It's important for businesses to understand how they create competitive advantage. It's also important for businesses to understand how to protect their competitive advantage.
Intellectual property, or IP, is the most common set of tools used by companies to protect their competitive advantage.
An IP Policy, or intellectual property policy, should cover all of the important functions in your business that might relate to creating or using intellectual property. The IP Policy should address all the different personnel and roles that interact with your intellectual property assets and IP rights.
So, what should be included in an IP Policy? Here's a list of several different sections that could be included in your IP Policy. These sections will vary depending on your specific type of company and strategic objectives.
Your IP Policy should help your employees understand why your company values intellectual property. This section can establish general guidance for your company related to the importance of identifying internal IP, managing the disclosure of IP to customers, suppliers, or other third parties, summarizing the goals of IP ownership, outlining typical terms for interacting with strategic partners, and so on.
Many companies are becoming more savvy and informed about the alignment that exists, or should exist, between its intellectual property and its business strategy. Strategic alignment requires collaboration and coordination among all stakeholders from the executive management team, finance, sales and marketing, operations, legal, human resources, and any other function of the company that influences or is impacted by the intellectual property rights of the company.
The IP needs and opportunities vary for every company. Some companies focus more on technology development and patent rights. Other companies focus more on branding and trademark rights. Other companies utilize a mix of patents, trademarks, copyrights, trade secrets, and other confidential or protectible intangible assets.
In some cases, it might be important for a company to also identify the types of policies, procedures, and rights that are not covered in your IP Policy. For example, some companies need much more extensive data privacy policies than what might be included as a section in the IP Policy. Other sections listed below that might warrant their own separate policy include the IP Committee, Innovation Disclosures, Standard Terms & Conditions with Suppliers or Customers, Open Source Software, Government Sponsored Research, Export Control Compliance, or any other section that is a primary focus of your business.
The scope of your IP Policy also might outline the geographic jurisdictions where this IP Policy applies or doesn't apply. Depending on the geographic distribution of your business, and variations in the applicable laws and IP practices, you might find it necessary to coordinate different versions of IP policies for different offices within your company.
Your IP Policy should outline who is responsible for creating, administering, updating, and enforcing the IP Policy within your company. This often falls on legal counsel but could also include representation from the executive team, the technology division, finance, or other areas of your company that are influential regarding intellectual property rights.
If applicable, your IP Policy also might outline who holds signature authority for IP matters within the company. This includes designating who has authority to grant power of attorney to any IP service providers engaged with your company.
You might find it useful to include a section, or an appendix, of commonly used words, phrases, and definitions. This helps employees reference the types of IP and actions that are frequently used in your business.
Your company should establish an IP Committee with authority to make decisions, including financial budgeting, related to acquiring, protecting, and commercializing the intellectual property or intellectual property rights of the company. Your IP Policy can help outline who assists with the IP Committee, and how the IP Committee functions.
As an example, your IP Policy might establish how frequently the IP Committee meets and the procedures for evaluating and processing intellectual property actions. It also might detail how frequently employees receive training on IP topics and procedures.
It might be surprising to learn that many potential IP issues are directly related to employees. The potential issues begin with the interview process and continue throughout the employment relationship until an employee leaves. Some issues even extend past that time.
At the early stages, some examples relate to visitor agreements and releases, as well as non-disclosure agreements for candidates. Upon being hired, employees should sign a number of standard documents. One of these is often referred to as a Proprietary Information and Invention Agreement, or PIIA. The PIIA outlines how the company will handle confidential information and ownership assignments for new inventions from the employee. On the topic of inventions, employee candidates should disclose prior inventions or rights owned by anyone other than the new employer.
At the time an employee leaves your company, the employee should sign an exit agreement or acknowledgement related to his or her compliance with all of the IP policies and procedures that were in place during the employment period.
Your company should implement standardized IP practices within any agreements used with independent contractors or consultants. The types of issues addressed in these agreements might include non-disclosure of confidential information, non-competition with your company, non-solicitation of your employees or customers, and ownership/licensing rights associated with any IP developed by the consultant or used by the consultant during the engagement with the company.
The reporting of IP strategy to investors should be managed by the IP Policy in order to create standardized performance metrics and communications with investors.
At a minimum, legal counsel should be involved in reviewing or drafting all agreements with suppliers. Experienced supply chain personnel and executive team members understand that every vendor or supplier relationship involves contractual terms and conditions, even if these terms and conditions seem benign with standard purchase order agreements or are incorporated from the Uniform Commercial Code (UCC).
As with supplier agreements, legal counsel should be involved in reviewing or drafting all agreements with customers. Customer agreements often include standard terms and conditions expressed by one party or the other. There are also many circumstances where the customer and the company might create a “battle of the forms” dependent on the order in which each party presents their own terms and conditions and the language within those terms and conditions.
Your IP Policy can help everyone in your company understand that healthy competition does not include using unfair or illegal tactics to access or use the IP rights of its competitors. Your team should be especially careful when hiring past employees from your competitors to make sure your company won’t be accused of using your new employee to disclose confidential information from their former employer.
Your IP Policy is also great place to express your company’s policy to respect the IP of other parties, generally, including any suppliers or vendors who engaged with the company.
Your IP Policy should clearly state the company's position about only using approved software and other IT resources. No employees, or equipment of the company, should use pirated or unauthorized software.
Related to software, your company should clearly establish its position clearly about whether or not employees are allowed to use open source software or similar resources. This can be especially important in development efforts of new products, because the inclusion of open source software could subject your new product to legally authorized access by unintended parties through the license terms associated with the open source software used in the development.
Ideally, your IP Policy will clearly outline when the company will own IP developed by its employees. Often companies have exclusive ownership of all IP authored, invented, created, generated, or otherwise contributed to the company and its products by any employee.
On the other hand, the IP Policy should also clearly state when your company will not assert IP ownership, especially in states or countries where laws restrict ownership claims by employers for inventions developed outside of an employee’s scope of work, unrelated to the employer’s business, and/or without the use of resource from the employer.
Your IP Policy should set a clear expectation around when an employee is obligated to disclose to the company inventions or other IP created by the employee. An Innovation Disclosure Form, or IDF, is often useful to help guide inventors in documenting relevant information about their invention.
IDFs are gathered and used by IP Committee members to evaluate the appropriate next steps for a specific invention—like starting patent protection or keeping a new idea as a trade secret. Innovation disclosures can also be used to help the company make decisions about when to allow publications or other public disclosures of new ideas.
Does your company want to create incentives for your employees to generate new ideas? If so then, you can set up an innovation incentive program that outlines the types of incentives (monetary or other recognition) inventors receive for different types of innovation activities.
Consider including an outline in your IP Policy to cover milestones like submission of an IDF, filing of a patent application, issuance of a patent application, selection of a breakthrough technology, achievement of a certain quantity of patents, publication of a technical paper, or presentation at an important industry conference.
Your company should train your employees on aspects of public domain assets, especially in the area of copyrights and trademarks. Without this knowledge, it's very easy for employees to create significant statutory and financial liability for a company.
Your IP Policy can establish a process for employees to report any unauthorized use of technology or inventions that should be maintained confidential or are subject to exclusive control by the company. Similarly, your IP Policy can establish a process for employees to report any potential uses of technology or inventions owned by other people, in order to limit potential liability of the company.
Government contracts and grant funding can provide a significant, non-dilutive source of funding for certain types of research, development, and commercialization activities. These arrangements also include substantial compliance and reporting issues that need to be followed in order not to jeopardize the IP created under such contracts and grants.
Your IP Policy can provide guidance to employees when there are opportunities to jointly enter into research or development with another entity. The specific types of policies might depend on the type of research, or the type of partner, your company is working with under the agreement.
Your Company should train employees on any potential issues related to export controls for its technology, technical data, or other information that might be subject to government control. This includes helping employees classify technology under any applicable statutes or regulations. It also includes training them to understand how broadly the terms “technical data” and “export” apply under these government restrictions (because they are inclusive than untrained employees would expect).
Additionally, export control compliance issues often come up in working arrangements with strategic partners or suppliers who provide access to their confidential information while working with your company.
Some companies are open to outside innovations and support the commercialization of technology received from outside the company. Other companies are very controlled in their process to limit outside inventions and the potential liability associated with disclosures from outside inventors.
Your IP Policy should establish minimum criteria related to an open innovation policy, including information related to submission terms and conditions, submission procedures, review guidelines, intellectual property rights and ownership, and potential commercialization strategies.
Every company gets to decide how structured it will be with its intellectual property. At a minimum, a basic IP Policy can help you set expectations of performance from your employees. When used correctly, your IP Policy can guide your team to create and protect some of your most valuable assets that make up your competitive advantage.
Intellectual Property Rights (IPR) are important to people for different reasons. Your role and objectives will influence your view of intellectual property.
A book chapter on copyrights, from Utah Business Law for Entrepreneurs & Managers (2016, The Utah Bar Association, Business Law Section)