One of the biggest challenges facing many organizations, and especially early-stage companies, is attracting and retaining qualified talent. In the rush to identify and hire employees, many employers make the common mistake of failing to ensure new hires are not bringing a potential lawsuit with them when they join the organization. Most employers recognize the need to safeguard their organization’s intellectual property (IP) and proprietary information. However, many fail to ensure their new employees are not utilizing IP and proprietary information of another party, thereby infringing on the other party’s property rights and possibly exposing the new employer to a claim of infringement.
Proprietary Information of Others
When an employee utilizes IP or proprietary information of another party while performing their job duties, they may be bound by, and in violation of, a previously entered confidentiality, nondisclosure, and, or non-compete agreement, thereby exposing their current employer to potential liability. This scenario has played out many times, where a salesperson, new business developer, programmer, or even senior executive has used proprietary material or information obtained in a previous job to benefit a new employer. If the information used, for example, customer lists, programming code, trade secrets, etc., was wrongfully obtained or is protected by a nondisclosure, confidentiality, or other protective agreement entered by the employee in their prior job, the employee’s previous employer may have a legal claim against the employee, as well as the new employer.
Cost of Using Other Party’s Proprietary Information
While an employer may be able to limit damages assessed against it if it can show it had no knowledge an employee wrongfully utilized another party’s proprietary information, the employer may risk forfeiting profits earned resulting from the use of the wrongfully obtained material or information. In addition, the time, effort, and potential legal cost required to defend against such a claim, could be significant.
Limiting Exposure With Employment Agreements
The best way for an employer to guard against a claim of infringement resulting from an employee utilizing another party’s IP or proprietary property is to have written employment agreements with each employee, prohibiting the employee from utilizing another party’s IP or proprietary information during their current employment.
