Who owns Intellectual Property? Don’t follow the money!

“I paid them to do the work, so I own the intellectual property. Don’t I?”

Well, um, probably not.

The fundamental that must be remembered with intellectual property of any kind – ownership naturally rests with the creator, whether that is the designer, author, inventor etc. Paying someone to do a job, where doing that job results in the creation of intellectual property, does not in itself transfer ownership of the intellectual property.

Intellectual property ownership can only be transferred by an explicit contract – one that identifies the IP and to whom it is to be assigned. We suspect that there is a wealth of valuable IP whose ownership still actually rests in the hands of contracted researchers, designers, authors and the like because their contract did not make any clear arrangement for the transfer of IP created in the course of their work to the contracting organisation.

The only ‘exception’ to this rule (or so it is often said) has been the case of the employee inventor/designer/author. However, it would be a mistake to assume that ANY intellectual property produced by ANY employee is actually owned by the employer.

The line of decisions by Australian courts seems to be steadily narrowing the circumstances in which an employer will automatically own the IP output of an employee’s work.

As ever, the answer to the question of IP ownership depends on the unique circumstances of each situation, but to illustrate some general principles, here is a list of circumstances that are likely to mean the employee actually owns the IP in the output of their work:

  • If the employee is not expected to create IP as part of their regular role, e.g. if they are part of the sales team, even though they may work with R&D personnel, or even if they are a researcher at a university;
  • If the employee creates something new at work, that they were not ‘directed’ to create, even though they are in a role that usually involves the creation such new things;
  • If the employee operates as a highly skilled specialist in their role, such that they do not operate under close supervision.

So, in what circumstances will an employer own the IP? Something like this:

  • Where the employee is employed to create IP, such as a member of an R&D team, design team or software development team, but where the employee has a more functionary role – not acting as an independent specialist without technical supervision – and is working on a project that forms a part of the employer’s development plan, and is not a ‘skunk work’ with a business application.

Failing that, an employer, or user of contract IP generators, who does not institute a program of obtaining IP assignments is letting ‘its’ business IP walk out the door.

by Adam Hyland

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