Who Owns the IP – Employee or Employer?

Who owns the IP between an employee and an employer? I don’t know myself but stick around and we’ll work it out.

Hi, it’s Simon from The Contract Company. Contracts is what we do all day, every day and sometimes overnight, I know, we’re blessed.

How to Know Who Owns the IP

Right answer, who owns the IP in an employee and employer relationship? Well, first thing I’d say is, look at the employment contract.

The employment contract that’s signed between the employer and the employee should clearly set out who owns the IP that they create during their employment.

Now, if there is no contract or you’ve lost it, which never happens, then what’s the story?

Well, the story is that the employer owns the IP that an employee creates in the normal course of the job for which they were hired.

Classic Example

So let’s use a classic example. Let’s say you hire an in house lawyer, like myself. So it’s normal then that if I’m an in house lawyer for an organisation I’m gonna create all sorts of legal documents. I’m gonna create templates. I’m gonna give advice.

Now because my services are providing legal advice to the organization then any IP I create in doing that job, the organization owns.

But if I was developing some software, after hours on, I don’t know, some sort of marketplace or coming up with some sort of banking app, i.e. if I’m doing something in my own time that’s in no way related to my job as an employee, then no, the employer can’t get their hands on it.

Where it gets blurry though, is where the employee does something that’s close to the reason for which they’re employed. Such as let’s say I was working on some software to help draft contracts and my job, or part of my job is to draft contracts, then who owns the IP in that software?

It gets a little interesting there, doesn’t it?

In that particular case, I believe that the employee would still own it because the employee wasn’t actually engaged by the business to come up with some software to help draft contracts.

Rather, they were just to draft contracts as part of their normal day to day job. But once again, that’s just my view and lots of other people will have a different view. So that’s usually what happens with the employee-employer relationship.

Employer or Employee IP Ownership?

One, see what’s in the contract that hopefully should specify what happens. If there is no contract or you just don’t have it then normally, the employer owns anything that the employee creates in the further and so in the course of their employment.

If the employee creates something after hours or outside the terms of their employment that has nothing to do with day job, then the employee should continue to own that.  And the employee, just sort of the employer hands off.

Anyway, I hope that helps. This is a complicated area of law and has been the subject of much litigation. So I’ve done pretty well to give it to you in three minutes. I’m gonna give myself a pat on the back, anyway joking.

If you found that helpful, please feel free to share this video with anyone you think could benefit from seeing it or hit the like button down below. Any questions simon@contractcompany.com.au, or 1800-355-445, thanks very much.

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