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Trademark Law and Employment Agreements

May 16, 2023

Trademark Law and Employment Agreements

Protecting your company’s intellectual property is critical to preserving its uniqueness and helping business owners stand apart from competitors. But should an employee decide to leave, how do you keep them from telling a competitor what they learned while on your payroll?

Employment agreements and Non-Disclosure Agreements (NDAs) may offer some protection for business owners and their trademarks. A skilled trademark lawyer can draft ironclad protections to help preserve your trade secrets.

Establishing Intellectual Property in an Employee-Employer Relationship

Determining who owns the intellectual property (IP) an employee creates in the course of their employment isn’t always straightforward. The creator of the IP is usually the one with ownership. However, when the employee is creating IP on behalf of an employer, the employer has reason to believe that the IP belongs to the business.

In some cases, the IP remains the company’s property even after the employee leaves. In others, the employee who created the intellectual property has the legal rights to it, even if they created it as part of their job and even after leaving the company.

Employment agreements can protect both business owners and employees who create IP on behalf of the business. However, it’s best to consult with an experienced attorney to ensure you have these protections in place before the employee starts working. The comprehensive team of business attorneys at Quadros Migl & Crosby are experienced in corporate law, corporate litigation, and trademark law. Their unique team approach will help protect your business from negative outcomes in future disputes.

Drafting Employment Agreements to Preserve Intellectual Property

Suppose that you — as a business owner — plan to hire an employee or team of employees specifically to create unique products, systems, or services on behalf of the business. Working with a Trademark attorney to establish clear ownership of IP and drafting an employment agreement is a good idea. The agreement should establish who owns the IP to avoid any contention about ownership after the IP’s creation.

Alternatively, an employee could create IP without an employment agreement in place. In such cases, an employer may still own the IP, but they must give sufficient consideration to the employee who created it.

For example, suppose that a graphic design company hires an employee to create logos and websites, which the employee does. And in the course of their employment, they make unique creations and ad logos. These logos are different enough from the existing ones to be considered a new trademark. In this case, who owns the new logos: the graphic design company or the employee?

An argument can be made for either party to have ownership over the logo, and these disputes can end up in court. An employment agreement establishing ownership over all logos created at the design company can avoid these situations.

Employment Agreements to Protect Existing Trademarked IP

Employment agreements can be enacted prior to hiring or after the employee begins working at the company. Using the above example of the graphic designer, the business owner may require new designers to sign employment agreements protecting the integrity of the designs.

Unique graphic design may set the company apart from others. Thus the logos can be considered trademarks eligible for trademark protection.

Logos aren’t the only type of IP and trademark creation eligible for employee agreement protection. Most businesses use some form of trademarked intellectual property, from customized software to a recognizable logo. Even the company’s website contains IP and trademarked material. Having an employee sign an agreement to protect business IP as part of a condition of hiring is fairly standard in many industries.

Drafting Employment Agreements for IP Developed by Employees

The business owner can also draft an employment agreement after an employee creates the IP. The goal of this is to prove sufficient financial compensation was provided to the employee for the company’s use and ownership of the creation.

At this point, both parties may negotiate the value of the new logos. The designer is entitled to fair compensation for the design company’s use of the design. In turn, the employer has a reasonable claim to the logos, as they were developed by an employee who was hired and paid by the business owner.

Your trademark and intellectual property attorney can properly value the newly created IP and draft an employment agreement. The agreement should establish that the employee has been appropriately compensated for allowing the employer to own their creations outright. Alternatively, it could allow the company to use the designs for a certain period, like a lease of the IP.

How Can a Texas Trademark Lawyer Help Your Business?

Learn more about how employment agreements can help protect your IP and preserve the integrity of your trademarks with a personalized consultation from an experienced Texas intellectual property and trademarks attorney. Contact Quadros, Migi & Crosby today to schedule an appointment.