Industry Market Trends

Minding Your Business: Contingent Engineers and IP Protection

Jul 02, 2014

It's not uncommon for contingent engineers and contractors to play key roles in the invention and development of new products or processes, and that fact is heightened in today's lean staffs and outsourcing environment. Here are ways to ensure your sensitive IP is safe.

Engineering managers are sometimes reluctant to bring in contingent engineers or contractors, due to concerns about intellectual property or confidentiality of proprietary information. But in a survey featuring insight from 13,000-plus engineering professionals about their workforce attitudes and motivators, Kelly Services found several factors that are driving the need for contingent engineering talent.

In the survey, while 70 percent of engineering professionals feel engaged or committed to their current employers, 69 percent plan to look for new jobs in the next year, with considerable turnover expected in the Americas and in the global management ranks. This turnover is leaving organizations with engineering staff shortages. However, if a sensitive project or program requires supplementing your full-time engineering staff with contractors due to workload, scheduling, or a number of other factors, what can be done?

Of course, intellectual property (IP) considerations are really a two-way street. On one hand, as an engineering manager, you have a fiduciary responsibility to protect confidential product and process information, which you do not want walking out the door with a contractor (or, for that matter, any employee who leaves). On the other hand, bringing in new engineering contractors with the right kind of talent and experience can greatly contribute to the intellectual property of your company.

Consider the case of an engineering manager at a commercial bakery that produces a variety of breads, rolls, and other baked goods on an industrial scale. It was in the process of adding a new line and working on a project to revise the layout of its existing processing equipment to accommodate the installation of the new machinery. To assist in the project, it had augmented its staff with a manufacturing engineer contractor.

This manufacturing engineer applied a process design concept to speed the cooling of baked products, which he had first used in a composite lamination curing process for a completely unrelated industry. The result was an innovation in the bakery that had the potential to dramatically improve the productivity of the line, while also improving space utilization within the plant.

It's not uncommon for contingent engineers and contractors to play key roles in the invention and development of new products or processes. In fact, one of the benefits of using contract engineers is that they can provide a fresh look from the outside at a technical problem. Just remember, if patent protection will be sought, the actual inventors must be named on the U.S. patent application -- including contingent engineers, if they play a significant or principal role in the invention of a patented product or a technology. In fact, an issued patent may be voided if their names are not among those listed on the application.

One way to ensure your IP is retained when using contingent engineers is to designate their work product as "work made for hire" in the related service agreement. In addition, agreement to assign patent rights can be documented at the start of engagements by including appropriate language in the service agreement with the vendor, as well as directly with the contingent engineers.

Lock Up Those Trade Secrets

In order to protect a trade secret and have it be considered a trade secret, companies need to: (1) identify trade secrets as such and let workers (employees as well as contingent workers alike) know what information is to be kept confidential, and (2) take measures to protect the confidentiality of the trade secret. This can mean, for example:

  • Labeling reports and other documents containing sensitive information as "CONFIDENTIAL: FOR COMPANY USE ONLY"
  • Training staff and contingent workers in the protection of confidential information
  • Keeping hard copy files and reports in locked, controlled-access cabinets
  • Restricting the use of mobile phones with cameras or the use of physical means (such as drapes, walls, and fences) to prevent visual observation of confidential processes. For electronic files, many organizations protect sensitive data with variable access passwords, access logs, prohibiting or restricting the use of flash drives, and eliminating or controlling remote access.

Of course, these are good ideas whether or not contingent engineers or contractors are used. It can prove challenging to recover client-owned mobile devices issued to contingent workers, so restricting the provision of these devices to contractors in certain roles and locations (as well as not allowing them to possess their own devices on-site) can provide additional means of protecting IP.

Information compartmentalization is often used to protect trade secrets. For example, the Coca-Cola Co. and Kentucky Fried Chicken are two famous examples of companies that keep their recipes and formulas compartmentalized. Purportedly, there are only a few senior managers at each company who know the entire formula for Coca-Cola or the entire "11 herbs and spices" recipe for Kentucky Fried Chicken. This compartmentalization applies to employees and contingent workers alike.

Consider All Available Security Resources

Confidentiality and non-disclosure agreements are typically used by companies when assigning staff employees to research and development or process engineering work involving access to trade secret information. These agreements can be signed with contingent workers as well, of course, and they are just as valid and enforceable with contractors as they are with staff employees. When the contractor is supplied by an agency or outside company, as the employer of record, it may also need to be added as third parties to these agreements.

When using an engineering staffing vendor or project services firm, it is also prudent to consider its internal security resources. While small firms and self-employed consultants may offer no capabilities in this area, large firms may have substantial security resources that can assist in efforts to protect or recover sensitive information, data files, and documents. For example, Kelly has a professional security department led by former federal law enforcement agents and investigators. Establishing a partnership up-front between client and vendor security teams can be critical, so that these security specialists are not brought in after the fact -- when recovery of data is more challenging.

Having a robust policy and attitude toward enforcing a suspected violation of a protective covenant is also important. This involves proactive partnership between the business, security, and legal departments of the client and vendor alike. Having a process in place to prevent ad hoc attempts at data and hardware retrieval are important and afford the best opportunity to be successful in protecting IP.

Engineering managers are right to be mindful of intellectual property and trade secrets when utilizing supplemental engineering workers. However, these concerns are manageable and can yield highly successful and protected technical work for companies. Many of the largest and most famous manufacturers in the world use contingent engineers in a variety of roles, including many that involve the engineers in highly sensitive and confidential research and development work. The experiences of these companies has shown that concerns can be effectively managed to ensure that intellectual property is properly protected.


Joe Lampinen is director of Kelly Services' Engineering Center of Excellence. Kelly Services is a leading provider of workforce solutions headquartered in Troy, Mich., offering an array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Since employing its first engineer in 1965, the Kelly engineering specialty has grown to be recognized as a leading provider of engineering resources to customers in such industries as automotive, chemical, defense, electronics, energy, medical, and pharmaceutical.