IP Concerns in New Hires: with talent comes liability

In a fast-paced technological landscape, companies are always looking for talent that can drive innovation and growth. However, hiring employees who carry awareness of intellectual property (IP) owned by previous employers can be a double-edged sword.

While hires bring valuable skills and insights, they also pose potential risks related to IP infringement by leaking your competitor’s IP to you, which could lead to legal liabilities and damage to your company’s reputation.

This particularly relates to trade secrets, know-how, unpatented inventions, and other confidential IP.

Understanding these implications and taking proactive steps is crucial for companies to protect themselves while fostering a culture of innovation.

IP-Conscious Hiring

Employees often develop extensive knowledge of their previous employer’s IP, including patents, trade secrets, and proprietary processes.

When they move to a new company, especially within the same industry, there's a legitimate risk of unintentional or intentional IP leakage.

The importance of IP-conscious hiring lies in its ability to:

1. Maintain Integrity: Ensuring that the movement of employees does not equate to the unauthorised transfer of sensitive information that the employee has agreed to keep secret.
2. Foster Innovation: Encouraging new hires to develop original ideas and solutions, rather than replicating past work. However, there is a balance to be struck between permitting the use of knowledge employees gain from previous work and the protection of ex-employer IP, those two circles will overlap.
3. Avoiding Litigation: Avoiding legal battles related to IP infringement which can tarnish a company’s image and financial standing.

Potential Risks and Liabilities

Hiring employees with knowledge of a competitor’s IP can lead to several risks:

1. Legal Actions: The previous employer might sue for IP theft, leading to costly and lengthy legal proceedings.
2. Financial Losses: Settlements or judgments in IP infringement cases can be substantial.
3. Reputational Damage: Allegations of IP theft can harm a company’s reputation, affecting customer trust and investor confidence.

Precautions and Best Practices

To mitigate these risks, companies should adopt comprehensive strategies, including:

1. Thorough Hiring Processes: Conduct detailed interviews and background checks to understand the nature of the candidate’s previous work. Clearly communicate the importance of respecting IP rights from the outset.
2. Robust IP Agreements: Have clear clauses in employment contracts about not sharing or introducing IP from previous employers in their work at your company.
3. Training: Conduct onboarding sessions for employees about IP rights and the importance of maintaining confidentiality of sensitive information.

By carefully navigating the hiring process, companies can harness the full potential of their employees while working to safeguard against IP-related risks. It's about striking the right balance between leveraging the wealth of experience that new hires bring and maintaining the integrity of intellectual property from their previous employers, keeping your business safe.