Employee's or employer's? Apple serves as a reminder of IP ownership in the startup sphere

In brief 4 min read

In a world of tech startups and innovation, securing IP rights has never been so important. The question of 'who owns what?' continues to present issues even to Apple Inc, as employees branch out to capitalise on creativity. Apple's recent claim against a former employee is a timely reminder of the fundamentals of IP ownership between employers and employees, and of tips and tricks to safeguard your inventions.

Key takeaways

• In Australia, the question of 'who owns what?' in an employment context will usually hinge on whether an invention or work was made 'during the course of employment'.
• The best method of protecting IP rights is by clearly setting out the rights of each party in an employment contract and in company policies. These should explicitly state the scope of the employee's duties, including any duty to disclose innovations or works to the employer. 

An Apple employee goes on a frolic of his own

Before the Santa Clara County Superior Court in California, a former Apple employee is trying to prove that an individual can plan a competing venture while still employed. Gerard Williams III, former chief architect of nine years for the custom processors that power Apple products, left to create startup Nuvia Inc, a company responsible for designing chips for servers. The sticky situation comes down to this question: was Williams entitled to plan this new startup while on company time? Apple doesn't think so. It also alleges that Williams was obliged to disclose to Apple 'extensions of the technology on which he was working', and could not claim them as his own.

Still in the early stages of litigation, this case will hinge on the specific facts of Williams’ planning while still at Apple and the activities of his new business. Again, though, it raises the question of in what circumstances does an employer own the IP in their employee's creations?

The Australian position

The general rule in Australia is that the employer owns any IP created during the course of employment. But the term 'course of employment' isn't so clear cut. The key factor a court will consider is whether or not the employee had a duty to create IP in the relevant field as part of their employment. Someone employed to create IP in the normal course of their duties is unlikely to be able to claim personal ownership in IP that is relevant to their work. However, an employee who is not employed to create IP, but does so, will have a greater chance of staking their claim. Much hinges on the way the employment contract is drafted – particularly, the duties of the employee.

A hypothetical creation

Consider a situation where a company employs Mr Inventive to design a software program to detect compliance risk in the marketing content of banks. The company would own the IP in the finished product (and all its drafts), as the creation has clearly been made in the course of his employment. The result would be the same regardless of whether Mr Inventive completed his work in business hours or thought of the solution on an early-morning run.

However, say Mr Inventive spends his lunch breaks developing a software program for his startup that converts one language to another, all while working on his company-issued computer. Is the employer entitled to the profits? The answer will depend on how broadly the employment contract defined Mr Inventive's software development obligations, but it seems unlikely. Despite Mr Inventive possibly being found to have wrongfully used the employer's computer and being subject to disciplinary action for misusing work hours, this does not affect the ownership of the copyright in the language conversion software.

What if Mr Inventive were also a budding stand-up comic and wrote some great material for the opening address at the company's annual retreat? Can the company lay claim to his comedic gold? The further we get from the duties he was required to perform, the less likely it will be that the employer will have an ownership claim. But if he were specifically tasked with writing the address, that could be considered an expansion of his scope of work, muddying the already murky waters. 

Actions you can take now

• It is important to document clearly an employee's duties and responsibilities in their employment contract, and outline whether the employer will own the resulting IP rights. Contracts may need to be tailored to particular job descriptions.
• Before striking out on their own, an employee should be mindful of their contractual obligations, and of any company policies relating to disclosure of IP and use of company resources.