Being first with a new product is often the key to generating or maintaining market share. For many agribusinesses this will involve introducing some new product or process to the market that none of their competitors can match. To do this requires businesses to protect their intellectual property in these ideas until they are ready to be released to the market. This requires consideration of risk management strategies. Arguably one of the most important focuses should be the protection of confidential information.
Imagine you are in the business of selling agricultural products or processes. Part of your business involves being ahead of your game, a leader in bringing new processes or products to the market. You employ a key person whose job it is to find and develop new opportunities. The key person is a team of one and largely runs his/her own show.
Imagine now that the employee leaves to work for a competitor. Rumours filter back to you that the employee took your pipeline of product development to the new employer.
What could you do?
- Was the employee subject to restraints of trade? If the employee had been restrained for a period of say, three months following exit, this would have provided an opportunity to secure the pipeline of product development and for the employee’s replacement to settle into the role and foster relationships with clients and suppliers. Consider also whether you have the right to place the employee on “garden leave”.
- How are the confidentiality and intellectual property rights of the business addressed in the employment contract? The employee clearly considered that the product ideas were the employee’s property to take away. This can be addressed at an organisational level (see next point). It can also be addressed by specifically addressing marketing initiatives and business development opportunities within the definition of confidential information in the employment contract.
- Does the business have secure processes and systems? Foster a culture where staff identify, value and protect intellectual property. Central to this would be the creation of a workplace policy about intellectual property. An aspect of that policy may be to mark all documents concerning confidential business development projects as confidential and to direct that none of those documents are secured in local drives, rather that they are secured in a central drive in a password restricted area. This will allow the organisation to more easily control the confidential information.
- Does the business avoid “islands” of information? Consider developing people management and work practices that discourage “lone wolves”. If an employee is largely running his or her own show this increases the opportunity to divert business. If management doesn’t know the detail of what the employee is doing then management can’t act to protect the interests of the business. This could be addressed by increasing the size of the team or creation of the reporting lines and regular meetings.
- Does the business have viable customer and supplier connections? For the same reason, create multiple points of contact with key customers and suppliers. This helps reduce the risk of the supplier or the client transporting their business to that employee’s next employer.
- Does the business have processes to maintain contact with customers and suppliers? Make sure the mobile phones of your key staff are owned by the business, returned on exit, and that their mobile phone numbers are issued by the business. This allows the business to control the mobile phone number and client contact and other information contained in the phone, particularly if it is a smart phone which can transfer and store data.
- Does the business control the location of information? Consider issuing authorised USB sticks with the instruction that only authorised USB sticks or other external memory devices are to be used for work related data transfer, and are returned on exit. Each USB stick has a number enabling tracking of which USB stick has been used. Equally, this will identify use of non‑authorised USB sticks.
What else should you consider?
For departing high risk employees, consider:
- Making an image of the employee’s computer once notice is given as well as after the employee leaves. This is for comparison purposes to detect data destruction and transfer.
- Directing the employee to take steps to handover clients or suppliers and up-skill and involve other staff.
- Actively managing the employee during the notice period.
- Preparing a summary of the employee’s role, who reports to the employee, who his/her key clients and contacts are, what projects the employee is working on, what is the confidential information which the employee has access to which, if transferred, can damage the business. A plan can then be put in place to deal with each aspect.
- Keeping a contemporaneous record of what is said by the employee about his/her intentions after exit.
- Being prompt and upfront about the resignation with the employee’s customer and supplier contacts, involving the employee in the management of the handover process, giving incoming staff the best opportunity and the most time to learn. Additionally, if the outgoing employee is actively introducing and promoting their replacement to clients and suppliers in the company of his or her replacement, any duplicity is unlikely to leave a favourable impression.
- As part of the exit interview process, presenting a document to the employee for signature confirming that the employee has returned all confidential information and acknowledging post employment obligations.
If some or all of these measures had been deployed in our scenario, the business would likely have managed the risk more effectively, a far superior position to addressing the damage to the business following rogue behaviour. Essential risk management involves both having the full “legal armoury” available to the business as well as the taking of other practical steps to proactively reduce the identified risks to avoid the need to activate some of this “legal armoury”.
Authors: Stephen Trew & Christine Jones
T: +61 7 3135 0629
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed above.