What happens if a Team Member breaches the CIPA? What level of involvement does Oyster have in addressing the breach?
Because both the Team Member and the Customer are parties to the CIPA, there is a direct contractual relationship between them, and the Customer is entitled to enforce that breach of contract directly. Pursuant to Oyster’s Terms of Service, Oyster will "do everything in Our power to assist [the Customer], at [the Customer’s] expense, to evidence, record, and perfect any assignments of IP Rights, and to perfect, obtain, maintain, enforce, and defend any rights owned by or assigned to [the Customer]."
So what does that mean in a practical sense? Any violation of the CIPA is between the Customer and the Team Member. And any action that the Customer wants to take is at the Customer's expense and direction, just as it would be if the Team Member were employed by the Customer. Oyster will, however, provide any support that may be necessary to help the Customer enforce its rights under the Agreement, including but not limited to taking any actions that might be required of Oyster as the Team Member's employer.
The Oyster CIPA Template includes the following language regarding a breach of confidentiality:
Therefore, in addition to other remedies available, Oyster and Customer Company are each entitled (jointly or severally as may be appropriate under the circumstances) to seek injunctive relief (including interim relief without notice) or specific performance to enforce the terms of the CIPA, and Team Member waives any requirement for the securing or posting of any bond or the showing of actual monetary damages in connection with such claim. Team Member further agrees not to oppose the granting of such relief on the basis that Oyster or Customer Company (as applicable) has an adequate remedy at law.
Can you please explain what this means?
This paragraph serves three purposes:
- The Parties agree that Oyster and the Customer are entitled to “injunctive relief” or “specific performance” in the event of a breach or a threatened breach.
- The terms “Injunctive Relief” and “Specific Performance” refer to claims that are not for monetary damages. For example, if a Team Member were to actually release (or threaten to release) confidential information, the Customer could seek an order from the Court that the Team Member be prohibited from doing so.
- The Team Member waives any requirement that Oyster or the Customer must post a bond or show actual money damages before seeking injunctive relief or specific performance.
- In some jurisdictions, a plaintiff (the Customer or Oyster in a case like this) may be required to post a bond or prove monetary damages before the Court will enter any order. Essentially, the plaintiff is required to wait until they are harmed before they can stop the wrongful conduct. A waiver provision like the one included in the Oyster CIPA is common in confidentiality agreements because, by their nature, these agreements are intended to stop that harm from occurring.
- The Team Member agrees that the Customer may be entitled to injunctive relief or specific performance even where they may also be entitled to monetary damages.
- In some jurisdictions, if the aggrieved party is entitled to monetary damages, they may not be entitled to injunctive relief or specific performance in addition to those money damages. For example, if a Team Member steals Confidential Information and threatens to release it, a Court could find that if the Customer can be “made whole” by an order that the Team Member pay the Customer a certain amount of money, the Team Member may then be permitted to use or disclose that Confidential Information. Through this provision, the Parties agree that Oyster and the Customer could be entitled to both money damages and an order prohibiting the use or disclosure of Confidential Information.
Please note that the terms of this paragraph only apply to claims for "injunctive relief" and “specific performance.” And they do not remove any legal requirements placed on the party seeking that relief. The Team Member is not waiving any right to defend any claims made against them, and Oyster and the Customer are still required to meet their respective legal burdens of proof for injunctive relief, specific performance, and money damages in the event of a dispute.
How is the “Pre-Existing IP” Appendix supposed to be used?
Our CIPA includes an appendix that allows the Team Member and the Customer to agree on Intellectual Property “that Team Member created something before Team Member's placement with Customer Company that is not within the scope of the foregoing assignment.”
It is important to note that (with some country-specific exceptions), the IP assignment provisions of the CIPA only apply to “Works . . . made or conceived or reduced to practice, in whole or in part, by Team Member:
(a) at Customer Company’s request or
(b) within the scope of and during the term of Team Member’s placement with Customer Company.”
As a result, the IP Rights in any Works created by the Team Member before the engagement should not be subject to the CIPA, and there is no requirement that a Team Member list any IP in the Pre-Existing IP Appendix. Rather, this optional Pre-Existing IP Appendix allows the Parties to create clarity where the Team Member has rights in pre-existing IP that may be confused with IP created for the Customer Company during the engagement.
Team Members and Customer should consult their own counsel to determine what (if any) pre-existing IP should be listed in this appendix and, if so, how that IP should be listed. While Oyster provides the CIPA template, Oyster cannot advise either party regarding the contents or form of the appendix.