IP Ownership: Everything You Need to Know
IP ownership, or intellectual property ownership, is considered the ownership of ideas and concepts.3 min read
2. Who Owns IP?
IP ownership, or intellectual property ownership, is considered the ownership of ideas and concepts. However, it's not as easy to define IP ownership as it is ownership of tangible items of property.
IP Rights and Ownership
Intellectual property isn't tangible, such as an office or computer equipment. Instead, IP is a collection of concepts and ideas.
In the U.S., these are the only ways to protect intellectual property:
Ownership and the rights associated with it are generally straightforward. Typically, to own a certain type of property includes the right to do the following:
- Possess it
- Enjoy it
- Sell it
- Prevent anyone else from doing the same
Laws that relate to ownership and the control individuals have over property usually involve questions that arise from shared or disputed ownership.
Usually, there's little question over ownership when you consider a physical object or a parcel of real estate. There's also little question about what complete ownership of those types of property means.
When it comes to IP, ownership isn't as easily crystallized and defined. The main issue is that IP is intangible. You can't touch it, hold it, or define it using physical boundaries. Instead, IP ownership concerns the interest that someone holds in creations of the mind. Owning IP means to own an idea or concept instead of an object or piece of real estate. Although IP is intangible — like real property — you can sell it or otherwise convey it.
Who Owns IP?
Normally, the person who thought up an idea or concept that's the subject of IP is the owner. However, it's possible to release or transfer IP rights through the following means:
- Operation of law
- Passage of time
When a person holds IP rights, this allows him or her to exclude others from using the concepts or ideas that make up the IP. Governing law, as well as the type of IP involved, determine how far-reaching these rights are. For example, rights may be limited to preventing someone else from using the IP for commercial gain.
One thing that's important to understand is that a company doesn't necessarily own IP because it paid for the work to be created. Legal positions differ depending on the creator of the work. The following may be involved in IP development and ownership:
In many cases, founders create, develop, and register their IP rights before they incorporate their company. For instance, they may do the following:
- Register domain names
- Coin brand names
- Develop a website
- Formulate algorithms
When founders create an IP before the incorporation of their company, they own the IP, not the company. Founders usually don't enter into consultancy or employment agreements for their services with the company. As a result, the IP that founders develop during their service after the company is incorporated won't be owned by the company.
The general rule regarding IP that employees develop is that the company owns it. However, the IP must be created during their employment. There are exceptions, and employment agreements should always have clear provisions regarding company ownership.
Consultants or Independent Contractors
Unless a written contract exists that transfers ownership, consultants almost always have IP ownership rights to what they create. Because it's common for companies to hire consultants, both sides are usually aware of the need to draw up a written contract to transfer ownership rights if an agreement doesn't already exist.
Early-stage companies and startup businesses often contract with third-party companies for the purpose of developing their product or services. For instance, new businesses may contract with product design specialists, web development companies, or software development providers. Although the company pays for the services, the third party holds the IP rights, unless the two sides enter into an agreement that states otherwise.
Just because property is intangible doesn't mean it has no value or can't be owned. In the field of intellectual property, concepts and ideas can be extremely valuable. If you have IP that you want to benefit from, it's important to protect your rights. Consulting with a legal professional who's experienced in this area can help you protect them.
If you need help with IP 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.