Confidentiality Clauses And SEP Development

In industries where companies contribute technology to standards bodies, confidentiality clauses and employment agreements often play a central role. Standard-essential patents (SEPs) can be some of the most valuable assets a tech company holds. These patents often arise from employee efforts, typically under employment contracts that include provisions governing confidentiality, invention ownership, and disclosure obligations. When companies participate in standard-setting organizations, these issues become even more important as an SEP lawyer knows all too well.

The Relationship Between Employee Agreements And SEP Contributions

When an employee creates something that could qualify as a standard-essential technology, their employment contract often dictates who owns the rights as an employment lawyer can share. Most contracts state that any invention made during the course of employment belongs to the employer, particularly if it’s related to the company’s business. This applies to contributions later declared as SEPs, which may then be licensed on fair, reasonable, and non-discriminatory (FRAND) terms.

Problems arise when those contributions are based on technology an employee developed outside of work or prior to employment. In these cases, the clarity and scope of the confidentiality clause and invention assignment provisions are tested. A well-drafted employment agreement should include a disclosure requirement for prior inventions and specify how future contributions will be handled, especially those involved in standards development. For example, a dispute may arise if an employee develops technology outside of working hours but on a company provided computer. It should be made clear before the employee starts working how the company views this kind of activity.

Limits And Responsibilities In Confidentiality Clauses

Confidentiality agreements are designed to protect company information, including draft patent filings, technical documentation, and internal strategies related to standard-setting activities. But the line between protecting information and restricting necessary disclosures can be thin. For example, if an employee works on a technology that will be submitted to a standards body, they must often share technical details publicly. In that case, overbroad confidentiality clauses may interfere with participation or delay submission, which could lead to problems with the standards organization.

Lawyers often advise that confidentiality provisions should be reviewed in the context of anticipated SEP contributions. Contracts should make allowances for disclosures required by standard-setting bodies, and clearly define what is considered confidential, what must be disclosed, and how ownership will be retained.

Employee Departures And SEP Exposure

When technical employees leave for a competitor, there is a risk they may carry sensitive information about pending SEPs or strategies related to licensing. This is especially sensitive in industries with heavy participation in standard-setting. A departing engineer with knowledge of key SEP positions or draft filings can create significant exposure. That’s where clear and enforceable confidentiality and invention ownership clauses come into play.

Some agreements extend confidentiality obligations beyond the term of employment. These can help reduce the risk of trade secrets or patentable ideas being disclosed post-employment. For example, an employee may not be able to work for a competitor for a specific period of time in order to protect the company’s products and services. However, courts are more likely to uphold narrowly tailored provisions that focus on specific technologies and timeframes.

Avoiding Disputes Through Clear Policies

Companies involved in SEP development should consider adopting internal policies that work alongside employment agreements. These policies might include documented processes for identifying and reporting inventions, a system for determining what gets submitted to standards bodies, and internal checks for FRAND licensing readiness. These steps can reduce confusion and help prevent disputes later.

Attorneys like those at COFFYLAW can attest that disputes often arise not from the invention itself, but from the lack of clear procedures or agreements. Lawyers often see SEP-related conflicts where vague confidentiality language leaves room for disagreement about ownership or disclosure rights.

For companies engaged in standard-setting, getting employee agreements right from the start is essential. Confidentiality clauses must strike a balance between protecting company information and allowing necessary disclosures that come with SEP development. Working with an experienced lawyer can help businesses put the right contracts and processes in place.

Taking the time to revisit your company’s current agreements and SEP participation practices can prevent legal challenges down the road. Whether you are a growing tech company or an established innovator, strong contracts help protect your position in a competitive market. Contact a lawyer near you for help.