Recovering Intellectual Property in Insolvency Situations

Preserving a business’ commercially sensitive data and intellectual property (IP) in insolvency situations has been made more difficult by the rise in remote working. Remote working is on the up, shutterstock_379770382with recent research linking remote working to an increase in productivity.

The increased use of personal devices that goes hand in hand with remote working is making the role of administrators and insolvency practitioners more challenging. Many companies are now allowing staff to use their own personal laptops and smartphones for work purposes. While this may have benefits for the companies involved, problems can come when a business becomes insolvent. In this instance, ‘securing and preserving’ intellectual property from personal devices creates more problems than ever before.

Why is IP so important?

Intellectual property (IP) and other commercially sensitive information is an extremely important asset for modern businesses. Although IP is often intangible, in many cases it is the most valuable asset a business owns. For this reason, securing and preserving that information is one of the first jobs for insolvency practitioners.

Recovering the electronic equipment that belongs to the business is something most administrators will do on their appointment. This is an effective way of securing the IP stored on those devices. However, the rise in the use of personal devices means this electronic equipment is now a lot more difficult to recover.

Recovering sensitive information from personal devices

Recovering sensitive commercial data from personal devices is a more complicated process. Generally speaking, administrators will not be entitled to physically recover those devices. Some employment contracts specify that any IP created by employees is owned by the employer. While it’s certainly beneficial to put that kind of contractual safeguard in place, sometimes things are not quite so clear cut.

For instance, if no specific terms are included in the contract of employment, it can be necessary for administrators to a obtain court order. This will allow them to remove business data from employees’ personal devices.

This particular problem arose in the recent administration of Powa Technologies. Employees of the company were contacted by the administrators and told not to pass IP on to former management of the company. According to the Financial Times, some employees had been asked to share computer codes for staff laptops by former senior managers. This is despite the fact they had no entitlement to do so.

The legal position

According to intellectual property law experts, employees who share commercially sensitive information with former colleagues could find themselves in serious trouble. Sharing such data or IP without the consent of the administrators is likely to be in breach of the terms of their employment contracts. Legal action could also be taken against the former employees who use the IP that has been passed to them.

Before the rise of remote working practices, administrators had to prevent former employees physically entering the premises to access sensitive data and intellectual property. Now, the latest technology makes it possible for employees to access sensitive data from their homes.

To protect their companies against this kind of practice, organisations are being urged to consider investing in software that controls the use of important data. This can track when sensitive documents on corporate servers are accessed, making it easier to recover IP.

How can we help?

If your business has become insolvent and you are worried about preserving intellectual property, we can help. Please get in touch today for expert advice and a free, no-obligation consultation. Alternatively, you can call our senior consultant Mike Smith on 07912 344 394.

 

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