual Property (IP) Working Group within the Trade Policy Forum.
Following this, the U.S. conducted an out-of-cycle review of India’s IPR policies, setting deadlines for public comments by October 30, 2014, and foreign government comments by November 7, 2014. In a notable move, on October 22, 2014, the Department of Industrial Policy and Promotion (DIPP) established an IPR think tank to draft the National Intellectual Property Rights Policy and provide advice on IPR matters. The draft legislation was published on the DIPP website on December 19, 2014.
In February 2015, the U.S. Chamber of Commerce’s Global Intellectual Property Center released its annual report, ranking India with the second-weakest IP environment out of 30 countries assessed. India scored just 7.23 points, ahead of Thailand’s 7.10.
This was followed by the United States Trade Representative (USTR’s) Special 301 Report in April 2015, which placed India on the Priority Watch List but acknowledged the positive progress with the draft IP policy. With ongoing reforms, India is poised for a significant shift in IP protection and enforcement, potentially fostering greater innovation.
Stay connected with us on social media platforms for instant updates click here to join our LinkedIn, Twitter & Facebook
