Intellectual property: Can IT employers control it?

By Vivienne Fisher, ZDNet.co.uk, 17 July, 2002 10:20

NEWS

Placing restrictions on staff after they leave a company is undue restraint, claims one civil rights proponent. But do IT companies need this protection from ex-employees? Cameron Murphy, president of the NSW Council for Civil Liberties, said an extension of companies claiming rights to intellectual property has been in the terms of employment contracts with staff. Murphy believes it's an undue restraint in many cases. "I think people are being compelled to give away their intellectual property rights to corporations to obtain employment," he argued. "Unfortunately most people don't read the terms of their employment contracts and many of these conditions are enforceable," Murphy said. "It's only when people leave that they get an understanding of what they've signed up for." However, some argue that post-employment restraints protect businesses against what can be significant damage inflicted by employees who are leaving a company. Kathryn Dalton, a partner in the workplace relations group at law firm Herbert Geer & Rundle, said that these restraints focus on how employers can protect their business from ex-employees. Dalton argued that it was a growing concern. "Given that the majority of employees in this area are highly skilled and well renumerated, it becomes a more significant issue than it would be in your general manufacturing or industrial areas of enterprise," she said. "The intellectual property and information that's dealt with in the IT industry is really the stock in trade." She said this could include ex-employees going to work for competitors, setting up in competition to the company they had previously worked for, revealing confidential information, or poaching staff or clients. "Basicially what we're saying in frontier and entrepreneurial industries -- where an employee's personal or technical skills are likely to form major capital assets of the business -- if they leave they have the potential to inflict significant damage on a business." She believes that a practical way to minimise this risk is for employers to impose what are referred to as post-employment restraints in the contract of employment or engagement. "Their success depends on how well they're drafted, and how carefully they've been tailored to the needs of the particular business," Dalton warned. Nor is it necessarily uncommon in the IT sector. Chris Sandham, state manager at recruitment company IT&T Careers, believes that it is standard practice in the industry, and restrains people from taking intellectual property when they were leaving a job. He said that if you're a contractor there may be a restraint clause with the agency you're with.

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