Navigating intellectual property (IP) as General Counsel can be difficult. There are so many different forms of IP, each of which comes with its own complex set of rules and requirements.
As IP professionals, we often see the same mistakes being made, from self-publishing inventions to inadvertently using copyright material. Rectifying these mistakes through litigation or a negotiated settlement is almost invariably expensive and time consuming, and sometimes impossible. Even more frustrating is the fact that most mistakes could easily have been avoided with a planning from the outset.
In this article, we discuss some of the more common IP traps for General Counsel and ways to avoid them.
1. Forgetting to Capture Employee-Generated IP
Employees generate new IP all the time. They are constantly discovering new ways of doing things, making small but meaningful tweaks to products and processes and creating new works. If you are not capturing these, your business could be missing out on valuable IP assets and not fully capitalising on its investments.
Hold regular check-ins with technical teams and educate staff about IP
The volume of activity within a large organisation makes keeping tracking of and even identifying these innovations difficult. To improve your visibility – and your team’s focus on IP – you might consider holding regular meetings with technical staff, or their supervisors, to discuss what they’re working on. If technical staff are too busy for more meetings, perhaps periodically join any existing team meetings to learn about their work. Other strategies include educating staff and providing regular reminders about the importance of sharing (potential) innovations or, simply having a welcoming, open door policy to everyone who thinks they may have something valuable.
Even small, non-obvious improvements may qualify for patent protection.
In that vein, the bar for patent protection is lower than some General Counsel may realise. The standard for patentability is “new and inventive”, not “new and groundbreaking”. An inventive step can be found in seemingly small improvements and changes, with even a small spark of ingenuity often being enough. All that is required is that the invention was not obvious to a skilled technician. As a rule of thumb, ask yourself whether the innovation addressed a problem in a new way: if it did, it may be worth talking to a patent attorney to find out if it can be protected with a patent.
File for patents or registered designs before publishing or commercially using
Remember that you can lose your ability to obtain a patent (or a registered design) if you publish the work, or commercially use the invention, before filing an application. While some countries have grace periods (for instance, you can file a patent application in Australia up to 12 months after making the invention public), they are not available in all countries. It is far better to apply for a patent or registered design early on, otherwise you may effectively extinguish those IP rights forever. You therefore need to be proactive and regularly check in with employees to ensure that all valuable IP rights are being identified and protected in a timely fashion.
2. Not Keeping Pace with Developments
Your protected IP assets need to grow and move with your operations. A patent that was filed 10 years ago may no longer cover what the business is doing today as product features or processes change. The same applies to registered designs. Logos and branding are often modernised. These incremental changes add up, and it’s not uncommon, and very frustrating, to find that copycats don’t actually infringe existing IP rights. It is important to regularly compare the commercial offerings of the business with its IP portfolio to ensure that they do not drift apart.
3. Overlooking IP Ownership and Assignments
Establishing entitlement to IP assets is more complex than many realise. Generally, IP assets are created by people; the rights to those assets need to be assigned to the business. There are a few mechanisms for effecting these assignments. IP may be assigned prospectively through a general assignment clause in an employment agreement or a consultancy agreement. It may also be assigned through a retrospective assignment that specifically refers to the IP asset.
If you do not own an IP asset, you cannot register it as a patent, design or trade mark. Worse still, you may find consultants using what you had assumed was the business’ IP or authorising your competitors to use that IP.
Include broad IP assignment clauses in employment and consultancy agreements
You should ensure that all employment agreements include a broad IP assignment clause in favour of your business. The rights to all inventions, designs, trade marks and copyright created by your employees should be automatically assigned to the business. This is important, though it is not enough on its own to protect you. In practice, things are often more complicated.
Define employees’ duties clearly to capture all relevant innovations
Many employees create works both in the course of their employment and on their own time. Distinguishing between the two can be difficult but it is critical, as generally only works created for the business are owned by the business. You can significantly reduce this risk by clearly defining employees’ duties in their employment agreements to capture works they create that are relevant to your business. Similarly, if you have employees whom it is anticipated may contribute to developing inventions, ensure their employment agreements explicitly state that creating inventions is an expected part of their duties, to maximise the likelihood that the business will be the owner of such possible innovations.
Secure express IP assignments in contracts with external collaborators
It is also common for many people to collaborate to produce an invention, design or creative work. However, not all contributors will be inventors, designers or authors. It is important to understand how the IP asset was created, and each person’s contribution, to ensure that the business has assignments from all relevant contributors. This is more straightforward where all collaborators are employees with assignment clauses in their employment agreements. However, if employees were assisted by a third party – such as an external consultant who has not assigned their rights to the business – that consultant may retain an ownership stake in the asset. Avoiding this issue requires planning. Employees should also be warned about the danger of informally discussing projects with external consultants. If a consultant is brought in, their role should be clearly defined in advance, they should stay within the confines of their engagement, and their consultancy agreement should contain confidentiality/non-disclosure provisions and clearly capture and assign (to the business) any IP assets that they generate while working for the business.
When retaining creative agencies like brand consultants, graphic designers, artists and photographers, you should ensure that the retainer agreement includes an assignment of any IP assets that they generate for the business. This applies to brand names, logos, slogans and other marketing materials. In some situations, IP assets may automatically vest in the company, but this does not apply to all works in all circumstances. For simplicity and peace of mind, it is better to have the assignment expressly set out in an agreement.
4. Neglecting Lifecycle Management
If IP and/or innovation is the lifeblood of your business, you need to be strategic about how you manage your portfolio. Once IP assets like patents and registered designs expire, revenues can drastically decline as competitors are free to enter the market with cheaper prices.
To safeguard against this possibility, whenever developing improvements to your existing offerings, your technical staff should be specifically looking for innovations that may be protectable with either a patent or design registration. For sophisticated organisations, deciding which innovations to explore and develop, patentability and design registrability are as important as functionality. If an innovation cannot be protected, it may well have little practical value to the business, and you should think seriously before pursuing it any further.
Commercially, try to transition your customers to improved products or services that are covered by new IP rights well before the rights to your existing offerings expire. While competitors may be able to exploit your old inventions as patents and registered designs expire but, by being strategic, you can develop your customer’s appreciation for your “new and improved” protected technology and keep them from purchasing your competitors’ outdated technology.
5. Skipping Sophisticated Freedom to Operate Searches
All too often, businesses find out very late into a product’s development that their new product or service infringes another party’s IP rights. At this stage, it can be extremely difficult, expensive and time consuming, or even impossible, to work around those rights. However, it is often the case that, with knowledge of those rights and/or limitations from the outset, a simple tweak early in the process can easily resolve the issue or, on occasions, show that the product/service is unlikely to be worth pursuing. Either way, spending a little bit of time and money conducting a freedom to operate (FTO) search at the beginning can result in significant savings in the long term.
A proper FTO search looks beyond the bare patent, design and trade mark rights as they exist on the register. By keeping a few things in mind, you can bring a higher degree of sophistication to the analysis.
- First, there is often a difference between what a judge finds is an infringement at the end of litigation and what a rights holder believes is worth litigating. Ideally, your products and services should be configured so that they are as far away from others’ IP rights as possible to minimise the risk of you having to defend infringement proceedings. Successfully defending infringement proceedings is seldom preferable to avoiding litigation in the first place. Reaching the best solution often involves a creative collaboration between technical and legal staff.
- Second, finding relevant IP rights is not necessarily a roadblock for your project. Registered IP rights are often broader than is allowable. If you find IP rights cover a product or service which is important for your business, invest the time to assess the validity of those rights. You may find that you can challenge and limit, or even invalidate, those rights, thereby clearing your way.
- Third, if there really is no way around an IP right, you can always approach the rights holder to ask for an assignment or licence. The owner may well have little interest in those rights anymore and gladly allow you to use them. It is always preferable to make an approach before you start your commercial activities, as having the ability to just “walk away” from the deal will allow you to drive a harder bargain than if you are facing potential infringement proceedings. It is also useful to come to negotiations forearmed with possible invalidity arguments as these can often be used as leverage to secure a licence at a lower cost.
6. Assuming all IP Rights Are Valid (and Created Equal)
As granted patents, registered designs and trade marks are often found to be invalid, you need to invest the time and money in preparing/obtaining good quality IP rights. Applications need to be drafted by a professional that you trust. It is an unfortunate reality that patents for great inventions are frequently invalidated, or too easy to work around, due to technical problems with the way the patent is drafted. If an IP asset is worth registering, it is worth preparing the materials required to obtain those rights with care and precision.
When acquiring IP rights from a third party – for example, where merging with a business with an extensive IP portfolio, or partnering with another organisation to take advantage of their IP, it is crucial to do due diligence around the validity and scope of those patent rights. If you fail to do so, you may well find that you have paid a lot of money for rights that are effectively worthless.
7. Failing to Protect Confidential Information
While confidentiality agreements are important, in practice they are difficult to enforce against former employees. It can be difficult to prove that an employee used or disclosed specific information, and that they derived the information from your business. It is also difficult to prove that information is confidential. It is not enough to baldly assert that the business considers the information confidential. Unless the information is explicitly cited in a confidentiality agreement, you will need to satisfy a court both that the information has the necessary quality of confidentiality and that the employee knew that it was confidential.
Restrict access to sensitive data; encrypt files and use read-only permissions
Rather than suing a former employee to try to plug a confidentiality leak, it is better to stop leaks happening in the first place. There are many ways to stop employees leaving the business you’re your confidential information. Limit their access to confidential information and encrypt sensitive information so only authorised employees can view it. Where an employee requires access, consider restricting the access to only a portion of the information, so they don’t see the complete picture.
Evidence that your business has adopted such measures to protect confidential information will also assist in persuading a court that the information is in fact, valuable and confidential, and that your (ex) employees were aware of this.
Cut off access immediately when employees resign
It is of course impossible to stop people leaving the business with information retained in their head. But the information retained may be considerably less extensive than what they can download and take with them on a hard drive. Where possible, only allow employees to read, not download or copy, confidential information so you can be confident that the business retains the only version of the information. You can also discourage employees from logging into personal email accounts from work devices.
If an employee resigns, take steps to immediately cut off their access to sensitive information. It may also be appropriate to forensically review their email account and work-provided electronic devices and place that employee on a period of gardening leave to further restrict their access to confidential information.
Once again, adopting such practices is useful if it becomes necessary to persuade a court that your business is serious about how the protection of its confidential information.
Key Takeaway
For General Counsel, intellectual property is more than just a legal consideration, it’s a cornerstone of business strategy. The mistakes outlined above are rarely the result of negligence; they happen because IP is often treated reactively, addressed only after a dispute arises or a competitor moves in. By then, it’s often too late.
A forward-thinking approach transforms IP from a defensive shield into a powerful growth driver. Ultimately, IP is at its most valuable when it’s managed deliberately, systematically, and with a commercial lens. For General Counsel, this isn’t just about avoiding pitfalls, it’s about positioning IP as a central lever of innovation, competitiveness, and long-term business success. By investing time and resources in a disciplined IP strategy today, you safeguard your company’s most critical assets for tomorrow.
For more information about this topic or our Wrays Litigation and Dispute Resolution Services please contact the authors below:
About the Authors
Andrew Mullane
Andrew is a Special Counsel in the Wrays Litigation and Dispute Resolution practice who assists his clients to resolve their contentious intellectual property issues, particularly those relating to patents, designs and confidential information. Andrew has extensive experience with advising and representing clients during negotiations, as well as litigating matters in court and before IP Australia.
Andrew Goatcher
Andrew is a Principal in the Wrays Litigation and Dispute Resolution practice and has more than 30 years’ experience advising and acting in complex commercial litigation, including intellectual property matters. Disputes in which Andrew has advised and acted have included patents, registered designs, trade marks and copyright issues, and disputes involving allegations of misleading and deceptive conduct in breach of the Australian Consumer Law.