Intellectual property is a critical corporate asset that can make or break a company. When that IP is in the hands of an IT contractor, follow these best practices.
Your company hires an IT contractor to develop a system that sales can use to get quotes from customers for a custom product built to their specifications on the spot instead of taking weeks. The solution gives your company a competitive advantage.
When the entrepreneur’s contract expires, a competitor hires her. Six months later, your competitor has an identical product created by the developer for your company.
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To prevent this type of IP nightmare from happening at your company, follow these tips to protect your intellectual property when working with IT contractors.
1. Check your counterparties
First, get to know who you’re contracting with before you retain them or even interview them. Is the contractor reliable? Does the person do their job well? Can the person be trusted with the private information you have entrusted to them? These questions can often be answered by companies that have previously worked with the contractor.
2. Require all prospective contractors to sign an NDA
Before entering into any contractual agreement with an outside contractor or even telling the person about your project, have the contractor sign a non-disclosure agreement obligating them not to share information related to your project with others. The NDA makes the contractor personally liable if he violates this confidentiality agreement.
3. Do a legal review of your IP before starting projects
Before hiring an independent contractor, you should include as many legal protections for your project in the contract as possible. It is wise to review the legal remedies available to the project and consult with legal counsel if necessary.
One step is to review the rules and regulations of the US Patent and Trademark Office to see how your project can be protected from infringement.
If you will be working with an offshore contractor, it is also advisable to check the intellectual property protection rules and regulations in the contractor’s country so that you can spot the differences between the country where your company is based. If there are differences, the contract should include the IP protection for your project that meets the rules and regulations of both countries.
4. Document that your company owns the contractor’s work products
The contract should clearly state that all rights to the work product, including copyright, are transferred to your company. If you fail to contract these rights appropriately, the developer may claim that they also have legal ownership of the project deliverables they helped create for you.
“By default, copyright belongs to the author of the copyrighted work,” said Matt Kress, an attorney at KreszLaw, a technology and intellectual property law firm. “By default, copyright belongs to the person who wrote the code. Here, that author is a third-party developer, not the company, and thus copyright belongs to the developer by default. However, the contract between the company and the developer can be drafted to transfer the developer’s copyright in the company’s code. Technical contracts can be complex, so it’s best to seek advice on facts specific to your situation.
5. Control access to sensitive information
Anyone working on a patented project may not need to know every detail about it. For example, if a person is tasked with writing a particular software module, that person may only need to know the specifications for developing that module.
6. Use thin client workstations and secure all code in the cloud
If you hire a contractor to write proprietary software, you can issue the contractor a company-owned thin client workstation that stores all the code it develops in a highly secure cloud workspace, with no options to store data on the workstation or to extracting information from using flash drives. Workstation usage, including flash drive usage, can be monitored and reported 24/7 by the IT department.
7. Limit the number of project team members
The fewer people who know and work on your patented design, the better it is protected. This reduces the number of people who could intentionally or unintentionally leak IP information to others outside the organization. You can also talk to HR or IT about the best way to train your full-time employees on why it’s important to keep IP secure.
“Well-intentioned, honorable people sometimes clash not because they intend to do harm, but because they don’t know any better — but they clash anyway and cause turbulence,” Kress said. “But friendly reminders can go a long way. Providing training to HR and new hires on what intellectual property is and what intellectual property belongs to the company and repeating these trainings throughout the year helps remind employees that the intellectual property they encounter is also used by them. which they contribute belongs to the company.”
In addition to these tips for protecting your IP, download the TechRepublic Premium IT Consultant Code of Conduct to create a standardized ethical, professional, and behavioral code of conduct for your employees, contractors, and subcontractors.
7 tips for preventing your IP from walking out the door with contractors