Does your vendor own your intellectual property?

Dear Ladies and Gents:

Last week we reviewed three cost-effective approaches for protecting your business intellectual property. Now we begin discussion of how intellectual property which others create for your business will be owned by your business. Today we address contracts for non-employees who create intellectual property for your business.

Each of your vendors and other independent service providers should sign a contract known as a work hire agreement. Projects protected by work for hire agreements are listed in the copyright law. However, as a practical matter most projects are on this list, and if at all in doubt the vendor should sign the agreement. Why? Because this short agreement transfers ownership and authorship of works containing copyright to your business.

If this agreement is not signed by both the business owner and the vendor at the onset, then the completed work belongs to the vendor. For example, you may retain a graphic art company to create illustrations for your business. If you do not insist that the vendor sign the agreement prior to the work, the illustrations belong to the graphics company.

This means that after the graphics company provides you a copy of the illustrations for your fee, it can sell the same illustrations to other companies. Definitely not the result you intended when you paid for the project!

Work for hire agreements generally apply to projects containing copyright components, such as visual art, software, music and architectural drawings. However, again it is better to err on the side of over inclusion. I also recommend that each vendor sign an agreement for transfer of invention ownership, if it appears that project contains technical innovations. If in doubt, place a quick call to your intellectual property attorney   to confirm your assessments.  Also be sure that the vendor signs an agreement for each project to be completed, if there is a continuing relationship with that vendor.

In the next series installment, we will discuss how and when employment agreements transfer intellectual property ownership to your business. However, I will be on vacation for two weeks, so this discussion will not appear until after July 4th.  In the meantime, I hope everyone has a great holiday weekend!

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