Blackmagic is a company that provides computer software to the
television and film production industry. The company took action
against former employees who intended to establish a business for a
video capture card.
Blackmagic alleged that the employees conceived the idea for the
card whilst employed by Blackmagic and with reference to
Blackmagic's confidential information. Blackmagic also argued
the employees should not be able to commercially exploit the
The Court distinguished between ownership of the confidential
information that belonged to Blackmagic and ownership in the idea
for the card. While the Court was prepared to restrain the
ex-employees from using the confidential information, ownership in
the idea for the card did not vest in Blackmagic.
It was indicated that had the employment contract contained an
express provision requiring the employees to disclose their ideas
to the employer and to acknowledge that ownership in those ideas
will vest in the employer, the outcome was likely to have been more
favourable for Blackmagic.
As there was no such provision in the employment contract, the
Court allowed the ex-employees to continue to use the card within
their new business.
On appeal, Blackmagic argued that the exemployees had a duty to
disclose their idea for the card during their employment, as the
card was a 'business opportunity' for Blackmagic.
The Court was unsympathetic to this argument and found that
employees were not obliged to disclose ideas they conceive during
their employment, unless their employment contract required them to
The importance of intellectual protection ('IP') from
The electronic storage of information in the workplace has made
it increasingly difficult for businesses to protect their
innovations and other intellectual property from being wrongfully
exploited by employees and former employees, for their own personal
How then can businesses protect their innovations from misuse by
Limits on patents or registered designs
Patents or registered designs can be a very effective means of
protecting an innovation or invention. However, aside from being
expensive, patents or registered designs cannot normally be
registered over all of an employer's commercially valuable
Action against employees for breach of confidence
There is a general duty of employees not to use confidential
information belonging to their employer to the detriment of the
employer. Businesses may seek to take advantage of this duty as a
means of controlling the poaching of the employer's IP. However
the limits of this duty were illustrated in the Blackmagic
Protecting confidentiality in the employment contract
Given the limitations of the common law duty of employee
confidence, businesses should consider amending their employment
contracts to better protect their IP. Each employment contract
Require the employee to disclose innovative ideas to their
Carefully detail the non-competition and copyright obligations
of the employee
Include a non-disclosure, non-compete and IP ownership
contain provisions that are not unreasonable, as a Court may
not enforce provisions which stifle innovation or a competitive
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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