It’s often said that 80% of the value of businesses lies in their intellectual property (IP). So, put simply, if you don’t get the ownership of IP clear at or before the point of creation, then you risk losing the money and time you have invested in it.
Not owning any one IP right could potentially be disastrous for your company: it could mean someone else can stop you doing what you want to do, it could mean that an investor won’t invest, and it could mean you need to carry out a complete rebrand.
Determining who owns a certain IP right can depend on the situation as well as the right in question. We’ll therefore consider some common situations and where the ownership lies.
In general, the rights to a creation, whether an invention to be patented, a design to be registered, or a creative work, like a book subject to copyright, belong to the creator. However, if the creator is working for a company then it is quite likely that the company is the owner.
Firstly, employment contracts often have terms that transfer ownership of employee creations to the company. This will likely override any law that specifies that the creator is owner. Even if there are not terms in the contract of employment relating to IP ownership, it is likely, at least in the UK, that the employer still owns the creation.
In patents, if an invention is made by an employee in “the normal course of his duties” then the invention belongs to the employer. To put that in context, if the inventor is employed by a software company as a developer and the invention lies in code that has been developed, then the company almost certainly owns the invention. However, if the inventor was actually employed as a receptionist and happened to do some coding in his or her spare time, then it is probably not owned by the employer.
If you’re an employer, it is always worthwhile ensuring that your employment contracts deal with IP ownership, irrespective of whether the rights are likely to automatically transfer to you as the employer.
So what happens when a founder has created something, but they are not explicitly employed by the company? Well, owners of companies and directors are deemed to have a special obligation to the company. For example, even if they are not part of a technical team who are meant to be inventing, this special obligation would extend to creating potentially patentable inventions that may be of benefit to the company. As such, it is likely that everything created by someone at director level is owned by the company.
When the idea was created before a company was officially set up the issue of ownership gets a little more complex. In these circumstances, the original creator would arguably be the owner. When founding the company it would be best practice to get all IP associated with the newly founded company, even if it was created before the company was founded, assigned over to the company. Otherwise a founder could cause problems down the line.
If you use an external contractor for some work, say a consultant with particular technical expertise and they invent something, then as the inventor it is likely that they will own whatever they have created.
It is therefore always best to ensure you have a contractual agreement in place before any non-employee starts doing work for you and ensure that the contract deals with IP ownership. However, it is worth noting that UK design law is slightly different in that if a work is commissioned by a company to a contractor, then the company owns any resulting IP.
In the UK and Europe registered trade marks are owned by the person or company first filing the registration. There is therefore generally less of an issue when it comes to ownership. However, it is worth noting that in other countries like the US, the ownership is determined based on who used the name or logo first.
Where you do need to watch out is where you get an external consultant to design your logo, which you may then register as a trade mark. While your company that filed the trade mark may own the trade mark, copyright would exist in the original work put into designing the logo. The external consultant that designed that logo would likely be the owner. As such, make sure that you get any IP created by such a designer assigned over to your company.
Well, on your head be it!
When it comes to patents only those who own the rights to an invention are entitled to file a patent application directed to that invention. If you file an application anyway, then any third party, at any time, can start legal proceedings in the UK to have themselves named as the rightful owner of your patent application or patent.
If this happens, your patent application or patent may be taken from you, regardless of the money and time you have invested in it.
Taking a minute or two to determine who owns this invention, design or logo at the outset can save you time, money and considerably reduce your stress levels.
While various provisions exist to ensure that employers own IP created by their employees and anyone commissioning a design owns the resultant design, it is always best to put a written agreement in place that clearly shows the ownership of IP.
As much as anything, this will help to ensure you don’t have to spend unnecessary money explaining that you do own a certain IP right because the written agreement should make it crystal clear that you are the owner.
Answer last updated: 17 Jan 2018Tags: