Layoffs are now an everyday occurrence. The short-term urgency of conducting layoffs can distract management, which may overlook protecting their intellectual property (IP) assets during the termination process. There is a common understanding between employers and employees that office supplies and equipment do not depart with a departing employee. But trade secret and other confidential information can, and too frequently does.
The following steps can assist you in protecting your company’s intellectual property assets necessary for continued long-term success during downsizing.
1. Identify Your IP Assets at Risk The most likely IP assets to depart with your departing employee are trade secrets. Fundamentally, a trade secret is business information that creates or has the potential to create value to the company because it is secret. Given the frequency with which trade secrets are compromised during termination, it is helpful to take a quick inventory of possible assets your employee may have. Some examples include: employee manuals, customer lists, inventor notebooks, proprietary processes, non-public financial information, and business plans, all of which could be in hard-copy or electronic form, or both.
2. Recover Your Assets Once identified, the next step is to recover your IP assets. Ask the employee to return all confidential materials whether hard-copy or electronic. For electronic materials, ensure that you have complete access to where the information is stored. If your employees work away from the office, request the return of all company laptops, cell phones and other electronic equipment and all necessary passwords to prevent the loss of valuable assets.
3. Conduct an Exit Interview An exit interview gives the employer an opportunity, among other things, to reinforce the employee’s obligations under inventor agreements and confidentiality agreements. Request that the employee sign an agreement/acknowledgment, stating that he or she will honor these obligations. Even if the employee refuses, you have lost nothing in asking. The exit interview also presents an opportunity to request the employee sign any outstanding inventor documents, such as declarations, to be filed with the United States Patent and Trademark Office. Additionally, the exit interview provides an opportunity for the employer to ask where the employee will be working next and whether the employee will be able to perform his or her new responsibilities while meeting his or her confidentiality obligations.
4. Post Termination Following the termination, it can be useful to reiterate the employee’s obligations in writing and to send a copy of the agreement/acknowledgment signed by the employee. Concerns that an employee may have misappropriated company trade secrets are sometimes uncovered during an exit interview or while preparing for termination. In such situations, a company is often tempted to use self-help measures. Engaging experienced counsel can be useful to ensure the company’s actions are done in a manner to minimize risk of post termination liability.
For further information on protecting intellectual property assets before, during or after employee termination, please contact gkelly@lgpatlaw.com.