For Business Owners: Intellectual Property (IP) Fundamentals
Caution Business Owners: Do you own or have the right to utilize the significant intellectual property for your business?
Every business believes some form of intellectual property (IP) to be valuable. A trademark (a logo, a business name, or a product name), copyright (software code, an instruction manual, or website content), or a trade secret or patent (a novel and useful invention or recipe) are all examples of IP. Therefore, you might have invested in the production of such IP as a business owner.
On the other hand, the right of intellectual property is optional for every business; your business may not even have the right to use it or may have a restricted right to use it.
An independent contractor, by default, owns whatever copyright, invention, and intellectual property it creates. Whenever a business hires a photographer to take pictures, the photographer maintains ownership of the photographs he or she captures, and the business may only have extremely limited rights to use the photographs unless there is an agreement saying otherwise. Standalone agreements can be included in many types of agreements, including service agreements, which are the necessary steps for IP assignments and licences.
Definition of IP Assignment
A permanent transfer of ownership of all IP rights to the assignee in exchange for money is known as an IP assignment. The independent contractor assigns that IP to the business is usually the best way when a company hires an independent contractor to develop IP. The rights are sold and transferred in the same manner that the seller retains no rights when their physical property is sold (unless a licence-back provision is included in the assignment).
To verify that the assignor does not retain any IP rights, businesses need legal counsel in the relevant jurisdiction because certain rights, such as moral rights to copyright, cannot be assigned in certain jurisdictions and must be explicitly assigned in other jurisdictions.
Definition of IP Licence
A grant clause in an IP licence allows the author or inventor to keep ownership of the IP while granting the business owner restricted authorization to use the IP in exchange for a one-time or recurring charge (royalty). Permission might be granted for a set period of time or a specified purpose. Permission might be given for a specified period of time or a specific purpose. A secrecy clause, a termination clause, and termination repercussions provisions – including the return or destruction of IP at the end of the term – should all be included in an IP license. A confidentiality clause, a termination clause, and termination repercussions provisions – including the return or destruction of IP at the end of the term – should all be included in an IP license.
Following below 3 most common types of licences:
- Non-exclusive Licence. A non-exclusive license permits the licensor to keep the IP and give unlimited licenses to other parties.
- Sole Licence. The licensor retains the right to use the IP under a single license, but no third parties are allowed to use it.
- Exclusive Licence. The licensor cannot use the IP or give licenses to any third parties under an exclusive license
IP rights can be restricted based on geography by an IP license. Namely, you could have an exclusive license in Canada but a non-exclusive license throughout the rest of the world. Furthermore, you may only be able to utilize the IP for a restricted number of purposes. A marketing research firm, for example, may have only given you permission to utilize the study results for internal reasons; if you used these results for other purposes, you would be in breach of contract.
