My Employee is Stealing Our UK Business’ IP. What Can I Do?

Your intellectual property materials are valuable assets for your company. Your confidential information specific to your business is priceless information that your competitors would love to know. Therefore, suppose an employee in your company was to share this information. In that case, it could be highly damaging to your business. For example, it can cause lost sales or loss of reputation. This article will explore how to protect your UK business against an employee stealing your IP.

What IP Should You Protect?

In particular, you should consider protecting the IP that adds the most value to your business, or that would be the most detrimental to your business if it got into the wrong hands. This includes:

• trade secrets, such as unique manufacturing processes, business strategies, and product formulas;
• customer lists and databases; 
• proprietary software; and 
• marketing materials. 

SMEs may be affected disproportionately by IP leaks, so you should be particularly vigilant and proactive in protecting your IP.

A Current Employee Is Stealing IP

Businesses can be at risk from employee theft of intellectual property because employees need to access business data to do their jobs. Employees working on product development may use this knowledge against you by setting up direct competition with your business or copying your products or services. In addition, they may be willing to disclose your business’s trade secrets to another competitor.

As with any employee misconduct issue, you should have a set disciplinary procedure that you follow for any data theft. All employees should sign an employment contract explaining the expected standard of conduct. The employment contract should also contain explicit clauses about confidentiality, misuse, and infringement of intellectual property and personal data.

A Former Employee Is Stealing IP

If a former employee is stealing your IP or providing confidential information to a new employer or a competitor, this is damaging to your business. You may be able to take action depending on whether their employment contract placed obligations regarding IP on them after their employment. For example, you might have included a specific ‘non-compete’ clause. This prevents an employee from working in a competing business (or setting up a competing company) for a certain period. Ideally, the employment contract should contain clauses that prevent them from using your intellectual property.

If you discover that a former employee is using your intellectual property without permission, the best course of action is to send them a formal letter. This letter should remind the ex-employee of the continuing obligation to you. You should ask them to return any intellectual property they have taken and delete any software or data files that belong to your business. You should also request that they immediately cease using your IP or sharing confidential information with anyone else. 

Preventing Future IP Theft From Employees

The best course of action is to stop employees from stealing your IP in the first place. Ensure your employment agreements contain explicit provisions relating to your confidential information and intellectual property. Include what information you consider confidential, with examples if necessary. 

For employees who have access to IP that must remain confidential, use restrictive terms that limit the employee’s ability to use that information once they have left your company. These should be specific to the information you are concerned about, and you should only use them for employees where it is relevant. Otherwise, a court may view an overly general term as unenforceable.

Additionally, ensure that you share crucial IP only with employees who need to know it. You should keep records of who is allowed to access what intellectual property. This will not prevent an employee from stealing that information. However, a detailed audit makes it easier to know who has access to information. This can make it easier to ensure that those employees are aware of their obligations.

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Preventing Future IP Theft from Independent Contractors

Occasionally freelancers or independent contractors may require access to your business’ IP to perform their contracted work. When working with freelancers, you should ensure that there is a clear, written contract before their commencement. This contract ideally should:

• explicitly address IP ownership;
• make clear that any IP created during the project belongs to the company; and 
• clarify the freelancer’s obligations to keep relevant information confidential. 

For additional protection, you could consider also using a Non-Disclosure Agreement (NDA) before the commencement of their work. By taking these precautions, you can benefit from external expertise while minimising the risk to your valuable intellectual property.

Key Takeaways

If a current or former employee of your business is stealing your intellectual property, there are a few steps you can take to stop them. You can ensure that your employment contracts contain unambiguous provisions regarding confidential business information and intellectual property. For former employees, consider writing a formal letter reminding them of their obligations regarding your intellectual property and confidential information. If the employee continues their behaviour, or the situation is more serious, you can bring legal action against them.

If you need help safeguarding or enforcing your IP rights against employees, our experienced intellectual property can assist you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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