Intellectual Property Ownership| Legal Solutions (2023)

December 2014 edition

Tina A. Syring and Felicia J. Boyd, Barnes & Thornburg, LLP

Intellectual Property Ownership| Legal Solutions (1)Intellectual Property Ownership| Legal Solutions (2)Companies often hire and invest in employees to develop new products, improve processes, create new technologies and develop new markets. With this investment, it should come as no surprise that employers generally own the intellectual property created by its employees in the course of their employment. However, intellectual property that is created by an employee, other than in the course of employment, is owned by the employee not the employer. These simple principles present challenges for employees and employers alike.

Employers should not rely on assumptions of ownership

Intellectual property created during the course of an employee's employment does not equate to the employer's automatic and exclusive ownership of any and all intellectual property. In fact, employers who mistakenly believe that they own such property automatically can pay an expensive price – monetarily and through the loss of inventions or improvements – for failing to protect such intellectual property or effectively securing the rights from employees.

Critical to an employer's ownership of intellectual property is a written agreement with the employee, one which specifically assigns to the company any and all intellectual property created by the employee during the course of his or her employment with the company. Such an agreement is often called an "assignment of inventions" or "ownership of discoveries" agreement. Absent such an agreement, the employee may have ownership rights in the intellectual property he or she created while working for the company, even if the individual was specifically hired to invent a particular product or process.

(Video) Intellectual Property (IP) Ownership Clauses

To avoid disputes over whether sufficient consideration exists to support the validity of the agreement, employers should require that the agreement is executed prior to the commencement of the employment relationship, and the agreement should reflect that but for the employee's execution of the agreement, the company would not employ the individual. In the event the agreement was not entered into contemporaneous with the start of employment, the employer will need to provide additional, sufficient consideration to support the agreement. Such consideration can include, for example, a promotion, a one-time bonus, or, for example, a grant of restricted stock options. If entered into after the employment relationship has been established, the consideration must be more than a nominal amount in order to support the agreement. A dollar is not likely to constitute sufficient consideration.

Also important to the agreement is the inclusion of an addendum, wherein the individual identifies all intellectual property in which he or she has an ownership interest prior to the commencement of his or her employment with the company. If the agreement is executed after the commencement of employment (and sufficient consideration has been provided as noted above), the employer still should have the employee identify all intellectual property he or she believes to own. In the event the employee identifies and claims ownership of intellectual property that has been created during the course of employment and with company resources, and claims ownership to such property, the company should immediately work to determine if the employee truly owns it or if it is owned by the company. By doing this at the outset of the relationship and/or execution of the agreement, employers are proactively mitigating possible arguments later down the road about who owns what.

Employers also should make sure the written agreement complies with applicable state laws. For example, certain states require that the agreement include clear language carving out intellectual property created by the employee (i) entirely on his or her own time, (ii) without the use of any company property (e.g., equipment, supplies, facilities or confidential, trade secret information), (iii) that does not relate directly to the company's business or anticipated research or development, and (iv) does not result from the individual's work performed for the company. Some employers require employees to continually disclose intellectual property created outside the realm of his or her employment relationship. Again, this is done to avoid future arguments as to whether the company actually owns such intellectual property.

Next, employers should include language detailing what happens if the employee misappropriates and/or infringes upon the company's ownership of intellectual property. The agreement should contain a remedies and relief provision, which includes the right to seek injunctive relief and the recovery of attorney's fees and costs upon demonstration of the employee's breach. Often times, employers forget to include such language and, as a result, there is no meaningful "teeth" to the agreement, causing some employees to be bold in their self-interested actions.

Finally, employers should remember to use similar "assignment of inventions" or "ownership of discoveries" provisions or agreements when working with independent contractors. The independent contractor agreement should clearly state that the independent contractor's work of authorship, finished product, invention, or other intellectual property will be owned exclusively by the company, free of any royalty fee or license. The agreement also should state the independent contractor "hereby assigns" all rights in the intellectual property so to eliminate any issues if and when the company pursues a patent or copyright.

(Video) Intellectual Property & Ownership: Questions Answered!

Tips for the employer:

  1. Determine if you have a written agreement with your employees and independent contractors. If so, does it include an "assignment of inventions" or "ownership of discoveries" provision? Does that provision clearly state the employee "hereby assigns" all rights and ownership in the intellectual property, trademarks and/or copyrights?
  2. Make sure the written agreement is supported by sufficient consideration. Was the agreement executed prior to commencement of employment or later? If later, what additional consideration did the company provide to the employee in exchange for his or her execution of the agreement?
  3. Have prospective employees and/or independent contractors clearly identify, in writing, any intellectual property they may own prior to commencing the employment or contractual relationship.
  4. Periodically have employees update and identify, in writing, any intellectual property in which they believe they own and make sure such intellectual property was created independent of the company's resources and the employees' duties.
  5. Conduct exit interviews with employees and independent contractors, reminding them of their contractual obligations.
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Opportunities exist for employees to own their ideas

Where there is no employment agreement, policies or written agreements to assign rights to the employer, employers may still successfully assert ownership rights in employee inventions created during the course of the employee's employment. The lynchpin to an ownership analysis is often whether the idea was created "in the course of the employment." It is not sufficient for an employer to point to a paycheck and lay claim to all of an employee's ideas. Rather, the idea at issue must have been created during the course of the employment relationship. Thus, close examination of the relationship may reveal that the employee owns the ideas because they were developed outside of the employment relationship.

A primary focus of this analysis will be the reason for the hire of a particular employee. If the employee was hired to create intellectual property as part of their job, the employer will be the owner of the intellectual property. Thus, examination of the written employment contract and the duties described therein can be determinative of the ownership inquiry. Absent a written agreement, the courts will look to the nature of the position and whether the employer gave directives or set goals for the employee to achieve. Ideas which stem from these directives will generally belong to the employer. Consideration needs to be given to all the circumstances.

For example, care must be taken when asserting ownership simply because the idea was conceived or developed at home, during non-working hours or using personal equipment. The fact that an employee used the employer's equipment is not enough by itself to show that the employer should own the intellectual property created with the use of that equipment. Similarly, it is not enough for the employee to claim ownership simply because he or she used their personal equipment or conceived the idea at home. The analysis will delve deeply into the role the employee played at the company and whether the idea stemmed from that role. Thus, the employee in the shower at home who suddenly conceives of the long sought after solution he has been working on at his job cannot claim ownership of the idea simply because the idea arose in the shower. Likewise, an employer cannot claim rights to an employee's creation of a computer software game built at home where the employee's work role bears no relationship to game creation, even where the employee took notes during work hours related to his game ideas or tested those ideas on employer-owned computers.

One must also consider whether there is, in fact, an employee-employer relationship. In many cases, the hire is one of an independent contractor. This too is a multi-factor analysis, but one with significant consequences. Independent contractors generally own what they conceive in the absence of written agreements specifically transferring ownership of the same to the contractor. For example, under federal copyright laws, ownership of copyrightable works is generally held by the author (the individual who creates it), with the express of exception of works made by employees during the course of their employment. This exception does not apply to works made by independent contractors. Independent contractors will own the copyright unless: (1) the work falls within one of nine statutorily specified types of works and there is a written "work-for-hire agreement" between the creator of the work and the company who commissioned its creation; or (2) the copyrights are assigned in writing by the contractor. The nine types of works that qualify as works for hire are narrow: a contribution to a collective work, part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional test, a test, answer material for a test, and an atlas. Fall outside these categories and the copyright belongs to the independent contractor.

Patent ownership, like copyright, is presumptively owned by the inventor, i.e. the employee inventor. Employment agreements will usually require assignment of ideas, including patentable ones, to the employer. Even if such an agreement is not in place, employee ownership may not result in exclusivity of use or exploitation of that idea. The employer may still hold "shop rights" in the process or invention whose development it supported. The idea of shop rights simply gives an employer who provided funding, materials, tools, or work time for the project nonexclusive royalty-free rights to use an invention. The employer may not assign or transfer any shop rights to another unless expressly allowed, with the exception of a transfer of the employer's business as part of a business sale.

(Video) FAQ: IP Ownership with Morgan Kirley, Patent and Intellectual Property Attorney

Contracts will play a role in the ownership of trade secrets as well. Absent a contract, state law will govern ownership. This is a patchwork of laws and decisions which may assist the employee to assert ownership over a trade secret or attack the notion that the idea is a trade secret, where a contract does not exist or is not sufficiently specific with respect to the idea at issue. If the idea is not protected by copyright, patent or trade secret law, the idea is free for any and all to take, regardless of one's current or former employment relationship.

Finally, trademarks and slogans are not typically the subject of ownership disputes. Trademarks belong to those who use them, not those who create them. Thus, the company which uses a mark to promote a service or good will own the mark and the goodwill associated with that mark. Disputes over trademark ownership in an employee-employer relationship would be atypical.

Tips for the employee:

  1. Examine your employment agreement. What did you agree to do? Understand what you sign before you sign it and seek legal advice if you are unsure of what rights you have retained.
  2. Look at any other agreements executed and determine whether consideration was paid for the execution of those agreements. Agreements signed after you are employed will be open to challenge if additional, or insufficient, consideration was not provided for these new obligations.
  3. Keep records documenting the creation of your ideas on your own time, with your funds and your own equipment. Do not rely on memory and do not assume that ideas worked on at home or on your own time belong to you.
  4. Review non-compete agreements to assess their enforceability and reasonableness. Certain states will not enforce any non-compete agreements even those agreements which have the effect of hindering the freedom of employee job changes and which are not labeled as "non-compete" agreements.
  5. Were you an employee or an independent contractor? The difference matters in determining ownership and should be reviewed by a legal professional.

This Barnes & Thornburg LLP article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.

About the authors

Tina A. Syring is a partner in Barnes & Thornburg LLP's Minneapolis office and a member of the firm's Labor and Employment Law Department. Ms. Syring counsels clients on a variety of labor and employment issues, drafts and negotiates executive compensation agreements, and works with employers on the impact of social media. Ms. Syring was selected for inclusion in the 2011, 2012, 2013 and 2014 editions of Minnesota Super Lawyers®, and was named a Minnesota Rising Star by Minnesota Law & Politics. In 2013 and 2014, Chambers USA recognized Ms. Syring as an up and coming lawyer in the area of Labor & Employment: Minnesota.

Felicia J. Boyd is a partner at Barnes & Thornburg LLP's Minneapolis office and is co-chair of the firm's Intellectual Property Department. Ms. Boyd focuses her practice on complex intellectual property litigation and has led plaintiff and defense litigation on a large variety of claims related to patents, copyrights, trademarks, and trade dress. Ms. Boyd was recognized by Chambers USA for her IP Litigation practice and has been included in The Best Lawyers in America for the years of 2010-2015 in the field of intellectual property law. In 2013, Minnesota Lawyer named Ms. Boyd as one of its "Attorneys of the Year" and Minnesota Monthly recognized her as one of "Minnesota's Best Lawyers."

(Video) Introduction to IP: Crash Course Intellectual Property #1

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What is the solution of intellectual property? ›

The best way to protect IP is to register it with the government and enforce your ownership rights. Beyond registration and enforcement, you can protect certain types of intellectual property by: Documenting your discoveries. Using digital rights management.

How do you claim ownership of intellectual property? ›

In the United States, an inventor or multiple inventors must apply for a patent. Ownership can then be assigned to a corporate entity afterward. Patent ownership can also be transferred to assignees and successors who then become proprietors of the patent.

What are the 4 types of intellectual property? ›

Patents, trademarks, copyrights, and trade secrets are valuable assets of the company and understanding how they work and how they are created is critical to knowing how to protect them.

What are five ways to protect intellectual property? ›

5 Steps to Protecting Your Intellectual Property
  • Keep Business Ideas and Trade Secrets a Secret. ...
  • Document Your Concepts and Original Content in Detail. ...
  • Apply for a Trademark. ...
  • Register All Your IP, Trade Secrets, and Creative Works. ...
  • Make the Investment.

What solutions help to protect intellectual property holders in foreign countries? ›

To obtain similar protection in other countries, you generally have two choices:
  • Make a separate patent application in each country. ...
  • File a single international application under the Patent Cooperation Treaty (PCT) that is administered by the World Intellectual Property Organization (WIPO)
Jul 21, 2021

How intellectual property rights can be improved? ›

8 Strategies To Strengthen Your Business Using Intellectual...
  1. File multiple provisional patent applications (PPAs). ...
  2. Become deeply familiar with the prior art. ...
  3. Continue filing provisional patent applications (PPAs) as you improve your invention. ...
  4. File patents internationally. ...
  5. Don't forget about design patents.
Mar 27, 2019

Who owns intellectual property in a company? ›

Rights can be transferred to someone else (eg by selling them). Intellectual property created in the course of employment (ie it's part of what they are paid to do) by an employee generally belongs to the employer.

What are the 3 types of property ownership intellectual property rights? ›

Types of intellectual property
  • (Photo: Copyright. Copyright is a legal term used to describe the rights that creators have over their literary and artistic works. ...
  • (image: Patents. A patent is an exclusive right granted for an invention. ...
  • (image: WIPO/Gen a) Trademarks.

Who owns intellectual property if no agreement? ›

IP Created by Business Owners

However, unless the owner is employed by the company, and hired for the purposes of creating IP or working within their scope of employment, ownership rights in the IP are likely retained by the creator, i.e., the company owner, and not the company, absent an assignment agreement.

What are the two main areas of intellectual property? ›

Intellectual property has two categories: industrial property and copyright and neighboring rights. Industrial property includes patents, trademarks and other marks, geographic indications, utility models, industrial designs, topographies of integrated circuits and trade secrets.

What are the 7 intellectual property rights? ›

In India, there are 7 types of intellectual property rights, namely – copyright, trademarks, patents, geographical indications, plant varieties, industrial designs and semiconductor integrated circuit layout designs.

What are the solution of intellectual property violation? ›

Patenting or copyrighting works and processes, and actively defending them in court, are two traditional ways of securing IP. Digital Rights Management schemes are used in modern techniques.

What is the strongest form of intellectual property protection? ›

Patent protection is the strongest form of intellectual property protection, in that a twenty-year exclusive monopoly is granted to the owner over any expression or implementation of the protected work (35 U.S.C.

What are the three main ways to protect intellectual property? ›

There are only three ways to protect intellectual property in the United States: through the use patents, trademarks or copyrights. A patent applies to a specific product design; a trademark to a name, phrase or symbol; and a copyright to a written document.

How can we protect intellectual property globally? ›

You must protect your IP by filing for a patent in a specific country. In order to file for a patent overseas, you must already have a U.S. Patent and Trademark Office license.

How does the US government protect intellectual property? ›

U.S. law provides for civil, criminal, and border enforcement of IP rights. The USPTO and partner agencies provide online tools and information for how to protect and enforce intellectual property rights, but rights holders should seek legal advice from a licensed attorney.

What are the two ways you can protect intellectual property? ›

patent a completely new working part. use copyright to protect drawings of the product.

What is improvement in intellectual property? ›

IP Improvement means any invention, discovery, upgrading or modification and all other Intellectual Property Rights (whether patentable or not) created by either Party or jointly by the Parties during the Term in performance of a Party's rights or obligations under this Agreement, including any manufacturing processes, ...

How can I protect my intellectual property without a patent? ›

If you determine that the invention is probably not patentable, the most effective way to protect yourself is to have prospective licensees sign a nondisclosure agreement before you reveal your invention. This document is sometimes called an "NDA" or a "confidentiality agreement," but the terms are similar.

Why is intellectual property an important issue today? ›

Why is it important to protect intellectual property rights? Your IP rights are important because they can: set your business apart from competitors. be sold or licensed, providing an important revenue stream.

Can an LLC protect intellectual property? ›

The liability protections of an LLC do not apply to intellectual property infringement. It should also be noted that certain IP infringements are federal crimes, including counterfeit trademarking, infringement of copyrighted works, counterfeit labeling and theft of trade secrets.

Can a company take your intellectual property? ›

As a general rule, an employer will own the intellectual property created by its employees in the course of their employment. However, intellectual property that is created by an employee, other than in the course of employment, is owned by the employee, not the employer.

Can ownership of intellectual property be shared? ›

Typically, joint ownership is created where an IP right comes into existence by the efforts of two or more persons, such as a collaborative invention or joint creation. In general, it refers to a right in undivided shares. Each joint owner is permitted to assign his share to a third party.

What is the importance of intellectual property ownership? ›

IP ensures you are recognised as the creator of such things as an invention; literary and artistic works; designs and software. To protect these types of IP there are: registrable rights - IP Rights (IPRs) such as patents, trademarks and design rights; and. unregistered rights such as copyright.

Is intellectual property ownership the same as license? ›

Note that the assignment of IP is different than licensing IP. Under an assignment, ownership and all rights are transferred. With a license, there is no transfer of ownership and only limited rights to use the IP are given.

What does the intellectual right of ownership protect? ›

Inventors, designers, developers and authors can protect the ideas they have developed, for instance by means of copyright or patents. The aim is to prevent others from wrongly profiting from their creations or inventions. It also gives them an opportunity to earn back the money they invested in developing a product.

Can you sue over intellectual property? ›

Intellectual property (IP) theft occurs when someone uses your intellectual property for any reason without your permission. Laws protect intellectual property rights, including trademarks, copyrights, and patents. If you have the proper protections, you can sue for money damages.

Who owns IP employee or employer? ›

Under India's Copyright Act, 1957 (the “CR Act”), any work product, including source code, if developed by an employee, the employer will be the first owner of the copyright in such work product, in the absence of any contract to the contrary. (Section 2(o) r/w section 17 of the CR Act.)

What IP is commonly violated by most people? ›

Although intellectual-property infringement can be unintentional, it still unacceptable under the eyes of the law. The most common examples of intellectual property disputes include using another's words, images, or logo without the property owner's permission.

What are the main threats to intellectual property? ›

Intellectual property threats include threats from unauthorized copying over the internet, threats from hackers, and threats from employees.

What is the most valuable intellectual property in the world? ›

Google's trademark--now the most valuable on the planet, according to Brand Finance--is worth an estimated $44 billion, or 27% of the firm's overall value, measured by market capitalization (its stock price multiplied by the number of shares).

What is the most common type of intellectual property? ›

Patents are the most common type of intellectual property rights that come to people's minds when they think of intellectual property rights protection.

What is the difference between copyright and intellectual property rights? ›

The terms “copyright” and “intellectual property” are often used interchangeably. However, copyright is just a part of the scope of intellectual property, as are trade marks, patents, and designs. Intellectual property (IP) describes a form of property which is the intangible output of the human creative mind.

What is intellectual property for dummies? ›

Intellectual property, or IP, refers to anything created by the human mind that is granted the same rights associated with tangible or personal property. These rights are obtained by the IP's creator and function under statutory law on either or both the state and federal level.

What are some examples of intellectual property? ›

Your intellectual property includes the intangible assets you create for your business, such as names, designs, and automated processes.
  • Company and product names.
  • Slogans and taglines.
  • Logos and symbols.
  • Brand colors.

How are conflicts resolved on intellectual property rights? ›

Mediation is provided to the parties as the first viable option in resolving their dispute. Once mediation is not successful, the case is submitted to litigation for resolution. Mediation is a process of settling dispute with the help of a third neutral party called the mediator.

What is the conclusion of intellectual property? ›

Intellectual property rights are monopoly rights that grant their holders the temporary privilege for the exclusive exploitation of the income rights from cultural expressions and inventions.

What are the solutions to copyright? ›

Six steps to protect against copyright infringement claims
  • Do not copy anything. ...
  • Avoid non-virgin development. ...
  • Avoid access to prior design work. ...
  • Document right to use. ...
  • Negotiate for enhanced warranty and indemnity clauses. ...
  • Document your own work.

What are 3 effective ways to resolve conflict? ›

Some Ways to Resolve Conflicts
  • Talk directly. Assuming that there is no threat of physical violence, talk directly to the person with whom you have the problem. ...
  • Choose a good time. ...
  • Plan ahead. ...
  • Don't blame or name-call. ...
  • Give information. ...
  • Listen. ...
  • Show that you are listening. ...
  • Talk it all through.

What are the 4 basic strategies for resolving conflicts? ›

4 steps To resolve Conflict: CARE
  • Communicate. Open communication is key in a dispute. ...
  • Actively Listen. Listen to what the other person has to say, without interrupting. ...
  • Review Options. Talk over the options, looking for solutions that benefit everyone. ...
  • End with a Win-Win Solution.
Mar 13, 2017

What are three legal ways to protect intellectual property? ›

Intellectual property can be protected four ways:
  • By copyright.
  • By patent.
  • As a trade secret.
  • By trademark.

Why is intellectual property important in today's society? ›

Whether you're a start-up or a family business that's been trading for generations, recognising and protecting your intellectual property (IP) is critical to growth, protecting what's yours and maintaining a good reputation. IP is about protecting the time, money and effort you put into your business.

Why is intellectual property important in society? ›

The primary function of intellectual property rights (IPRs) is to protect and stimulate the development and distribution of new products and the provision of new services based on the creation and exploitation of inventions, trademarks, designs, creative content or other intangible assets.


1. Company Vs Employee, Ownership of Intellectual Property and What you Should Know Before You Hire!
(The Patent Guru)
2. "Intellectual Property Basics: Understanding Patents, Trademarks, Copyrights and Trade Secrets"
(Cliff Ennico)
3. Intellectual Property Law Explained | Copyrights, Trademarks, Trade Secrets, & Patents
(All Up In Yo' Business with Attorney Aiden Durham)
4. Legal Services Interest Group Webinar: IP101 – Introduction to Intellectual Property
(Singapore International Chamber of Commerce)
5. Episode 3: Ownership and Intellectual Property
(Open Restitution Africa)
6. Panel Discussion | Law 2.0 Conference | Las Vegas
(Law 2.0 Conference)
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