One of the most costly — yet easily prevented — disasters for any business is the failure to secure ownership of intellectual property.
Here are some details company owners and executives should know:
1. Under the law, the ownership of copyrights and inventions may actually belong to your independent contractors and employees, unless there is a prior written agreement to the contrary. Federal copyright law, and the laws of most states, mandate that employees and independent contractors who invent products, write materials and develop software may be the owners of the intellectual property rights.
2. In some states, an employer may only have a limited license to an invention that an employee creates while on the employer’s clock.
Fortunately, you can easily prevent this type of catastrophe. All states permit employers to require employees to sign copyright, intellectual property and invention assignment agreements that give all rights to the company.
3. A well-drafted agreement can be less than a single page in length and should be written by an attorney. It requires the employee or contractor to turn over or legally “assign” all rights to the business. In addition, these agreements require the employee or independent contractor to assist the company’s counsel in securing and enforcing the rights.
Another good practice: Ask employees to identify, upfront, all pre-existing inventions that are to be excluded from the agreement. However, you should also mandate that they give up claims to all new inventions that are in any way related to your business, even if developed during the employees’ non-working hours.
For example, let’s say your company makes billing software. This agreement prevents one of your software developers from claiming that he came up with a time management program at night that could be of use to your company — or your competitors.
By following these simple procedures, business owners can avoid tremendous aggravation and loss of intellectual property that’s truly irreplaceable.
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