PRESUMPTIONS ABOUT INTELLECTUAL PROPERTY: The Real Story
There are some presumptions that address the ownership of intellectual property, specifically that created by folks who are working for other folks. This is supposed to make company owners/founders more secure in the ownership of this valuable resource. Here are three of the most relevant to startups:
- Anything an employee creates while working for an employer is presumed to belong to the employer.
- Anything created by collaboration with the intent to be part of one creation is jointly owned by all collaborators and can be used by any one or more for their individual financial benefit.
- Anything created by a non-employee as a “work for hire” belongs to the person who commissioned it.
Now the bad news. These are presumptions, not rules, and they can be rebutted, particularly if you are not clear in defining roles and responsibilities.
- If an employee does not know they are an employee but think they are a founder or partner or contractor, they can contend that they own the IP and that it does not belong to the company.
- A collaborative effort is wonderful, until someone gets mad. Then the angry party can take the results of the collaboration and start another business using the collaboration to make money in competition with you, and it is perfectly legal.
- “Work for hire” by someone other than an employee can only be a work specially ordered or commissioned for use as:
- a contribution to a collective work,
- a part of a motion picture or other audiovisual work,
- a translation,
- a supplementary work,
- a compilation,
- an instructional text,
- a test,
- answer material for a test, or
- an atlas,
AND then only if there is a written agreement with the magic words “work for hire” included.
So, what is a careful founder or CEO to do? Every person who makes a contribution to the intellectual property of the company should sign a non-disclosure, confidentiality and assignment agreement as part of joining the venture. This should protect all of the various intellectual properties created in any company and bring it all under the ownership of the company.