Key Takeaways

  • Intellectual property (IP) includes creations such as inventions, works of art, trademarks, and designs.
  • Ownership of intellectual property may depend on employment status, contractual agreements, and jurisdictional law.
  • IP ownership can be transferred or licensed but requires careful documentation to avoid disputes.
  • Employers often own IP created by employees during the course of employment, especially under "work for hire" doctrines.
  • Contracts play a crucial role in clarifying who owns IP, especially in collaborative or commissioned projects.
  • Failing to secure or understand IP ownership can lead to costly legal challenges and loss of rights.

Ownership of intellectual property can be a slippery slope. In some cases, more than one person will claim ownership of an idea or piece of work. If that happens, it will be necessary to determine through documentation and other proof who is the true owner of the IP.

What is intellectual property (IP)?

Anything that you have created using your own skills results in intellectual property, or IP. IP is typically defined widely and includes anything from:

  • discoveries
  • inventions
  • copyrighted pieces
  • patents
  • knowledge
  • trade secrets
  • artistic work

It can also include books, software, inventions, research papers and journal articles.

Protection of IP is handled under copyright and patent laws. The rights to intellectual property may be bought and sold using binding contracts. There is typically a trail of documentation to help establish who owns the IP. IP rights can also be established during the creating of the work.

Who Owns Intellectual Property?

Ownership of intellectual property generally belongs to the creator by default. However, several factors can affect this:

  • Employment Agreements: If an employee creates IP within the scope of their employment, the employer usually owns the rights. This is especially true under the "work for hire" doctrine in the U.S.
  • Independent Contractors: These individuals generally retain ownership of the IP they create—unless a contract explicitly states otherwise.
  • Collaborative Works: Joint ownership may arise when multiple parties contribute to a project. In these cases, each party typically holds an undivided interest in the IP.
  • Commissioned Work: Without a written agreement assigning ownership to the client, the creator of the work often retains the IP rights.
  • Licensing vs. Ownership: A license allows someone to use the IP under certain conditions without transferring ownership. Licensing should be governed by detailed agreements to prevent misuse or overreach.

When determining intellectual property ownership, reviewing employment contracts, NDAs, and collaboration agreements is essential. Without clarity, disputes may arise that could delay commercialization or enforcement.

What is a copyright?

A copyright provides the holder of creative work or artistic productions the exclusive rights to copy and distribute those works. Copyrights cover many works including computer programs, publications, paintings and books. The copyright holder has to grant permission before anyone may copy or distribute his or her work.

A piece of work is considered copyrighted upon creation. Once it is expressed through any medium, it is copyrighted. Creators of this material may register the copyright, but it is not required for the copyright to be valid. Copyright holders are allowed to assign their rights to others if he or she chooses to do so in order for that product or idea to be licensed or used.

What is Patent?

A patent is granted by the United States Patent and Trademark Office. It is given to a patent holder, with the right to exclude others for a certain period of time, from using, manufacturing, making or selling an invention in the United States and surrounding territories.

Patents are legal documents that describes an invention in full detail and defines the scope of the product or idea. Patents for inventions may also be obtained in other counties.

At this point, if an employee invents a product while on the job or for the purpose of their employer, the employer will own the rights to a patent if one follows. However, the employee who invented the product could be entitled to compensation, only if the invention, patent, or a combination is considered an outstanding benefit for the employer.

What Can be Patented?

Rights for patents can be granted for all sorts of things, from inventions of new products or processes, manufacturers, machines or any useful and new improvement of items that are already in use.

An invention has to be considered useful, new and non-obvious. New is defined as something that has not yet been disclosed publicly for over a year before the application date.

Items that cannot be patented are ideas, theories, scientific principles or laws of nature.

Transferring and Licensing Patents

Patent ownership can be assigned or licensed to third parties. Here’s how:

  • Assignment: A formal transfer of ownership that must be documented in writing and recorded with the U.S. Patent and Trademark Office (USPTO).
  • Licensing: Allows another party to use the patented invention under specific conditions, such as time frame or geographic scope, while the original owner retains rights.

Assignments are permanent, while licenses can be exclusive or non-exclusive. Exclusive licenses often provide the licensee with significant commercial rights, so it's crucial to structure these agreements carefully.

Companies often require employees and inventors to sign invention assignment agreements to ensure that any resulting IP belongs to the company—not the individual.

What about Designs?

The person who creates the design is the first owner of that piece of intellectual property. Design rights will automatically protect a design for ten years after the first one was sold, or fifteen years after creation, whatever point was the earliest.

There are no official symbols that state a designed is registered. However, you may display the design number on the product or object after it has been registered.

There are many benefits from registering a design. Your design may have some automatic protections in the scope of copyright laws and unregistered design rights. If you created the design, you are likely to be considered the owner and may apply for a design registration. There are some exceptions, like when a design is created under the direction and within the course of your employment.

In the UK, law now defines that unless there is a contract stating otherwise, the location of the design commission does not matter and the designer is the owner rather than the person commissioning it.

Ownership Considerations for Industrial Designs

Design rights may arise automatically or through registration, depending on jurisdiction. However, questions about ownership can still surface:

  • Freelance Designers: If hired for a specific task without a written agreement, the designer often retains the rights to their creation.
  • In-House Designers: When an employee designs in the course of their job, the employer usually owns the design.
  • International Differences: In the EU and UK, unregistered design rights may apply, but registration can offer stronger legal protection.

To avoid ambiguity, businesses should use contracts to assign intellectual property ownership upfront and explicitly.

What are Trade Marks?

The initial trade mark owner will typically be the company that uses the mark first, as long it has not been registered already. The ownership of copyrights also must be considered where the trade mark comes from a copyrighted work, like a novel logo. Copyright ownership can automatically arise or can be transferred.

Resolving IP Ownership Disputes

Disputes over intellectual property ownership can be costly and time-consuming. Common scenarios include:

  • Lack of Clarity in Contracts: Without precise language, it can be unclear who retains ownership, especially in contractor-client relationships.
  • Joint Development Projects: Multiple contributors can create confusion over who owns what, particularly if contributions aren't documented.
  • Departing Employees: If an employee leaves a company without clear IP assignment clauses, there may be conflicting claims over inventions or creations.

To mitigate these risks:

  • Draft thorough contracts defining ownership, use rights, and licensing terms.
  • Regularly audit IP assets and their associated legal agreements.
  • Seek legal counsel when forming joint ventures or entering high-value innovation agreements.

You can find an experienced attorney through UpCounsel to help draft, negotiate, or review contracts involving intellectual property ownership.

Frequently Asked Questions

1. Who owns IP created by an employee at work? Generally, the employer owns the intellectual property if it was created within the scope of employment or under a work-for-hire agreement.

2. Can IP rights be transferred? Yes. IP rights can be transferred via assignment agreements or shared through licensing agreements with clearly defined terms.

3. What happens if there’s no written contract for commissioned work? In most cases, the creator retains ownership of the intellectual property unless there’s a clear agreement stating otherwise.

4. What’s the difference between owning IP and licensing it? Owning IP gives full control, while licensing allows another party to use the IP under specific conditions without transferring ownership.

5. How can companies protect their IP ownership? They should use robust contracts, have employees sign IP assignment agreements, and register IP rights where applicable.

If you need help with ownership of intellectual property, 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.