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Businesses often rely on employees or independent consultants to develop their intellectual property assets and assume that they automatically own the intellectual property rights on the resulting creations. However, this is not always the case. National laws vary broadly, both as to who is the first owner and how ownership can pass to others. To prevent misunderstandings, it is best to clarify the issue of intellectual property ownership in any agreement with employees or independent contractors and, preferably, to get specialist advice.

Intellectual property created by employees

Many employees create intellectual property in the course of their employment. This may be a software program, article, architect's plans, new logo, new product or product packaging, business plan, invention or many other types of creative work.

But who owns the rights to these materials: the creator or the employer? The answer varies from one country to another and even within a given country, it may depend on the law and the employer/employee relationship.

Inventions

In many countries, the employer owns an invention made by an employee if it is related to the employer's business, unless the employment contract stipulates otherwise. Conversely, in some countries the rights to inventions belong to the inventor, unless otherwise agreed.

In other countries, for example the United States, the employee may retain the right to exploit the invention, but the employer has non-exclusive rights to use the invention for internal purposes. This is known as "shop rights". Some countries grant employees the right to a reasonable compensation for inventions, whereas other countries do not grant any remuneration whatsoever, or only limited remuneration in exceptional cases. Copyright

In most countries, if an employee produces a literary or artistic work, the employer automatically owns the copy-right, unless otherwise agreed. But in some countries, the transfer of rights is not automatic. There are several circumstances under which an employee may own all or part of the rights. For example, if the employer is a publisher, the employee will, in most countries, own the copy-right for some purposes, such as the publication of a book, and the employer owns the copyright for other purposes. In other countries, if an employee generates software in the course of employment, he or she owns the copyright, unless otherwise stated in the employment contract. The moral rights - i.e., the rights to claim authorship and to oppose changes to the work that could harm the creator's reputation - are not transferable. They remain with the author, even if he or she has transferred ownership of the economic rights to the employer. In some countries, such as the US and Canada, moral rights can be waived.

Industrial designs

Generally, design rights belong to the employer. In some countries, however, employees retain the right of ownership, unless otherwise agreed. In some cases, the employer has to pay the employee an equitable reward, which takes into account the economic value of the industrial design and any benefit the employer derives from using it.

In other countries, the creator of an industrial design remains the proprietor un less he or she has received a reward for it.

Independent contractors

Companies regularly engage consultants or independent contractors to create material for them. In this case, both the company and the independent contractor should take care to address the question of ownership of intellectual property assets. For example, they need to decide, if the contractor presents a number of designs or logos and the company accepts only one, who owns the intellectual property rights over the remaining options.

Inventions

In most countries, an independent contractor hired to develop a new product or process owns all rights to the invention, unless agreed otherwise. This means that, unless the contractor has a written agreement with the company giving ownership of the invention to that company, the company will have no ownership rights, even if it paid for the development process.

Copyright

In most countries, a freelance creator owns the copyright, unless he has signed a written agreement that this is "work for hire."

If there is such a written agreement, the company owns the intellectual property, but the moral rights remain with the author. In the absence of such an agreement, the person who paid for the work is generally entitled to use the work only for the purpose for which it was created. Companies that have paid an independent contractor to create a web site for them may be unpleasantly surprised to find they do not own the creation. Different rules may apply for commissioned photographs, films and sound recordings.

Industrial designs

If a freelance designer produces a design, the intellectual property rights will not pass automatically to the commissioning party, but will remain with the freelance designer. In some countries, the commissioning party owns the rights to a design only if a reward has been paid for it.

Source: International Trade Forum

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