Who owns the intellectual property created for my business

Jan 13, 2017 | Intellectual Property

It is common for business owners to hire employees and contractors to develop ideas and create intellectual property. Business owners frequently engage graphic designers to design their business logo and website designers to build their website. Consultants are hired to develop business and marketing plans. IT experts are hired to build software packages. The list goes on. You may assume that you own the intellectual property that has been created for your business, however this is not always the case.

There is a significant distinction between the ownership of intellectual property created by employees compared to contractors. So when you engage someone to create something for your business, you need to draw up an agreement that makes it clear whether they are being engaged as an employee or a contractor.

Intellectual property created by employees

Intellectual property created by employees in the course of their employment belongs to the employer unless the employment agreement creates an alternative arrangement. Some employees, such as researchers at universities typically have other arrangements. Universities generally have intellectual property policies covering the work of academics and researchers.

However employers don’t own all intellectual property created by employees. They only own what is created in the course of employment. This means it had to be part of their duties and created during work time.

There are two things you should include in your employee’s employment agreement to avoid a situation where they are able to claim ownership over intellectual property they have created for your business:

  1. A clear statement of the scope and duties of their role
  2. A clause assigning the rights to intellectual property created by the employee to the business

Intellectual property created by contractors

Intellectual property created by contractors belongs to the contractor unless their contractor agreement states otherwise. This may surprise business owners who assume that given they have paid for a service they automatically own the rights to business plans, marketing materials, logos and designs (and other items) created by contractors such as advisers or consultants for their business.

This position can be rectified and fixed. So fret not!

It is important to make sure that you include a clear and comprehensive intellectual property clause in your agreement with the contractor. Under this clause you can make it clear that any IP they create for you in providing their services that you own.

Also if a party has already created IP for you and they still own it you can get that IP back by having them sign a IP Assignment Deed (which in essence transfers ownership of the IP they created from them to you).

Remember its good business practice to own all your IP or IP that has been created for you by others. That way your business is protected and more valuable if an when you ever wanted to sell it.

If you would like some peace of mind in relation to the IP position in a contract you have signed with a contractor (or are about to sign), get in touch using our Free Contract Review button and we can check things out for you.

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