Dismissal of employee for breaching intellectual property rights upheld

Dismissal of employee for breaching intellectual property rights upheld

The Fair Work Commission has upheld the dismissal of a senior employee who was found to have breached the company’s intellectual property rights through promoting his own design system, which closely resembled the company’s products.

The employee commenced with Amplified Al Pty Ltd (Amplified) on 23 February 2020 as Head of Design and, at the time of his dismissal, was employed on a base salary of $145,000. He was the first person to occupy this role within Amplified, with the objective of improving its design system.

Amplified is a technology company that designs and sells products that include the use of artificial intelligence for conducting patent searches.

Prior to his commencement, the employee signed a Confidential Information and Invention Assignment Agreement and an Employment Agreement which compelled him to protect Amplified’s intellectual property. The agreements made provision for the employee to identify and retain ownership of prior inventions created or owned by him.

None were detailed.

The employee created a design system for Amplified (AmplifiedDS), which was stored in Figma, a software tool for building design systems and includes all the software codes needed to implement the desired visual styles, buttons, interactions, and layouts.

On 18 August 2021, Amplified’s CEO saw a post on LinkedIn from the Head of Design announcing a `free design starter kit’ known as `AcmeDS’ without any reference to the business.

The CEO believed that there were significant similarities between the two systems. The CEO was also concerned that the system may have breached license obligations held with Figma. The CEO formed the view that it was not possible that AcmeDS could have been created from scratch and concluded that the employee had copied Amplified files and modified them for AcmeDS.

He reviewed the design codes and determined that the AcmeDS system infringed Amplified’s copyright, was an unauthorised disclosure of its protected trade secrets and violated its intellectual property (IP) rights.

The employee was required to attend a Zoom meeting on 25 August 2021 with the three founders of the business. They claimed that the employee had breached their confidentiality as well as their IP rights in designing AcmeDS.

At the meeting, he effectively denied the allegation that AcmeDS was a derivative or a copy of AmplifiedDS. A further meeting was held in the afternoon, at which the employer believed the employee was unapologetic, evasive, and refused to take the AcmeDS material down from his website.

A letter confirming the employee’s summary dismissal was forwarded to him on 25 August 2021.

In determining the case, Deputy President Ian Masson was swayed by Amplified’s submissions.

As he noted,

A comparison of AcmeDS and AmplifiedDS reveals great similarities which in my view are not easily explained as mere chance. See, for example, the visual similarities between the two design systems…There is, in my view, an overwhelming visual similarity of the two design systems. Further, the software code used in AcmeDS and AmplifiedDS appears the same…I am also satisfied that the similarities between the two design systems go beyond the visual elements, as can be seen in the comparisons of prototypes and screens between the AcmeDS and AmplifiedDS…It follows from the above, and I am satisfied that the similarities between AcmeDS and AmplifiedDS are such as to enable the Respondent to reasonably conclude that the former was a derivative of the latter”.

The application for unfair dismissal was rejected.

JM v Amplified AI Pty Limited [2021] FWC 6702 (30 December 2021)

For questions about employment agreements, intellectual property, confidentiality, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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