You paid for it, but do you actually own it?
“But I told them what I wanted, and I paid for it, therefore I must own the Intellectual Property!”. This is something a client recently said to me while discussing a potential trade mark dispute. It may seem like a logical conclusion, but it’s not necessarily true.
Intellectual Property (IP) ownership is not always as straightforward as many assume.
Trade marks, patents, designs, copyright, trade secrets, etc, are often some of a business’s most valuable assets, yet they can also be the most overlooked. Without proper planning, businesses can find themselves without legal ownership and control of these extremely important assets.
Commissioning the creation of a work
Whether it be your website, photographs for an event, a logo or packaging, commissioning a third party to create the work is commonplace. However, commissioning and paying for a work does not automatically mean you own the copyright in the work. In most cases, the person who creates the work, or in the case of a company, their employer, owns the intellectual property.
Without securing copyright ownership, you may be unable to modify or further protect the work, leaving you subject to restrictions if you rebrand or scale. We have recently seen an upturn in business break-ups in which a company’s name and logo are in dispute by former directors of the business. In these cases, one of the parties may claim they own the copyright in the logo because they commissioned the designer; however, no written assignment exists, meaning the designer retained ownership of the copyright.
The lesson is to always include a written IP assignment clause in any contracts regarding commissioning a work. This ensures that ownership of the economic rights will belong to your business, allowing you to use, adapt, and sell the work without restriction.
It should, however, be noted that the creator of the work has the right to be identified as the creator of the work. This is a separate moral right which cannot be assigned, although it can be waived.
Employee creations
The good news is that, in most cases, IP created by employees belongs to the employer so long as the work is created by the employee in the course of their employment. Serious issues can arise when employees create work outside of their normal contracted duties. For example, if a marketing manager does some web design and photography, it may reasonably be considered to be part of their employment, but if the person is employed as a waitress, but does a bit of web design on the side or takes some photos, they may retain the copyright in that work since that would not be considered part of their “normal duties”.
A copyright case arose from a photo taken by, the then, Prince Charles’ chef, Carolyn Robb. The photo was later used as the official engagement photo of Prince Charloes and Camilla and on postage stamps, reportedly without her foreknowledge or consent. Since the photo was not done “in the course of her employment,” she retained ownership of the copyright.
Employment contracts should clearly state that all IP created during employment or working hours belongs to the company and that employees must assist in confirming or transferring rights as needed. This eliminates ambiguity and reduces the risk of disputes.
Volunteers
The UK Copyright, Design and Patent Act does not specifically mention works created by volunteers of an organisation for that organisation, therefore, copyright is presumed to belong to the creator of the work, and permission must be obtained. Unfortunately, there have been instances of work being produced by volunteers and then, due to a dispute between the volunteer and the organisation, consent for the use of the work being denied or withdrawn. So, once again, it is important to have any assignment or licence in writing and to keep a record of this.
Dissolving a Company
One of the most overlooked risks arises when a company is dissolved. If IP is not properly dealt with before the company’s dissolution, it may become bona vacantia, i.e., “ownerless” property, and pass to the State in Ireland or the Crown in the United Kingdom.
A common misunderstanding we come across relates to the ownership of the assets of a company. A company is a separate legal person, so even if you own 100% of the company, it does not mean you personally own the IP rights
If the company is dissolved, any rights, including IP rights, held in the Company’s name must be disposed of. The owner of the company does not automatically become the owner of any assets which have not been disposed of.
If your company is being dissolved, you need to identify your IP assets. Does the company own:-
- trade marks and brand assets,
- domain names and copyright in a website,
- copyright in marketing materials,
- patents,
- design rights,
- commercial know-how, databases and commercially sensitive information, or
- software or proprietary materials?
Once your IP assets have been identified, have a written assignment document completed transferring them to a new entity or individual. Then, in the case of registered IP, record the change in ownership.
Recovering these valuable assets later can be time-consuming, expensive and, in some cases, impossible; therefore, it is essential to plan ahead to ensure they remain under your control.
If you are unsure whether your business properly owns its IP, it is worth reviewing your contracts and arrangements sooner rather than later.
If you need guidance concerning the ownership and protection of your Intellectual Property, why not make an appointment with one of our Patent and Trade Mark Attorneys who can help guide you through this complicated area.
