best foot forward - Association of Accounting Technicians

What’s fair to share?
Andrew Douglas and Penny Lording offer advice on protecting your patch.
With recent pressure on business costs, many bookkeepers are now
being asked to hand over their work and train others, often from
overseas. What protection do Australian bookkeepers have in
managing the transfer of their skills and expertise to people outside
of Australia or providers of cheaper services within Australia?
Do bookkeepers have intellectual property rights in their skills
and expertise?
Whose property is it?
Intellectual property is a higher order concept that features around
the creation of something which is original. Some intellectual
property rights, such as patents and designs, require formal registration
whereas others, such as copyright and confidential information, can
arise automatically.
Get your contracts right and ensure
you protect the clever work you do.
Courts distinguish between confidential information and know-how.
Confidential information is something which is impressed with a
specific confidence which is understood between the parties and has a
particular value which is discrete to those parties. Know-how, on the
other hand, is general experience and knowledge.
Sorting out ownership
The first question to ask is: what is the intellectual property of the
bookkeeper, if any? The reality for bookkeepers and other professionals
is that we often speak about something being confidential information
or intellectual property when in fact it is something that is generally
practised in the commercial world. For example, the bookkeeper
carries out a service, usually as a contractor, to an organisation.
The elements of that service provision are well-known and wellpractised.
There is nothing novel in undertaking bookkeeping services
through the entry of data into appropriate journals or a piece of
accounting software.
bookkeeper should ensure that any intellectual property created
remains owned by it and is only licensed to the organisation. Or, if the
intellectual property is to be assigned (especially in the absence of a
royalty-free perpetual licence back to the bookkeeper), then the price
should reflect this as the bookkeeper may then be restricted in using
the intellectual property.
However, if these documents are not specifically identified as
confidential information or intellectual property within the contract of
services entered into between the bookkeeper and the organisation, the
bookkeeper is left to fight for them using other legal principles.
Without saying the obvious, bookkeepers rarely have the resources to
litigate such issues.
The second question to ask is what powers does a bookkeeper have to
refuse to train or to price to train an outsourced party? Again, the
answer is, what does the contract say. If the contract is one for the
provision of services without an expiry period and without limitation
of activity, it is likely the organisation will be able to require the
bookkeeper to deliver that service. However, if the contract is for the
specific provision of bookkeeping services (appropriately defined) and
can be terminated at will or upon notice by the bookkeeper or the
organisation, the bookkeeper always has the capacity to withdraw their
services and to re-price the delivery of that service.
The lessons for bookkeepers
First, carefully design your contract of services to limit it to the
delivery of bookkeeping services and make it terminable at a period of
time that is suitable for the bookkeeper.
Second, ensure that there are clauses within the contract that allow you
to reprice more complex work and, where that work creates novelty or
uniqueness, include clauses that specifically deal with any intellectual
property created.
At that time, you generally have some leverage. However, it is obvious
to everyone that organisations usually have deeper pockets than
bookkeepers. The litigious path will normally be an unhappy path.
Therefore, get your contracts right and ensure you protect the clever
work you do.
Therefore, generally the day-to-day practice of a bookkeeper does not
involve confidential information of the bookkeeper but rather uses the
confidential information of the organisation. So, unless the
bookkeeper designs or develops a particular system which is unique or
novel and for which they have impressed with confidence (preferably
by contract with the organisation) they have no property or confidence
that can be protected in law.
Andrew
Douglas
Penny
Lording
Possible protection
If the bookkeeper does set up processes, manuals, policies and
procedures around how the financial affairs of a business are collected
together and inputted, the contract that the bookkeeper enters into
may provide them some protection. In negotiating a contract, the
Andrew Douglas is a principal in the workplace relations team
and Penny Lording a lawyer at M + K Lawyers. Contact Andrew
at andrew.douglas@mk.com.au or (03) 8615 9900. Contact
Penny at penny.lording@mk.com.au or (03) 9794 2600.
16 accounting technician April 2013