Knowing who owns intellectual property in a business setting can help to avoid disagreements between you, your business partners, vendors, and customers. It's important to establish ownership rights over intellectual property as quickly and thoroughly as possible to avoid any potential conflict later on.

What Is Intellectual Property?

Anything that comes from a creative process on your part can potentially become intellectual property, otherwise known as "IP." Intellectual property can include, but is not necessarily limited to the following:  

  • Inventions  
  • Discoveries 
  • Work that can be copyrighted  
  • Work that can be patented  
  • Operational knowledge  
  • Trademarks  
  • Trade secrets  
  • Artistic and creative work  
  • Research papers  
  • Books  
  • Software  
  • Journal articles.  

There are a number of copyright and patent laws in place that offer protection for intellectual property.

Copyrights provide intellectual property owners the exclusive right to make copies of, distribute, and to make use of their work. Copyright laws provide protection for creative and artistic products, such as:  

  • Books  
  • Artwork  
  • Computer software  
  • Publications.  

When an individual has a copyright for his or her work, he or she is considered the owner of that work. Therefore, it becomes necessary to get the owner's permission before you copy or distribute his or her work. Copyrights are granted to owners as soon as a work is created and set in what is known as a "fixed medium of expression." 

The owner has the option to register his or her copyright. However, this is not necessary to gain copyright protection for his or her work. Additionally, the copyright owner has the ability to assign his or her copyright to another individual or legal entity. The owner also has the ability to license his or her copyrighted work for use by others.

In the United States, a patent is a grant the federal government issues specifically through the Patent and Trademark Office. This is a legal document that thoroughly describes the patented invention and prevents others from manufacturing, selling, or using the patented item for a limited time. If necessary, patents can also be filed in other countries as well.

Understanding Intellectual Property: Ownership

In many cases, the question of ownership will arise in the following situations:  

  • Investment rounds  
  • Acquisitions.

If questions regarding ownership of intellectual property arise during these stages, it's usually too late to resolve the issue. However, risks can be minimized by the simple act of staying aware of certain issues and following a few critical steps.

Who Can Claim Ownership of the Intellectual Property?  

Your business can't necessarily claim ownership rights to intellectual properties just because the company paid for the work or had it commissioned. Legal positions can vary greatly, depending on who actually created the intellectual property in question. 

Founders, for example, are typically responsible for creating intellectual properties before they decide to form a company. Examples of intellectual property that may have been created before a company's incorporation can include:  

  • Brand names  
  • Algorithms  
  • Domain names  
  • Websites  
  • Mobile applications.

In situations that involve a founder creating intellectual property before the formation of a company, that individual will have exclusive rights to the properties in question and not the company. In many cases, a founder will choose not to enter into contracts of employment or consultancy with his or her company. As a result, any intellectual properties the founder creates during the company's lifetime can generally not be claimed by the company.

As a general rule, any employees who develop intellectual property in service to a company will not be able to claim ownership rights over such property. There are certain exceptions to this rule, however. If the company wants to make sure it can claim ownership rights to intellectual properties that employees develop, there should be provisions in place to make certain this will happen.

Unlike employees, consultants and independent contractors will normally be able to claim ownership rights to any intellectual properties they develop in service to a company, unless there is a written contract in place that states otherwise. This is a common situation, and it's generally a good idea to have a written contract in place if the company wishes to obtain ownership rights to intellectual property developed by a nonemployee.

If you need help with who owns 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, Stripe, and Twilio.