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As a Programmer, Are You Committing Intellectual Property Theft by Abstracting Ideas Learned at Work Into a SaaS Product?

In this day and age, technology is taking over every aspect of our lives. Ideas developed for one area can be modified with ease and adopted in another area. If you are starting your own business, you need to protect your intellectual property to avoid someone else using your hard work in a different market. But what if you come up with an idea while working on a different project?

 

 

What is intellectual property theft?

Intellectual property theft is the stealing of creative ideas. In the area of start-up businesses, intellectual property is a huge concern. After all, you are dealing with new ideas in its early stages with significant progress to be made. As a programmer, you come across new ideas all the time, which may inspire some ideas of your own. The challenge is making sure that you aren’t taking anything that is not yours. The line between committing intellectual property theft and the creation of new ideas is not always clear, but the agreements you have signed as a developer may give you some clues about where to draw the line.

Source

 

Master Service Agreement

Start with the Master Service Agreement. If you are performing work for someone, your specific tasks, duties, and obligations should be clearly outlined. A well drafted Master Service Agreement will define your intellectual property rights as of before the work begins with the developer, while the work is in progress, and after the work is completed. These definitions are extremely important and often hotly negotiated, as is the ownership of these types of intellectual property. You may wish to make sure that the definition of client confidential information is not so broad that it includes all ideas developed during the term of the agreement.

 

Click here to see Clausehound’s Master Service Agreement!

 

 

Employment Agreement

If you are an employee, the rights you have as a developer may be a bit more limited.

Most employment contracts will contain language which requires you to transfer all rights to intellectual property created during the course of your employment. Some agreements allow employees to develop ideas independently, if they are developed outside of work time and without the use of employer intellectual property or confidential information.

 

Click here to see Clausehound’s Employment Agreement!

 

Under the Copyrights Act, if the work is created in the course of employment under a contract of service, then the employer will be the owner of the copyright in the work created by the employee. What this means is that you cannot retain any rights to work created during the course of your employment if you do not have an agreement that allows you to retain that right. Copyright includes artistic work but may be much broader and can include work related to technology.

 

Under the Patent Act, courts have decided that the employee will retain ownership pursuant to two exceptions. First, if you are “hired to invent”, which means hired for the purpose of creating ideas for your employer, then you would not be able to claim those ideas as your own. Your employer retains those rights and any ideas that you have. The second exception allows the employer to obtain the rights if you transfer those rights to the employer in an agreement.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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A business deal gone Nashty: basketball legend files for gyms to stop using his name and image

Have you ever heard of Steve Nash? Sound familiar? That’s because we all know him as one of Canada’s finest, a basketball player from Victoria, B.C. who made it big in the mid-’00s playing for the Phoenix Suns. The NBA legend was an eight-time All-Star and retired last year with plenty of celebrity leftover, and now that fame is the subject of a recent court case.

Nash has been in the news for filing a civil claim against some of his former business partners from a past business venture related to gyms. He wants his name and face removed from the front of Steve Nash Fitness World & Sports Club. Back in 2007, Nash helped open the chain that is now 21 gyms strong, but sold off his shares in 2014. He hasn’t received compensation for the continued use of his brand since, and is now seeking a ban and damages.  

Source

The issue might have arisen in relation to trouble with one business partner in particular, that being Mark Mastrov. In 2013, Mastrov bought into partial ownership of the Sacramento Kings. At the same time, Nash was still playing with the Los Angeles Lakers. The NBA has strict rules its members and associates must follow, and one of those is that team owners and players are not supposed to be involved in business with one another. To prevent a conflict of interest because of Mastrov’s move, Nash exited the business arrangement (one that was supposed to have lasted until 2022) by quickly selling his shares.

Since the case is a new one, it has yet to be considered by the courts. One point that the court will most likely consider is how to treat Nash’s celebrity status. What sort of intellectual property rights does Nash have to the representation of his own person? Does Nash even have a case to preserve and protect his person?

10722587196_ba204f0844_z (1)

music2020 / Flickr

Fortunately for him, there is a wealth of Canadian case law on the matter of what can be termed “appropriation of personality.” In Athans v. Canadian Adventure Camps Ltd. (1977) (ONSC), plaintiff George Athans Jr., a renowned professional skier, sought an injunction and damages because a picture of him skiing was reused without his permission on the front of a camp brochure. While his particular claim of injunction was deemed unwarranted because the reproduction was not particularly recognizable as him, it was determined that people do have exclusive proprietary rights towards their image and personality.

 

The circumstances during which proprietary rights to personality can be violated were later clarified and better defined in the case of Gould Estate v. Stoddart Publishing Co. (1999) (ONSC). This case disputed the publishing of a book of photographs and conversational excerpts from 1956 between famed classical pianist Glenn Gould and journalist Jock Carroll. Gould’s estate had not consented, nor received any royalties. A distinction was made about “sales vs. subject” here, and is described as follows: “Sales, where the identity of the celebrity is used, constitute commercial exploitation and invoke the tort. In contrast, where the celebrity is the actual subject of the work and the work is an attempt to provide some insights about the celebrity, the work does not invoke the tort.” As a result, the estate’s case was dismissed.

Applying this principle to Nash’s case, he may stand a chance to get the outcome he wants. The use of his name and image has a commercial bent, quite like the example the judge used in the Gould reasoning of Elvis merchandise. The gym chain is not like the book on Gould, meant to offer the public a way to learn about Steve Nash himself.

“Fitness World & Sports Club” sounds pretty underwhelming on its own, so if this case goes in favor of Nash they better be on the scramble to re-brand!

To see standard terms of use and site-user agreements, visit our Small Business Law Library!

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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The ABCs of MSAs

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negotiate
competitive advantage

Introduction

There are three things you need to consider carefully in every Software Development Master Services Agreement (MSA):

(A) Indemnity;

(B) Liability; and

(C) Ownership of Intellectual Property

 

No one is going to back down without a fight on these three points, but (A) Indemnity, and (B) Liability, can often be resolved easily. These issues are a bit like a numbers game – the question becomes a process of finding a mutually agreeable (and insurable) cap on liability.

 

Issue (C), Ownership of Intellectual Property, is usually a more delicate matter to negotiate. Both the vendor and the client have legitimate concerns about who owns the IP. The vendor wants to finish the engagement knowing that the pre-existing property (i.e., intellectual property that is used during this engagement, but was created by the vendor prior to or independently of the engagement) is protected.

 

Copyright Exclamation Mark
Protection over ownership of intellectual property will be hotly debated in MSAs.

 

A vendor may have spent years creating their own code and intellectual property, and it’s this pre-existing property that gives them their competitive advantage. No matter who the client is, they are going to want to keep their pre-existing property their own – even if this means walking away from the deal.

 

On the other hand, the client’s ownership of intellectual property also needs to be dealt with quite carefully. Clients must be assured that they will own the newly created and customized intellectual property that they have paid the vendor to create, and that they will be free to deal with it and distribute it as they require.

 

These two competing interests can usually be balanced by preserving the vendor’s ownership rights to pre-existing vendor IP, and by granting a simple licence to the client to use that pre-existing IP for the purpose of using the newly created software (often referred to as a ‘deliverable’).

 

The Vendor’s IP

 

The vendor will also want to retain ownership of improvements made to the vendor’s pre-existing IP during the course of the engagement, and will wish to protect all of their IP from reverse-engineering.

 

Note how the following example clause includes these elements:

 

Notwithstanding anything to the contrary, to the extent that any Data or materials provided under this Agreement contain any Data or materials which were developed by Vendor (a) independently of this Agreement or any applicable Statement of Work; or (b) by Vendor prior to the date hereof; and including any improvements or alterations made to such Data or materials during the term of this Agreement (“Vendor’s Proprietary Materials”), such Vendor’s Proprietary Materials shall remain the exclusive property of Vendor and the Client shall have no ownership interest therein, but the Client shall have an irrevocable, nonexclusive, perpetual right to use modify, revise, enhance, update, improve, expand and copy such materials only to the extent embedded in the Deliverables furnished to the Client hereunder, and notwithstanding anything to the contrary, the Client shall not reverse-engineer, sell,  distribute, or use the Vendor’s Proprietary Materials for any reason whatsoever, other than to the extent embedded in the Deliverables.  

 

The Client’s IP

 

From the client’s perspective, the following IP ownership clause is ideal:

 

All right, title and interest in any Deliverable and including, without limitation, all Intellectual Property Rights in a Deliverable, will belong exclusively to the Client;

Vendor shall be deemed to have assigned to the Client all right, title and interest including all Intellectual Property Rights in such Deliverables;

The Deliverable assigned to the client will cease to constitute Vendor Confidential Information, if applicable, and will become Client Confidential Information; and

At any time and from time to time the Vendor agrees, at no additional cost to the Client, to execute and deliver to the Client all such documents as it may reasonably request to evidence the vesting of its rights, title and interest in the Deliverables.

 

It is unlikely that a vendor with sufficient bargaining power will agree to transfer ownership in the newly created software (deliverables) without having been paid, or without requiring the client to otherwise comply with the MSA. As a result, the following caveat is likely to be negotiated as a precondition for the transfer of ownership in the deliverable:

 

Other than for Vendor’s Proprietary Materials, upon payment in full of all amounts due to Vendor under this Agreement or any applicable Statement of Work and subject to the Client’s material breach of this agreement, including without limitation, the reverse-engineering of Vendor’s Proprietary Materials.

Scale Balancing MSA
Balancing the client’s and vendor’s rights is a key factor for closing a deal.

 

Conclusion

Careful drafting can balance both the legitimate interest of the vendor in retaining pre-existing IP rights, and in not transferring ownership of the deliverables until payment has been made; and the client’s interest in free and clear ownership/use of the software they have paid to have developed.

 

Takeaways

  • Vendor will want to retain ownership of any intellectual property that they have created prior to or independent of their engagement with a client
  • A client is usually willing to accept this point so long as they own the rest of the newly created intellectual property and have received a licence to use the vendor’s intellectual property

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Can a competitor use my trademark on their website for comparative pricing?

Moogsi / Wikipedia

Many websites use numerous brand names to compare pricing of each company’s products. Issues may arise when such ‘price-comparison’ websites are using other companies’ trademark names or designs.

How is a trademark protected?

A trademark is a registered word name or design that is legally owned by a business entity or an individual. An individual or business can register a trademark through a jurisdiction’s intellectual property office. The receipt of approval for a trademark from an intellectual property office, such as the Canadian Intellectual Property Office (CIPO), means that any other third party that tries to use the trademark by either:

(i) displaying it as its own trademark;

(ii) depreciating the value of goodwill attributed with the trademark (s. 22 of the Trademarks Act); or

(iii) providing false or misleading advertising

will be infringing upon the intellectual property of the registered trademark owner.

A website using another company’s trademark word names or design may be liable for intellectual property infringement based on the last two breaches mentioned above.

Depreciating the value of goodwill

A website using a registered trademark in a negative light may be in breach of intellectual property laws which prohibit depreciating the goodwill of a brand. A brand’s goodwill can be decreased by providing negative comparisons to detract customers away from the brand (for example, implying higher prices of a certain brand, or implying that low prices equals low quality).

In Future Shop Ltd. v. A.& B. Sound Ltd. (1994) (BCSC) both parties accused one another of misleading comparative advertising. The BC Supreme Court judge stated comparative pricing strategies that compare similarities between trademarked competition is more likely to contravene s. 22 of the Trademark Act compared to comparative advertising displaying the differences between trademarked competition.

17141231050_3ba4940639_z

Walter Lim / Flickr

False and Misleading Advertising

Section 7(a) of the Trademarks Act prohibits any person from making a “false or misleading statement tending to discredit the business, goods or services of a competitor.” Furthermore, Section 52(1) of the Competition Act prohibits a party from “knowingly or recklessly make a representation to the public that is false or misleading in a material respect.” Price comparison companies that use other trademark names or designs must be careful to ensure that they are not misleading customers with respect to the information they provide on behalf of those marks.

Conclusion

Price comparison websites may be permitted to use trademark names or design of a third party company without claiming ownership of the mark, provided that they do not decrease the goodwill of the mark or provide false or misleading advertising of the mark.

To see examples of a variety of standard contracts, visit our Small Business Law Library!

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Protect Your Goodwill – Register Your Trademark!

What’s in a name?

Trademarks are the name, design, brand or logo that represent the products and services a company offers. They can be the word that customers associate with a company. If the mark is well known, it can be the major reason why consumers purchase the product or service.

 

Why you should register

When you register a trademark, you receive an exclusive right to the identified mark for use with the goods and services for which it is registered. While you may still use your mark without registering it under the Canadian Intellectual Property Office (“CIPO”), your mark will not be protected from unauthorized use. In other words, everyone is free to steal the creativity and brand recognition that has gone into the name of your mark. If your mark is protected by CIPO’s registration system, you can claim an intellectual property infringement against any individual or company that tries to use a mark that is the same or a similar to your protected trademark, for the same or similar goods or services.

 

When you should register

The sooner, the better! The best time to register is before you have built up goodwill with a name. That way, if the name you have chosen is already protected, you can choose another name. If you have already begun to gather some goodwill and a reasonable customer base in association with a mark, it is not too late, but you should register as soon as possible. This will help to protect the business you have built before someone else registers that name. It will also give you a chance to change if you discover that you are unknowingly infringing on an already protected mark. Sooner is also better than later because the registration process is quite lengthy and can take up to two years to complete.

 

The registration process

Even though trade-mark registrations are handled by trade-mark agents and/or trade-mark lawyers, it is important for you, the trade-mark holder, to understand the process of registering your trade-mark.

 

The trade-mark registration process is a team effort between the company applying for the registered mark and their agent representative (note that the company’s trade-mark lawyer is generally known as an agent representative by CIPO). The company understands the products and services it offers and the story behind its mark better than anyone else, while the agent representative understands the registration process and what the examiner of the file is looking for in an acceptable trade-mark.

 

The following are basic steps:

 

Step 1: Identify the Mark. The company will identify the mark the company would like registered. The mark will be the focus of the application.

 

Step 2: Identify the Competitors. The agent representative should complete an analysis of the competitors to determine whether they have any similar-sounding or similar-looking marks that are used in conjunction with similar goods and services.

 

Step 3: Conduct a Search on the Intellectual Property Office’s Website. CIPO’s trade-mark search database will generally have lists of marks that are registered, searched (currently in the registration process), expunged, or abandoned. It is important to conduct a thorough search in order to minimize objections by the examiner.

 

Step 4: Determine the Goods and Services. After an analysis of competitors and similar marks found in the database, the list of goods and services to be registered in association with the mark should be determined.

 

Step 5: File the Application. This is where the waiting game begins!

 

Objections

After the application has been filed, the examiner should respond to the agent representative within a 6 month period. The response may contain objections on various grounds, including: re-specifying goods and services; color claim description of a logo; or confusion with a previously applied-for or registered mark.

 

The most complex objection is the confusion objection, when the examiner finds that the applied-for mark is confusing with respect to another mark that is already registered in CIPO’s trade-mark database. This will require the agent representative to develop compelling arguments as to why the marks to be registered are not actually confusing, either with respect to the name itself, or with respect to the goods or services it is used with.

 

The following case is a surprising example of a successful defense to a confusion objection. In Mattel U.S.A., Inc. v 3894207 Canada Inc., the applied-for mark had the word BARBIE in its business name. It is arguable that most people in the world would associate the word ‘Barbie’ with the famous doll. Who doesn’t recognize a Barbie when they see one? Nevertheless, the Federal Court of Appeal held that use of the word in the name of a restaurant services business was not confusing with the appellant’s ever-so popular mark, BARBIE, used in connection with the doll. Compelling arguments by the defendant’s counsel succeeded against the retail toy giant, Mattel.

 

Conclusion:

The trade-mark registration process is lengthy and complex, but essential for the protection of  your brand recognition. Protect your goodwill, and register your trademark!

 

Take-aways:

A mark should be registered in the early stages of a company

  • A registered trade-mark will generally allow the trade-mark holder to bring intellectual property infringement claims against the ‘infringer’.
  • the registration process is a collaborative effort between the company applying for the registered trade-mark and the agent representative
  • objections by the examiner require a compelling response by the agent representative

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Stanford Loses Patent battle Because Researcher Signed Visitor’s Confidentiality Agreement When Visiting a Private Lab

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Universities need to be very careful about what agreements they have researchers sign, and especially vigilant with respect to consulting agreements signed in the course of joint ventures between the university and industry.

In Stanford v. Roche, both parties claimed ownership of the IP in the research and technology related to a procedure for calculating the amount of HIV in a patient’s blood. This technique allowed doctors to determine whether a patient was benefiting from HIV therapy. Roche commercialized the technique in HIV kits, which are used in hospitals and AIDS clinics worldwide. The dispute came about because the Stanford researcher signed a Copyright and Patent Agreement (CPA) when he began his employment with Stanford, assigning all his IP rights resulting from his employment, to the university. Stanford entered into a consulting relationship with the private lab that originally developed the technology, to improve the methods for quantifying the HIV in a patient’s blood. When the researcher visited the facilities of the private lab, he signed another agreement, unaware that it conflicted with the earlier agreement he had signed with the university.

This ‘Visitor’s Confidentiality Agreement (VCA)’ assigned to the lab all future IP developed as a consequence of his access to the lab. Roche subsequently acquired the ownership of all the lab’s IP. The university was unaware of this agreement. When the process was commercialized by Roche, Stanford University sued for breach of patent rights.

In the end, Roche won, as confirmed by the Supreme Court of the United States.

Read the article here.

Take away:

  • Consultants must take care that they do not sign conflicting IP Transfer agreements.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Third Party Experts Should Enter Into Consulting Agreements Which Include Robust Confidentiality and IP Transfer Provisions

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Read the article here.

This article notes that people “in the renewable energy and clean technology fields regularly need to speak with others outside their company for solutions to ongoing research and development problems.” The problem is how to protect confidentiality and company IP when engaging in such discussions. The solution lies in entering into a consulting agreement with all third parties that includes clear provisions on confidentiality and ownership of resultant IP rights. It is especially important that the innovator company own all IP in anything which results from the consultation, since that is why they are paying to consult with the third party.

Situations which give rise to these problems include speaking with academics; outside experts, technical consultants and engineering firms; equipment builders, vendors and subcontractors. The consulting agreements should be tailored to each type of consultant and the types of IP likely to be generated by each consulting relationship.

Read the article here.

Take away:

  • Innovators should not seek third party advice without having the third party enter into a consulting agreement. The agreement should deal with confidentiality, non-competition and IP issues.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Unless the Consulting Agreement Contains an IP Transfer Provision, the Consultant Will Own All IP Developed During the Term of the Agreement

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Read the article here.

Two companies claimed to own patents and other rights in systems and devices for testing blood samples. The two companies competed directly with each other. Their claims stemmed from the actions of one employee (later a consultant). This employee had worked for company ‘A’ for 15 years. He then resigned and entered into an 18-month consulting agreement with the company. The consulting agreement continued several of the restrictive covenants of the employment contract, including confidentiality, non-solicitation and non-competition obligations. The non-competition covenants were to expire 18 months after the execution of the consulting agreement, which expired at the same time. Unlike the employment contract,the consulting agreement did not include any assignment of patents or ownership rights in IP developed during the term of the consulting agreement. A few months after the consulting agreement expired, the consultant filed patent claims, which he subsequently assigned to a company later acquired by company ‘B’, the other party to the lawsuit.

The court held that the consultant retained ownership in the IP developed over the time of his consulting services with the company, because he had not assigned it to them under the consulting agreement.

Since the employment contract had expired, and the nature of the relationship between the parties had changed, the court declined to ‘read the employment contract terms into’ the consulting agreement.

Read the article here.

Take away:

  • When employees resign and enter into consulting agreements, it is important to ensure that all restrictive covenants continue in effect, and that the consulting agreement contain an IP transfer agreement similar to the one contained in the employment agreement.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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