Establishing your intellectual property (IP) rights is essential for any business. As IP can play a key role in your business’ growth and presence, you want to be able to share it without compromising its security..
For example, you might design a unique logo that helps distinguish your business in the market. In this case, you would apply to have the logo registered as a trade mark so others cannot use it.
At Sprintlaw, a question that comes up quite often is who actually owns this IP. More specifically, who owns any IP that already existed prior to their contribution?
IP ownership is a key matter for many businesses, and should be included in your agreements. Let’s take a closer look at how it all works legally.
Who Usually Owns The Intellectual Property?
As a general rule, the person who creates the IP is usually the owner of it unless there’s a legal agreement in place that states otherwise.
IP that already exists is likely to belong to the original owner. However, IP that is created under a contract might belong to the person that commissioned it (such as a business owning IP rather than their individual employees). This is usually only valid if it is clearly stated in the contract that the creator will not own the IP.
Elaine is a marketing employee at a large company. When she first signed an Employment Contract with them, one of the clauses made it clear that she would not own any of the IP she creates, but rather, it would belong to the company (this can also be done through an IP Assignment Deed, which we’ll cover later).
One of her tasks is to come up with a tagline for a new product the company is releasing. Elaine comes up with a few and her managers go with the one they like most. Even though Elaine was the one that came up with the tagline, it’s highly unlikely that she can consider herself the owner of it due to the IP clause contained in her agreement.
On the other hand, if Elaine came up with a tagline for her small business she runs in her spare time outside of work, her employer would not be able to stake a claim to it. This is because Elaine did not create this as an employee during work hours but rather, for a completely different purpose.
Contracts For Intellectual Property
You’ve probably noticed by now that the key factor in assessing who owns intellectual property is a contract. A strong legal agreement can make a large difference in determining what is created, who it is created for and what purposes it is going to be used for.
The kind of contract you need will depend on your unique circumstances. An IP Assignment Deed is a legal document that’s commonly used by businesses when getting others to create IP for them.
An IP Assignment Deed is a legally binding contract that ensures IP that is created by others is transferred to the business once it is complete. Therefore, if you’ve hired someone to create a piece of IP for your business, you’ll be able to make sure you have ownership of it.
Who Owns Intellectual Property Created By An Employee?
When an employee creates IP, it’s not always easy to figure out who owns it.
The general rule is that if an employee creates an IP during work hours and using work resources, and for the company’s purposes, then this is the company’s IP and should be stated clearly in writing.
Sometimes, employers will fail to let employees know they intend to own the IP created by the employee during the course of their employment. This can create conflict and tension when the employee has different expectations.
As there is no clear, singular answer to this question, the best thing to do is ensure you’ve addressed everything relating to IP before the employee actually creates anything for the business.
Commonly, employers will address IP in Employment Contracts. It usually comes in the form of a clause, letting employees know all the IP they create at work will be owned by their employer. It also lets them know what happens with the IP should they ever choose to terminate their employment (for example, that the employer continues to own the IP even after the employee has moved on from the job).
Who Owns Intellectual Property Created By Independent Contractors?
Independent contractors aren’t internal employees of a business, therefore, their rights and expectations are likely to differ from that of an internal employee. When hiring a contractor, it’s important to distinguish whether or not your business will expect to own the IP they create for the business or the contractor will have the right of ownership.
A Contractor Agreement drafted by a legal expert can cover everything that is needed when hiring contractors, from intellectual property ownership to workplace expectations. It’s best to have an expert help you with this, as there may be terms and wording where you need to tread carefully.
Who Owns Intellectual Property Created By Students?
If you’ve got a student working in your business (let’s say for an internship), then it’s also important to clarify any IP-related matters with the students as well.
In a lot of cases, students are able to retain the IP they create when they are researching or studying. However, if the situation is going to be different at your business, then you will need to clarify this with the student first.
If you’re running an internship, it’s important that you sort out IP ownership by clarifying this through a well-drafted Internship Agreement. Otherwise, an IP Assignment Deed can also work to protect you and your business’ IP. .
What Other Legal Agreements Should I Consider?
Owning your IP is great and it’s vital to have the right legal agreements in place that make sure you’ve secured your IP rights. However, what happens if you want to licence your IP out to other people?
Licensing your IP is a way of getting your work out there and being able to make a profit out of it at the same time. If this is something you’re considering doing, then it’s important to have the right legal protections in place before getting started.
An IP Licence is a legal agreement that safeguards your IP while it is being used by other people.
Sheila is a music composer and is approached by Tom who wants to use one of her compositions in his next independent film. Sheila agrees to this and gets Tom to sign an IP Licence agreement which covers matters such as a description of the IP, permitted use, liability, length of the contract, payment and termination. This way, Sheila’s IP rights remain protected while licensing her composition out to Tom.
When it comes to protecting any existing or future intellectual property, it’s important to have the right kind of legal agreement in place. This can help avoid conflicts and set the right expectations from the very beginning. Talk to one of our experienced IP Legal Experts if you have any questions.
Alternatively, check out our guide on how you can protect your business’ intellectual property.
To summarise what we’ve discussed:
- It can be hard to determine who owns IP at times, especially without the right legal agreements in place
- Having an IP Assignment Deed in place can aid in securing your IP ownership rights
- A common way to secure IP ownership is by inserting it into your Employment Contracts
- The same must be done for Contractor Agreements
- If you happen to work with students, it’s best to make IP policies very clear and get it in writing i.e through an internship agreement
- An IP licence is a great way to protect your IP when allowing others to use it
If you would like a consultation on intellectual property rights and how you can protect your business’ IP, you can reach us at 1800 730 617 or firstname.lastname@example.org for a free, no-obligations chat.
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