Always Read IP Clauses in Employment Contracts

WalesOnline has an opinion piece today by Bethan Darwin illustrating the potential effects that intellectual property clauses in employment contracts can have on an employee’s creative endeavors outside of the workplace.  The story presents the fictional example of two employees in the buying department of a UK fashion company who decide to form their own business on the side, selling Christmas jumpers.  The employees create the jumper designs from scratch, do not base them on any of the employer’s product designs, and are not directly competing with the employer, because the employer does not sell or design Christmas jumpers.  However, the employees use some of the knowledge gleaned from working at the fashion company to select an overseas manufacturer for the jumpers.

The jumpers are a big hit with the public, selling out during the first weekend, and the two employees make plans to place a larger order with the manufacturer.  Upon returning to work, however, the pair promptly find themselves facing disciplinary action and potential liability to their employer for copyright infringement, breach of contract, and the profits from their sales.  Why, you are undoubtedly tempted to ask, have these two budding entrepreneurs suffered such a dramatic reversal of fortune?  Well, because their employment contracts with the fashion company contained a clause providing that ownership of any copyrightable work (e.g., a fashion design) created wholly or partially in the course of their employment, whether or not during working hours or using the employer’s premises or resources, shall vest with the employer, rather than with the employee(s) who authored the work.  The hypothetical employment contracts also contained a provision obligating the employee(s) to notify the employer upon creation of any creative work that relates to or is capable of being used in the employer’s business, as well as a covenant not to compete with the employer.  Thus endeth the two employees’ adventures in entrepreneurship

The story is set in the UK and features a particularly (perhaps unreasonably) restrictive employment agreement, but the overall lesson is equally applicable to US-based employees and businesses: always read and understand any copyright-related provisions (and preferably, all of the provisions) in an employment contract prior to signing it.  This is sage wisdom for all types of employees, but it is particularly relevant in creative fields such as fashion, journalism, computer programming, architecture, graphic design, art, photography, music, film, science, engineering, and similar fields.  Prospective employees who engage in outside activities that can produce copyrightable works should consult a copyright attorney before agreeing to any copyright or creative restrictions in an employment (or any other) agreement.  You may be surprised at what you could be signing away.  Read the full article here.

 By TheUglySweaterShop.com [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons.

By TheUglySweaterShop.com [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons.

Reposted from WalesOnline.