Global hiring, despite its many advantages, can be risky business when it comes to a company’s proprietary assets. As teams increasingly work remotely, company data is spread across devices and clouds that are sometimes not even owned by the company. In a global and remote workplace, it becomes especially challenging to protect intellectual property (IP).
IP includes the ideas, patents, trademarks, trade secrets, franchises and copyrights generated by employees (on the company’s time and dime). IP protection matters for all companies since proprietary products and services let them stand out from the competition and attract business. IP is essentially the linchpin for driving value and unlocking a competitive advantage in the marketplace.
Here are the top IP considerations for companies with a globally dispersed workforce.
Risks for IP infringement are higher for remote global teams
If a company is completely remote and does not have a physical office, it must store and share its data on the cloud. Digital storage and data transfer can put confidential company information in the hands of hackers, phishers and other unauthorized, ill-intentioned actors. Companies should also be aware that this risk is heightened if workers or independent contractors use personal devices to access and transfer company data.
IP laws vary country by country
Each country maintains its own framework for IP, with some countries having more stringent regulations and others having more relaxed schemes. In most countries, however, employers retain IP rights and protections unless an employment contract states otherwise. Therefore, anything an employee creates on the job will belong to the company.
This type of protection does not exist in all countries. For example, in the Netherlands, employees are permitted to register a trademark in their name even if the work was created while they were employed by a company.
Companies should also note that, in some countries, an independent contractor is entitled to IP rights as well. This can sometimes pose an issue for clients, with the company’s IP legally falling into the hands of the independent contractor rather than the hiring company.
IP infringements can compromise corporate transactions
If a company fails to protect its IP, it is also liable to face challenges ahead of a liquidity event or corporate transaction, such as an initial public offering (IPO) or mergers and acquisitions (M&A).
Audits ahead of liquidation and corporate transactions investigate a company’s controls over financial reporting and, as part of this process, auditors look at whether a company adequately protects IP. After all, if a company fails to protect its IP, it may pose issues for an acquiring company or for shareholders following an IPO.
An Employer of Record can help mitigate IP risks
With increased virtualization, some companies have discovered the hard way how detrimental IP infringement can be to the bottom line. For companies that engage independent contractors abroad, the Employer of Record (EOR) hiring model may serve as a more secure alternative for building a global team.
For example, using an EOR reduces the risk of an independent contractor walking away with the IP they created while working for the company. Hiring through the EOR will also allow the company to better control how a worker accesses and transfers data. In some jurisdictions, it’s against regulations to provide independent contractors with equipment like a company laptop. If a company does provide a laptop, that independent contractor will be deemed an employee – presenting permanent establishment risks, potential fees and legal headaches.
Apart from arming companies against IP infringements, an EOR also provides innumerable benefits for global companies including global hiring, onboarding, cross-border payroll processing, benefits, taxation, compliance support and more.
Contact us to learn more about how hiring through an EOR can help protect your IP and offer more agility, flexibility and peace of mind in global expansion