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An Employer’s Legal Rights When An Employee With First-Hand IP Knowledge Quits

Many employers hold vast amounts of intellectual property they would do anything to protect. Sooner or later, employees with potentially damaging knowledge of the IP will quit or retire, opening the door for other companies to hire them. Are they legally obligated to keep your trade secrets close to the chest? Can they divulge information not considered intellectual property? What legal rights do employers have in these situations?

The best defense is a good offense, or so they say. In IP law, that means creating contractual obligations for new hires to prevent them from finding a competitor or jumping ship within a certain timeframe. The law allows employers to do this. For example, a business contract might stipulate that an employee with intimate knowledge of IP cannot gain employment with a competitor for several months or years after a contract ends — whether that end is voluntary or not.

A lawyer with employment firm said, “It’s necessary for most employers with significant IP assets to ask employees to sign NDAs in order to prohibit the sharing of trade secrets. This might make litigation easier when those secrets are divulged, but even without the NDAs, this type of activity is both unprofessional and unlawful. Sharing classified information can put someone in legal hot water, but it can also guarantee no one else wants to hire them in the future. Trust is tantamount for employers with IP, and you never trust a poached employee or someone who gave up his last company’s secrets.”

An equally large concern is what to do when an employee leaves one company to start their own. This can be quite hectic when the employer finds out, especially if the employee in question plans to be a competitor. This is because the soon-to-be-former employer will have learned a lot while employed at your company. Rest assured that any trade secrets, trademarks, and confidential information is still protected legally. But it’s important to keep in mind that general information derived from training is not. 

The employee might plan to take clients to the new company, which may or may not be a breach of the law. The employee cannot take client information or use the email for the old company to steal clients. This means all communication must be done outside of work and using only information available elsewhere. That’s why it’s so important for businesses using IP to keep communications and important data at a brick and mortar location — especially during these uncertain times, when many employees have started to telecommute to work. Virtual employment is a bad idea for most companies who have a vested interest in certain types of information.

When in doubt, contact a specialized IP, business, or employment lawyer. These individuals can help shed light on the details of your contracts or expose someone else’s liability where none was obvious. You might have incurred financial damages when your employee left the company, and you deserve compensation for those losses.

Companies Worry About Russian Hacking And IP Security

Intellectual property usually represents information — and information can be digitized. Once that happens, it can be stolen through a variety of means by expert hackers. Many companies around the globe have become increasingly concerned about cyber warfare and how it could affect business and the overall economy on a global scale. Are they worried for good reason? The easy answer is “yes.” That’s because Russia is already using IP as a wartime tactic. 

For example, Russian doctrine was recently amended to say that Russian companies no longer have any liability related to IP thefts from “unfriendly” countries. In other words, the motherland will stand by companies that steal from its political adversaries. This is a huge gambit on Russia’s part, and could change the way Russian companies approach business in general. 

It goes beyond the simple implication that stealing can occur without consequence. Many forms of IP aren’t protected because they’re so widely available. For example, music can be easily downloaded for free by those willing to risk steep fines or jail time. Let’s say a film’s producers found the perfect song for their movie. Normally, they would approach the musical artist to obtain the rights for that song. But Russian producers can simply find the song and use it without worrying about the ramifications.

These tactics are a clear response to the sanctions imposed by western countries, and the departure of many companies from Russia — like McDonalds. 
But Russian companies could go as far as they want if President Putin opens Pandora’s Box even more. Imagine what would happen if a Russian entrepreneur used McDonalds logos and icons like Ronald McDonald to build their own copycat business model. There’s a lot of IP out there, and much of it can be easily stolen because it can’t be easily protected. The future implications are enormous — especially if other countries begin acting the same way by employing similar tactics.

Does Declaring Bankruptcy Change Intellectual Property Rights?

When a person declares bankruptcy, it means they’re out of money. You might already have an idea of what happens when a person goes bankrupt. Any large assets — such as a personal vehicle or home — will be sold to pay creditors as great a sum as possible before the court wipes the remaining debts clean. But what happens when your primary assets are intellectual properties. Does the law force you to sell them?

The short answer is this: it depends on whether or not the IP in question is exempt by law.

But there are a number of scenarios regarding IP and bankruptcy. Let’s say, for example, you license a particular IP from an individual who then files for bankruptcy. That license will be considered by law to be an executive contract — so long as it’s exclusive to you. There are a couple different options in this case. You can sue in court for breach of contract in order to have the license terminated (which would eliminate any need to continue paying royalties for the IP). Or you could keep your rights to the IP and continue to uphold the contract. Usually, there’s no reason not to take the latter option.

If the reverse were to happen — the person who purchased the IP entered bankruptcy — then it would make far more sense from a legal standpoint for the other party to terminate the contract (because they won’t be paid for licensing it out). 

Generally speaking, let’s say you own an intellectual property worth nothing right now, but you expect it to become valuable in the future. You go into bankruptcy. Do you have to sell that IP?

Here’s what you should know: you have the right to sell IP during a bankruptcy proceeding. The court overseeing your case will need to approve your sale, but overall, that power to sell an asset to pay creditors is yours. Creditors also have rights and might ask the court to force you to sell an IP. More than likely, a creditor who knows about a valuable IP you haven’t yet sold will try to take out a security interest on that property. 

What is a security interest? Essentially, the interest is placed on a particular asset by a creditor to say “this is collateral for the loan we gave you, and it’s ours now.” The security interest can be placed on many assets, like a home or car, but is usually placed before a bankruptcy and not afterward.

As with all forms of business litigation, the plaintiff is required to prove his case in civil court. The burden of proof is always on the plaintiff, and not the defendant. The good news is this: that burden isn’t as great as it is in criminal court, and the plaintiff need only convince the judge or jury that the facts make the argument more likely to be true than untrue. 

Riot Games Sues Imba Network For Stealing “League of Legends”

The popular PC game League of Legends has inspired millions of players since its release by Riot Games in 2009. The multiplayer online arena game was novel when it first released, pitting two teams of five players against one another. During gameplay, each player controls a “champion” while other fighters spawn across the map. The player’s goal is to push toward each point, eventually taking down the opposing side’s “nexus.”

Vietnamese video game studio Imba Network allegedly replicated this formula with I am Hero: AFK Tactical Teamfight. Although video game studios routinely use the formulas of other popular games, copyright laws prevent them from using character names, designs, or mythology — all of which Imba Network allegedly did, according to the lawsuit.

For example, Riot Games compared a slide of its own character, “Tomee,” with one from Imba’s, Teemo. The backstories for each character seem nearly identical, suggesting copyright infringement. Reviews for I am Hero also noted similarities between the two games, calling out the Vietnamese studio for theft.

Riot asked that Imba be prevented from selling I am Hero. It also requested $150,000 in damages for the breach of copyright law.

Riot’s parent company Tencent previously won a lawsuit for copyright infringement against Moontoon for their game Mobile Legends for similar reasons. 

Riot Games was recently embroiled in a separate class-action lawsuit for gender discrimination after a 2018 filing. The company agreed to settle the case for $100 million. 

Former employees Melanie McCracken and Jess Negron said the Riot Games workplace was rife with sexual harassment, which led to investigations by the state of California. Popular gaming news site Kotaku likely inspired the inquiries after publishing an expose on the workplace atmosphere over at Riot Games.

Attorney Genie Harrison said of the win, “This is a great day for the women of Riot Games — and for the women at all video game and tech companies — who deserve a workplace that is free of harassment and discrimination.”

The Case: The Theft Of Teenage Mutant Ninja Turtles

In June of 2018 the plaintiff (Viacom) filed motions for default judgment in an ongoing case and it was granted by the court. Viacom Int’l Inc. v. Mark Anthony Baca & Guardian Anti-Bullying Campaign, Inc was conceived as a way to prevent the defendants from continuing to sell merchandise and perform a live action show based on the same characters, for which they had not obtained the rights.

Viacom is the company that owns the Teenage Mutant Ninja Turtles and licenses merchandise. It never sold these rights to the companies that stole them. The defendants are primarily responsible for the production of Ninja Turtles Live Action Parody, but as Viacom argued in court, the production in no way resembles traditional parody, nor does satirical content (if it was indeed satirical) provide the company with the legal option to sell related merchandise. There is no social commentary or criticisms. 

The courtroom brief’s “admitted and undisputed facts” acknowledge that “Defendants knowingly, willfully, and confusingly made use of Viacom’s well-established and famous trademarks and copyrights in the Ninja Turtles, with the intent to trade in on the goodwill associated with Viacom’s copyrights and trademarks.”

The trademarks originally found fame in New Mexico.

The brief also describes that the defendants ignored cease and desist orders, and requests, to remove content over several years.

We’ve covered similar lawsuits in the past, because companies have a penchant for suing artistic creations that seemingly infringe on their own. But it’s a delicate topic, because parody — that is, an exaggerated imitation for humorous effect or one that provides a satirical commentary on the content itself — is a protected form of art. Parody is easy to spot. For example, the TV show Family Guy imitates people, places, situations, and other TV shows all the time. Another common example is South Park. Everyone wonders how the creators of these shows can possibly get away with it or if they have permission from people who they tease. They don’t.

If an artist imitates another artist’s work and produces something very similar, though, and fails to comment on the original art or even make fun of it to comedic effect, is it parody? The answer is no. And that’s when something starts to be defined by theft. Stealing will result in a lawsuit.

Parodies aren’t always protected, depending on the circumstances or message conveyed. For example, if they parody is discriminatory in nature, it ceases to convey meaningful commentary and the original owners can still sue. 

Still parody isn’t always parody if the original work is stolen outright. You can’t always steal the exact characters or content. A successful parody will take the content and transform it in some way. 

Another reason that parody is illegal is if it erodes the market for the original work. This usually doesn’t have any effect on a lawsuit, because if the parody itself becomes “bigger” or more popular, then people are far more likely to go find out where the parody came from — and buy the original so they know more about it.

Big Intellectual Property Mistakes Made By Businesses

Building a big business is the dream of many, but one big problem with finding success is that everyone else wants to tear you down — and they usually do that most successfully in court. The bigger your business becomes, the more likely it is that you get caught making a mistake you didn’t even realize you were guilty of. Here are a few mistakes your business might be making right now.

One of the biggest mistakes that a business might make is two-fold: Either you don’t know whether your products, services, brand, or logos can be protected, or you don’t know that yours already infringe on someone else’s protected IP. Regardless of which situation you find yourself in, these are costly mistakes. You might be sued, or you might have to sue someone else.

The most obvious solution? Make sure to search for registrations or trademarks that might seem similar. Hire an IP lawyer to help you sort out the details. And be sure to register your own trademarks for additional protections.

Did you unveil an invention prematurely? Even tech giants are guilty of this one. Once that reveal takes place, everyone knows you have tech to steal either in or out of court. Be sure to file a patent application to protect your idea before you bring a new product to market. 

Maybe your business model doesn’t even consider intellectual property in the first place! These protections prevent other companies from stealing your brand when it becomes successful. And when we say “steal,” keep in mind that’s an umbrella term that can mean any number of things. Maybe another company likes your logo and realizes you haven’t filed any protections. They might alter it just enough to escape justice. 

Not sure you have any IP that needs protecting? Almost certainly you do. And it saves money to ask an IP lawyer what can be done right now, versus waiting until the worst happens.

What Are The Criminal And Civil Liabilities For Breaking Intellectual Property Laws?

You live in one of the richest, most developed countries on the planet — and so you’ve probably heard news about one company suing another for copyright infringement. Perhaps you’ve heard about an inventor suing a company for violating his patent protections. Or maybe a writer sued a TV producer for stealing a book’s ideas to use in another medium. These are examples of civil litigation, though. Does anyone ever go to jail for breaking intellectual property laws? Are there criminal penalties? Where does the law stand? These are the questions we hope to answer.

Remember VHS and DVD? Yeah, neither do we. But anyone who can catch those memories will recall those copyright infringement notices at the beginning of each press of the “play” button. Hundreds of thousands of dollars in fines for each violation plus the possibility for years of incarceration. 

Actual damages paid for violations are normally much smaller in civil court. Generally, criminal penalties are only applied when such violations are considered “willful.” Does that mean downloading a TV show or book without permission from the creator could land you in jail?

Technically, yes.

But realistically, that almost never happens. The people most likely hit with criminal copyright infringement penalties are the ones who are responsible for websites like The Pirate Bay. They’re the ones who make these thefts not only possible, but easy. 

Do you use a torrenting application to steal this type of content? You’re probably still safe — although internet service providers routinely watch out for big downloads by individuals (and more importantly, they know exactly what you steal). That means that this type of theft could make it more difficult to find a provider after the first one dumps you for too many infringements.

Now, let’s say you’re not only using torrenting applications, but are providing extra bandwidth to make the content even more accessible through uploads. Most pirates are content with downloading, but some go out of their way to disseminate the stolen materials for others. These individuals (or sometimes groups) are far more likely to see criminal prosecution for their actions. 

One federal case recently concluded with a guilty plea from U.K. citizen George Bridi. United States Attorney Damian Williams explained: “As he admitted in court today, George Bridi participated in an international video piracy ring that illegally distributed worldwide on the Internet nearly every movie released by major production studios, as well as television shows. Bridi circumvented copyright protections on DVDs and Blu-Ray discs to illegally share movies online, but he and his crew could not evade law enforcement scrutiny.”

Sound like you? Then you could be in trouble.

Criminal defense firms like understand the differences between criminal and civil proceedings — and they have a good idea of what to expect and when. Not sure that the lawman is after you for possible breaches of someone else’s IP? Not to worry. Consult with a criminal defense attorney to find out more about the laws where you live. Keep calm and don’t speak with the police or investigators without counsel present. 

The Most Common Misconceptions About IP Law

First and foremost, any questions you might have about intellectual property law should be answered by an experienced lawyer. Internet research might give you a basic understanding of IP law, but it cannot replace years and years of dedicated education. So, you think you know IP law? Let’s find out. Here are a few of the most common misconceptions.

So you have this great idea for a new invention. To your knowledge, it seems like no one else has released a prototype. You know what to do: get a patent. Your idea is protected, right? Almost. For starters, your idea is only protected for so long. Patents expire. More importantly, are you looking for an American consumer base or a worldwide consumer base? American patents only protect your idea in America. Unfortunately, you’ll need to make a different patent filing in every single country where you might want to release the product! 

Many business owners believe that the law gives them the rights to intellectual property created by employees when that IP is devised on the job. This is not the case. Your contract with that employee needs to say that you own that IP. 

You were struck with a copyright claim because you used someone else’s IP — but you didn’t profit from it. For example, let’s say you’re an artist who draws Dragon Ball Z characters (yeah, you’re one of those fanboys or fangirls). You think you have a defense because you never sold or profited from any of the drawings — but you gave them away for free. It could still be infringement depending on how unchanged the art is. 

You’re more likely to be protected from copyright claims in this area of IP law when your art doesn’t look anything like the original. A person is far more likely to be sued for this kind of infringement when the art is professional. If your friend Joe is a professional painter and you start giving away reproductions of the same art, you’re in legal hot water.

What Types Of Technology Are Protected By IP Law?

The answer to our question is actually quite simple. Almost all types of technology are protected by IP law — sort of. Did you write an algorithm? IP law protects your ownership of that code. Did you write a book? IP law protects your words from plagiarism. Did you come up with a new recipe? IP law protects your secrets, even if you must disclose the ingredients to the public. But what about when you release a new invention? Are you protected?

Let’s say you invented the lightbulb. That’s a big deal! But is your invention protected against theft? First, it depends on whether or not you registered your patent. Without taking that step, there’s no real proof someone else didn’t come up with the invention. Then again, let’s say you invented the Amazon Echo’s algorithms. Are they protected? Yes — and those protections are automatic (although a smart business will register them anyway for added protections).

Back to the lightbulb. Although the patent will protect the “idea” behind your invention from being stolen, it doesn’t protect it forever. After all, there are a ton of companies out there manufacturing different kinds of lightbulbs and none of them are named “Edison.” For one thing, monopolizing a specific market is illegal — and so legally, patents need to expire to increase the chance of competition in the future.

The expiration allows anyone else to make the same or similar product, so long as they didn’t outright steal its design. That’s because its designs are considered a trade secret — and those are protected under IP law as well. There are generic brands of cereal, for example, but none of them are exactly the same as the name brand originals.

Not sure whether your business or services are protected by IP law? You can always shoot a question to our friends:

The bottom line? Almost every type of technology is protected by IP law — at least at first. Certain protections can expire, such as the initial idea. Copyrights expire too. For example, most books become part of the public domain after a certain period of time following an author’s death (usually 70 years). This is true of any copyrighted materials. Because of the length of time before such copyrights expire, though, it’s unlikely a 70-year-old algorithm would prove useful to anyone — or that your corpse would feel as if its rights were violated.

Even though all technology can be protected by IP law, we still recommend speaking to a lawyer about strengthening these protections. Copyright and trademark protections kick in automatically, but deterring theft is important. Someone will always try to mimic popular brands, and these reproductions are almost always considered theft in court. Lawyers can help properly register these protections for additional security.

One thing you should always remember: Always take ownership of your own ideas. Companies will try to buy them. People will try to steal them. But they are, and always will be, yours — as long as you don’t give in.

Why Is Intellectual Property So Confusing?

Intellectual property is confusing because the regulatory laws are confusing. There are different types of intellectual property. Depending on which type you’re dealing with, you might need to file for different protections. Can you properly define the differences between a patent, copyright, trademark, and trade secret? Most people can’t, but that’s why we have lawyers — and legal websites like this one!

Another confusing aspect of intellectual property: Are you protected automatically or do you have to apply for protection? It depends. 

A copyright is a legal protection provided for published works such as books, music, and some types of art. Most people don’t realize that copyright protections are automatic. If you write something, you have copyright protection — primarily because plagiarism is illegal. You can (and should) still register the copyright for additional layers of protection.

Patents seem less important these days because individual inventors usually no longer exist. Most inventions come from big companies that already have legal teams who know whether or not a patent is needed. Patents protect a new product idea from being stolen before the actual product makes it to market. The idea might also be called a trade secret.

Trade secrets are specific pieces of information that, when stolen, would damage a business. For example, take the cereal you eat everyday. You know the ingredients. Could you make it yourself? Of course not. The exact recipe is a trade secret. 

Last but not least, you have trademarks. These are also automatically protected. Another company can’t simply steal your brand or copy your logo. There are notable exceptions for brands that are dissimilar enough that consumers are unlikely to become confused. Delta Faucets are obviously different from Delta Airlines even though they have similar trademarks. Words and phrases can also be trademarked. 
The words “Intellectual Property” or IP are really umbrellas that encompass all of the aforementioned protections. IP is defined as an idea-based product or service. Computer algorithms are IP. Books are IP. Paintings are IP. How an invention was made is IP. The list goes on.