Personal Finance

Employees’ right to intellectual property


Although employees are expected to come up with brighter ideas and better products, sometimes what they present are not part of their contracts and the IP may not necessarily belong to the employer. FILE PHOTO | NMG

Companies often hire and invest in employees to develop new products, improve processes, create new technologies and develop new markets. With this investment, it should come as no surprise that employers generally own the intellectual property (IP) created by its employees. In fact, it is a statutory presumption in most countries that the employer owns the intellectual property that an employee creates.

However, an employer would be careless to assume that all rights of the employee over such creations are extinguished.

The employee could claim rights of an author, moral rights and rights to object to alterations to work. Hence, it becomes critical to include terms determining the ownership of intellectual property in employment contracts, independent contractor agreements or agreements with a consultant or designer.

Without a clear understanding, these issues could present challenges for employees and employers alike.

In Kenya, IP is protected under Article 40 (5) of the Constitution that obliges the State to support, promote and protect the intellectual property rights.

Other laws include the Industrial Property Act and Copyright Act. Section 32 of the Industrial Property Act provides that in the absence of contractual provisions to the contrary, the right to a patent for an invention made in execution of a commission or of an employment contract shall belong to the person having commissioned the work or to the employer.

However, where the invention is of exceptional importance to the employer, the employee shall have a right to equitable remuneration taking into consideration his salary and the benefit derived by the employer from the said invention.

Critical to an employer's ownership of intellectual property is a written agreement with the employee.

The agreement specifically assigns to the company any and all intellectual property created by the employee during the course of his or her employment with the company.

Such an agreement is often called an “assignment of inventions” or “ownership of discoveries” agreement.

The lynchpin to an ownership analysis is often whether the idea was created “in the course of the employment.”

It is not sufficient for an employer to point to a paycheque and lay claim to all of an employee’s ideas.

Rather, the idea at issue must have been created during the course of the employment relationship.

Thus, close examination of the relationship may reveal that the employee owns the ideas because they were developed outside of the employment relationship.

A primary focus of this analysis will be the reason for the hire of a particular employee. If the employee was hired to create intellectual property as part of their job, the employer will be the owner of the creation.

In the absence of a written agreement, the courts will look to the nature of the position and whether the employer gave directives or set goals for the employee to achieve.

Ideas that stem from these directives will generally belong to the employer. Consideration needs to be given to all the circumstances.

To adequately protect the employer and employee interests, the agreement on assignment of Intellectual Property rights should contain a remedies and relief provision, which includes the right to seek injunctive relief and the recovery of legal fees and costs upon demonstration of the employee’s breach.

The writer is Partner at Latent & Associates Consultants.