Never reveal a company’s trade secrets to a rival

When I worked for a computer software manufacturing firm, I was the chairperson of a team charged with creating and developing innovative software for use by our customers.

Due largely to my efforts, my team came up with innovative software solutions for our clients. I used research that I had undertaken as part of my undergraduate research project and applied the recommendations I had arrived at in my work place.

I now work with another firm in a different industry. I am aware that this software that I spearheaded the creation of has not been developed elsewhere in the country and that my former employer’s sales have sky-rocketed due in large part to this innovative product.

Am I entitled to a share of the profits or any income generated from sale of the product?

This is quite common in industries where, in order to remain competitive, firms must continuously engage in research and development, such as the software, manufacturing, telecoms, engineering and pharmaceutical sectors.

To ascertain whether the claimant has any rights to the invention, it is important to establish the nature of the contract that governed the relationship.

An independent contractor contract is distinguished from a normal contract of service by two main elements. If the employer retains the power to direct the work and the manner in which it is done, then it is a normal contract of service. If the employer does not, it is an independent contractor contract. I highlight these differences because the position at law is different.

That said, the simple answer is, ‘no’ you do not have any right to a stake in the invention nor are you entitled to share in the profits, assuming that there is no separate agreement between you and your employer on the issue of ownership of inventions.

First, the employee owes his employer a duty not to disclose confidential information, especially to competitors. This is particularly important where existing trade secrets give the employer an edge over his or her competitors.

I used to wonder why chefs in five star restaurants were reluctant to share recipes that they had used for years.

When you think about it, chefs come and go but the food remains the same and chances are that you will not find exactly the same food elsewhere. Trade secrets are a type of intellectual property which an employer has a right to guard in order to maintain an edge over the competition.

When you invent or discover something as part of carrying out your responsibilities and duties you cannot disclose this information to an authorised person and you are not the owner of the invention.

At law, if you invent something as an employee, by virtue of the implied terms of the contract of service, you are only a trustee of that invention or discovery for the employer.

Consider, the case of the chef above. Suppose, while serving at the restaurant, he came up with new dishes that were added to the meal offerings on the menu. The recipes for these meals would belong to the employer. The employer may choose to protect her rights to that recipe by declaring them trade secrets under intellectual property law.

The employee is therefore compelled not to divulge this secret information to competitors, and when the chef leaves no longer works for that restaurant, the recipes remain as the property of the employer. It does not really matter that it is the employee who created it.

In the words of Lord Reid, in a UK case, in the ordinary case the benefit of an invention should belong to the inventor.

But at the time the employee made these inventions he was employed and it is inherent in the legal relationship between master and servant that any work which the servant is paid to do belongs to the master.

And according to Viscount Simmonds, it is an implied term in the contract of service of any workman that whatever he produces by the strength of his arm or the skill of his hand or the exercise of his inventive faculty shall become the property of the employer.

Patenting inventions
However, supposing that this invention is something you created in your own time and not at work and in any case is not related to the work you do, then the invention belongs to you solely and may be patented.

For example, if you produce music in your spare time, it is not the employer’s property as it is not related to the work you are paid to do.

If you feel that you are entitled to a stake in the invention, then it is important to negotiate an agreement with your employer, perhaps for joint ownership of the invention. However in some cases, you might be forced to resign so as to take full ownership of the invention.

This is because the law also precludes an employee from taking any steps to patent any inventions relating to the work he is paid to do.

While seeking formal employment it makes more sense to patent your own inventions before you disclose them to the employer.

For example if as a chef you hold a traditional family recipe and would like to use this it at your work place, before signing the contract of service, ensure that you have full ownership of the recipe vide intellectual property laws and disclose your rights to the employer.

This will ensure that you do not have to leave your recipe behind when you leave employment.

Mputhia is an advocate of the High Court of Kenya and a Patent Agent. cathymputhia@gmail.com.