Intellectual Property Ownership: Everything You Need to Know
Intellectual property ownership usually lies with the creator or originator of a work or idea, unless the individual is under contract with another party to create work for that party's use. 3 min read
Intellectual property ownership usually lies with the creator or originator of a work or idea, unless the individual is under contract with another party to create work for that party's use.
Who Owns Intellectual Property?
Usually, issues surrounding the ownership of intellectual property (IP) only arise during new investments or company acquisitions, but at that point, it could be too late to properly address the issue. It is always a good idea to fully understand your company's IP ownership policy upon starting a business and certainly before any major changes are made.
How do you know who owns the business' IP? Many just assume that a company automatically owns any IP created under its roof, but that is not necessarily the case. Just because a business instructs its employees to create a product doesn't mean that the IP of that product belongs to the business. Even if a form of IP is paid for, it doesn't necessarily mean that the payee owns the rights to that IP.
IP ownership depends on what is created and who creates it.
Intellectual Property of Founders
The founding members or owners of a company will usually handle IP registration when the company is first formed. This is when they might:
- Choose and trademark a brand name.
- Form original algorithms or formulas for certain processes or products.
- Register a domain name.
- Create a website.
All of these items created at the start of a business are actually IP that is all owned by the founding business owners and not the company itself. Unless the founders are technically employed by the company or form a consultancy agreement with it, they remain the owners of all the IP they create.
Intellectual Property of Employees and Other Workers
In most cases, companies automatically own any IP developed by their employees during their course of employment. Even though this is the standard practice, employment contracts should include the details of IP ownership between the business and its employees.
Consultants and independent contractors are treated differently than employees in many ways, including IP ownership. These types of workers always own their IP by default, even if it is assigned and paid for by a company. If a business wants ownership over the IP of a consultant or independent contractor, they will need to have the worker sign a contract that transfers the IP ownership to the company.
There are plenty of businesses that help business startups get set up as they're forming a company. Some examples are:
- Web-developing companies.
- Software developers.
- Product designers.
These third-party companies also automatically own any IP created for a business, even if it is paid for. If a business wants ownership of all of their IP, they'll need to form contracts that specify this ownership.
Issues like the integrity of the work and anonymity of the creator are covered under moral rights. For instance, if an author has asked to remain anonymous in their work, but sold you their manuscript, you are not allowed to then publish it in their name.
This form of IP rights can cause issues down the road, so many times it is wise to include a moral rights waiver in a contract for IP ownership transfer. These types of waivers can be written and signed at any point, but it's always easiest to take care of such issues before a work is even created.
How To Help Make Sure a Company Owns Its IP
A company can take certain steps to be sure that it owns all of its intellectual property:
- Keep detailed records of all valuable IP and who created it. Double-check to make sure that you have signed contracts including moral rights waivers for ownership.
- Have founding members sign over ownership to all of the startup IP created and either become legal employees or consultants so that their future IP is owned by the company.
- Check to ensure that any IP created by third-party companies has been transferred to the business.
- Enlist the help of an IP lawyer.
If you need help with intellectual property ownership, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.