IP information
Who owns what if it all ends?
It is only when something goes wrong, or you need to enforce or defend your inventions, trade marks, copyright, designs or patents, that you find out that all may not be well with the ownership details of your intellectual property. If this happens, you may be unable to use your IP as quickly as required to stop a third party from infringing your IP, or to defend a challenge to your right to own the IP.
It is generally the safest and most cost-effective thing to do to agree who owns what from the outset. Who will own the copyright of a design produced for you by a consultant? Who will own any intellectual property developed during the course of business by a limited company or a partnership, or in collaboration with another company, business partner, contractor or design agency?
Being mindful of what can go wrong and making contingency plans does not always take place when a new, exciting and challenging venture is being embarked upon. But what happens if the best friend you went into business with starts to do something you don’t like with the IP, or decides to leave and set up alone? What happens when you want to register your company logo as your trade mark, but you had it designed by a consultancy?
Like a celebrity signing a “pre-nup” agreement it is a good idea to think about who gets what in the case of a parting of the ways. Define in writing, when you start out, who owns the intellectual property which is there at the start and which also develops as the business goes along, and include provision about what will happen if the business relationship finishes or goes sour.
Consultants and designers
It is prudent to define at the outset of a relationship with a contractor who will own the copyright or design rights in a logo, photograph, product or design once a project has been completed and paid for. It is not always known that the owner of copyright in some articles is the person who designs or photographs it and not automatically the person who is paying the bill. Sometimes it does not become apparent that you do not own the copyright in something until it is used again or passed by the designer to a third party who uses it in your market.
When you commission a third party to do something for or with you, you need to establish that any rights to the intellectual property transfer to you or come into subsistence in your ownership. If an assignment document is required to transfer ownership then we can help provide one.
Employees
If an invention or improvement is made during the course of an employee's tenure with you, or if they coin wording or names, or write articles as part of their job then, as their employer, as a general rule, you will be the owner of the copyright (or trade mark or patent). However, it doesn’t hurt to have a clause inserted into any employment contract that any IP generated or used during the course of their employment belongs to you.
(Potential) Business partnerships and collaborations
You may not have the total range of skills, facilities, equipment or expertise to develop your products to work better or to reach new markets. If you decide to form a joint venture with another individual or company then you should agree the terms for using your (and their) intellectual property such as patents, copyright, trade marks, designs, know how and trade secrets. You should also consider whether you need to have confidentiality/non-disclosure agreements put into place during initial exploratory talks and negotiations and/or for the whole duration of the joint project to ensure that the IP of the respective parties is protected and is not open to dispute later.
For example, will know how, trade secrets and patents be used in the course of developing a new product without the other party paying a royalty or taking a licence? Who will own the rights to any inventions, trade marks, copyright or designs when a new or improved product comes into being? Talk to us about licensing and confidentiality/non-disclosure agreements before you start.
Partnerships
When two or more people decide to go into business then, in a similar way to above, there may be intellectual property already in existence to put into the “pot” and new intellectual property may be created.
It should be agreed who owns the existing IP and it could either be transfered to the partnership or agreed that it should be used under license. It should also be agreed how any new IP that comes into existence will be owned. If at a later date it is decided to break-up the partnership it will be necessary to decide what should happen with the IP. The disbanding partnership may have to assign the rights to its intellectual property to another entity or individual for it to continue to be enforceable. This will be much easier of the ownership position is already clearly set-out.
Limited companies
As in the case of a partnership, a limited company is a legal entity with its own identity, it can own property and assets and it can trade. So you should decide whether the company itself will own any IP brought to it, by transferring it to the limited company, or whether it will use it under license. You will also need to decide to whom such rights will accrue and whether the company will own any new IP which arises. It is not uncommon for intellectual property to be owned by a director and used by the company under (royalty free) license or owned by the company itself, in which case it becomes an asset of the company.
If you would like more information, please contact us on 01788 547 389.
This news item may contain information of general interest about current legal issues, but does not contain legal advice.