In a borderless world of work, companies need to prioritise IP protection
Today, more and more companies are embracing new working models and cultures. In particular, remote work has become mainstream, empowering businesses to expand their hiring pool beyond their geography and find talented candidates wherever they are, as well as offering employees the flexibility to choose where to live without needing to be tied to an office.
Workers are also embracing flexible careers, taking time to work part time on side hustles alongside their regular jobs and folks may also prefer to work as contractors instead of employees for further flexibility.
These flexible models offer multiple benefits but can also create vulnerabilities. Companies who embrace flexible remote work, particularly across borders, must be careful to avoid unnecessary risks to their intellectual property while growing their global workforce.
What are the issues to be concerned about?
Without exception, every company – regardless of size or industry – that employs people globally should think about protecting its inventions and intellectual property. Even if you don’t think your company has much IP, it likely does: your products, designs, even your brand and website copy, are all part of your intellectual property.
If you are hiring employees in different jurisdictions, some good news is that typically, the law regarding IP ownership is quite similar: if someone creates something in the course of their employment (i.e., it’s related to their job description), the company will automatically own the IP. However, it’s crucial to receive local advice to clarify exactly how this works in the relevant country, understand the nuances, and ensure that any required paperwork is put in place to cover off formalities.
If you don’t have a direct contract with the person doing the work for you (e.g., you hired them through an agency), and if they’re not your direct employee, this should set alarm bells ringing; you’ll really need to ensure you can evidence a clear chain or transfer from the worker to you.
If workers have side projects on the go, your company probably won’t be bothered about owning the IP, unless your business’s IP or business confidential information is being used to benefit the side project, or if the time spent on the side project is detracting from the person doing a good job for your company. Clear policies can help to clarify this, as well as building trusted, transparent relationships.
Similarly, your company should have clear IP policies to ensure that people that work for you are not infringing third parties’ IP in creating your product or using open source where the licence restrictions will cause your business issues.
Why is evidencing IP ownership important?
Startups must be cautious regarding their IP, especially if they are approaching a liquidity event such as a round of fundraising, a business sale or IPO. The due diligence needed to prepare for something like this will involve evaluations of the startup’s IP and its relationship with employees and contractors.
Aside from corporate events, being unable to assure potential customers and partners that you own the rights to your work could result in the loss of major deals. Alternatively, a dispute with an employee or contractor over IP ownership could lead to negative press and damage the company’s reputation.
Furthermore, if there is a dispute with a remote worker living abroad, businesses run the risk of being dragged into an expensive legal battle in a foreign court system to obtain their IP.
What’s the solution?
Given the risks of failing to protect IP rights, businesses should be incentivised to insulate themselves from dangers while benefiting from a growing global workforce.
Many companies hiring overseas will, instead of opening their own subsidiaries, hire international talent using a global employment solutions provider. However, some of these providers rely on third parties, passing their customer’s IP among multiple partners in different places, but this exposes the client to increased risk, is insecure and can be more expensive.
A better, more secure solution is to ensure your partner owns the legal entity in the country where you wish to engage someone and takes its local responsibilities seriously. Ensure that your partner monitors local IP laws regularly and uses top quality legal firms to ensure the IP created by your team makes its cross-border journey into your company’s hands with no challenges.
At Remote, we own our own legal entities in every country where we offer global employment services. Instead of passing IP through multiple third parties, we use a three-stage approach to transfer IP from the employee to our clients. First, we ensure the effective transfer of our clients’ IP from the worker to Remote’s local entity, in accordance with country-specific employment legislation and extra paperwork, prepared by top local lawyers, to ensure things are watertight. Next, we transfer the IP from our owned local entities to our holding company by a clear intra group IP agreement, and then we transfer the IP to our client through a clear written agreement. All of the process stays in-house. An international IP specialist law firm has blessed the way we do things and put its signature to this, which gives us and our clients great comfort. We’re not saying our way is the only way, but if in doubt about any of this, do speak to your own legal advisor.