During the natural course of business life, a business – whether it be an individual, a partnership or a company – will undoubtedly create confidential information and intellectual property that is very relevant and important to their business interests and which they will likely have to share with various types of people, from employees, to self-employed contractors, to potential business partners or indeed, customers. What can business do to protect that information?
Gervase McGenity, Director of Business Law at Granite Legal Services, says that the protection of confidential information is derived from equity, contract law and statute and that a relationship of confidentiality can arise in a variety of ways, for example between an employer and an employee, a director and a company, between partners in a partnership and in a joint venture scenario.
We live in the information age with access to a lot of important information via a wide range of devices, including smartphones, laptops or tablets. Many businesses even supply their employees with these devices in order to help them carry out their day to day role and indeed many employees will have some form of connection to their employers on a 24/7 basis.
But with such easy access to information – some of which might be highly confidential and/or involve the employer’s intellectual property – how can Northern Ireland businesses protect it?
For employees, this means protecting it both during employment and once an employee moves on? The reality is it is no longer the case that employees are in a job for life and it’s now considered the norm to change careers every couple of years. Recent research by LV Insurance suggest that many UK workers change jobs every five years on average.
Gervase says “the duty of fidelity implied into every contract of employment will generally prevent an employee from disclosing to third parties confidential information which comes to their knowledge during their employment, but what happens after employment ends?”
“Because the law categorises different types of (confidential) information in an employment context and the categorization can impact on what protections exist post termination of employment, the most straightforward way a Northern Ireland employer can protect its confidential information and intellectual property is to have in place specific confidentiality clauses in the contract of employment, or a confidentiality agreement/ non-disclosure agreement – which are essentially the same thing.
“Employers should seek to protect their confidential information from disclosure after employment has ended by way of suitable express contractual post-termination restrictions and, practically, should actually use the same method to protect use of that information during employment instead of relying on any implied duties”
“Legally, it’s the safest way of ensuring the employee focused protection of a business’s ideas, information, plans and confidential information both during employment and after an employee leaves”
“In fact, using carefully constructed contractual provisions is the best way of protecting confidential information and intellectual property in any disclosure setting. For example, a Non-disclosure agreement is absolutely vital in order to enable a NI businesses to protect its trade secrets, confidential information, customer lists and a whole host of other vital information that it owns and may need to disclose when assessing whether it is able to move forward with a business opportunity with another business ” he advises.
And while it might be tempting for business owners to write their own, or use an online template, Gervase says it’s a good idea to get one created by a legal expert.
“It’s an important contract and one that ideally should be tailored to your business, specifying certain areas of your business that fall under the contract.
“We would always advise you to seek the advice from an expert; that way you know your contract is legally binding and most importantly, unique to your own business needs,” he adds.
Gervase describes a scenario where he says businesses he has acted for have been very surprised to learn they don’t own either the confidential information or intellectual property created when they have enlisted the help of a self-employed consultant or service provider. They had assumed that after they’ve paid for the services, they would automatically obtain legal rights in the intellectual property and confidential information created.
That understanding, however, isn’t accurate, he explains, “whilst there are certain implied rights regarding confidential information between a service provider and a service user, the situation is different with regard to Intellectual property. Broadly speaking, unless you have a prior agreed and signed contract with the self-employed contractor, which clearly states that he/she assigns all intellectual property rights in the work product they create to you, then even after you’ve paid for a service and work product, from a legal standpoint the contractor would retain ownership of the intellectual property in that work product”.
“That’s why it’s of vital importance that NI businesses set out the ground rules for employees and outsourced parties contractually at the outset of the relationship”.
“A good rule of thumb is to be clear on expectations, ensure clarity of all communications, and agree both party’s terms of the agreement before an employee begins his/her work, before an outsourced agent starts their work or before a collaborative business venture is looked at” he adds.
Do you need help with your employment or commercial contracts and practices?
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