Ask the Expert: Determining intellectual property ownership
"Who owns the Intellectual Property (invention or work of authorship, i.e. software program, website, logo, etc.) that has been created for my business venture and how can I make sure that I own it and not my employee or hired independent contractor?" This is a common and reoccurring question I hear. For purposes of this article, I will focus only on inventions (whether patentable or not) and works of authorship (copyright).
Initially, without any written agreements or particular circumstances, invention ownership vests in and with the inventor(s). If there is more than one inventor, EACH inventor can make full use of the "invention" (i.e. can sell, license or assign his or her interest) WITHOUT accounting to any of the other inventor(s) or patent co-owner(s).
An inventor may be considered either an employee or an independent contractor. I'll discuss both.
If there is no express written agreement between an employer and an employee-inventor relative to inventions, various factors will determine whether the invention is owned by the employer or the employee.
There are two types of written invention agreements based on when they are signed. Some employment agreements have a provision requiring the employee to assign any inventions to the employer. Because these agreements are signed before the employee creates the invention, they are pre-invention assignments and courts will generally honor these agreements. Most typically, an employer will ask the employee to sign an invention assignment which references the invention specifically by name, title, (serial number and/or filing date if a patent has been filed) which will transfer ownership of the invention to the employer. This is a post invention agreement.
Rules for independent contractors differ from employees because there is not likely to be any written agreement that covers an independent contractor relative to inventions. It is extremely important that every contract involving an independent contractor include a written agreement concerning transfer of invention and copyright rights.
Copyright ownership: In the case of a single author, the general rule is that the creator or "author" of the work is the owner of all copyright interests in the work. When two or more people work together to create a single work, a "joint work" will likely be created under the Copyright Act.
The determination of whether a joint work is created can be important in determining each party's rights to the created work. If a joint work exists, then both authors are co-owners of an undivided interest in the entire work and one author can use the entire work as they please without seeking permission from the other joint author(s). However, if a single author makes a profit through the exploitation of the joint work, then the profits will have to be shared with the other joint author(s).
In a work made for hire situation, the "author" of the work is not the individual(s) who created the work but instead, the "author" is considered to be the "entity" which hired the actual creators of the work (such as a corporation for whom the author works for as an employee). The Copyright Act limits the work made for hire doctrine to TWO specific situations only.
The first situation outlined in the Copyright Statutes will apply only when the work's creator is an employee. The determination of whether an individual is an employee is determined under state law and hire can be crucial to the hiring party's ability to fully utilize the created work.
If a work is considered a work made for hire, the author and owner of the work is the hiring party. If the work is not a work made for hire, the hiring party likely has no copyright ownership in the work and its ability to use the work would therefore depend either on the specific terms of its agreement with the author, or upon the concept of an implied license to use the work which may grant the employer only limited rights.
Individuals and companies should pay close attention to copyright ownership issues when hiring computer programmers. Programs written by salaried employees will, in almost all cases, be considered works made for hire and the company itself will be considered the author of the software written by those employees, and ownership will properly reside with the company.
Companies must be especially careful when hiring and dealing with contract programmers or sub-contracting the software development to third party companies since it is important to make sure that the copyright ownership passes all the way from the individual programmer (who might be an employee of a third party OR an independent contractor) to the entity requesting that the software be developed.
Boot Camp for Startups
To learn more, please join me on Jan. 15 from noon to 1 p.m. at the abi Innovation Hub where I will be presenting a seminar titled "Capturing and Owning IP from Employees and Contractors" as part of nine monthly seminars in the abi's "Launch Series: A Boot Camp for Startups." To register contact Michele Petersen at Michele@abihub.org.
If you're unable to attend the Jan. 15 seminar, I'm happy to answer your posted questions at www.unionleader.com/expert or http://abihub.org/ask-the-expert/