Bodacious Secret No. 5: Manage The Ownership of Product Designs 🤯
Great design is a beautiful thing. Beautifully executed product design compels us to take notice, and if the messaging really resonates, make a purchase. Apple re-defined itself with the beautifully executed design of the Mac and the iPod. Suddenly functionality was not the driving force with consumers, but rather beautiful product design.
Finding good designers is not only crucial in designing products, but also in designing logos, content, packaging, and websites. Not all design work can be managed by ‘regular’ employees within a company, so often, a company will hire independent contractors to design. And sometimes, design can be done collaboratively by working with other companies and brands. Particularly by working with other brands, a company can gain an automatic boost in awareness by leveraging the network and loyalty of a well-known collaborator.
Deciding what design work to keep and what to send out depends on the skill and efficiency available within an enterprise. But have you given any thought to who owns the intellectual property related to the design when you outsource this? Do you think if you have “work for hire” in your contracts, that’s enough? Would you feel 🤯 if I told you that you probably don’t own the intellectual property in a project you paid for even though you own the work product? There is a difference. Intellectual property ownership in patents and copyrights is statutory, and without an adequately worded agreement, your intellectual property ownership rights might not be what you expect.
Tip No. 1: Know The Rules and The Type of Intellectual Property Being Created
When it comes to patents, by law, inventors own the rights in their patents. And as to copyrights, independent contractors own the copyrights in their works, except in a limited number of exceptions. BUT, if this is not what you want, then you can create an agreement that says otherwise. Yes, you heard me right. Great, uh? The problem-most entrepreneurs I encounter are 🤯 😲 😵 when I tell them this because in many instances they DON’T have agreements in place that say otherwise- they have no agreement, no nothing 🤭.
Tip No. 2: Know The Consequences of Not Transferring Ownership To Your Company
So what’s the big deal if you don’t own the IP in your products or creative? Maybe the best case is that you jointly own the IP, and the worst case could be your contractor or collaborator solely owns the IP. In the case of patents, joint ownership means each inventor can exploit the patent without an accounting to other inventors (this means they that don’t have to share 💰 with you). You might think, so what? But what if your collaborator decides to take that jointly owned patent and make it available to your biggest competitor? Oh, now I have your attention! This situation can be pretty dangerous, and to think it, could have been avoided.
When it comes to jointly owned copyrighted content like software or 2D designs, each author owes an accounting to each joint copyright owner (this means they that do have to share 💰 with you). So that means if you exploit jointly owned copyright works and you don’t pay your joint copyright author, you could be in big trouble. I’m not sure which scenario is worse.
Tip No. 3: Make Certain The IP Language In The Agreement Is Correct
The good news is that if you are not interested in giving away or jointly owning the IP in your creative or product concepts with your collaborators, you can agree to something different. Contract terms with your contractors or collaborators as to IP should be present and clear. You should consult a good attorney who understands exactly what “work for hire” means and when it should and should not be used. Unfortunately declaring a business arrangement a “work for hire” when in fact it really isn’t won’t help you much.
Entrepreneurs are busy people; I get it, I’m one too. But when you’re too busy to negotiate intellectual property with your contractors and collaborators, you may be giving away all the value in your company. Intellectual property is just about the only real thing of value a lot of science and technology startups have in the beginning. So, if you don’t take the time to make sure you own what you think you own, all your hard work may be in vain 😢.
About this Series
Bodacious a legal information series related to intellectual property and technology law issues, such as patents, trademarks, copyrights, privacy, and business formation for science and technology startups. The information in this post focuses on the 9 Legal Secrets Every Entrepreneur Should Know To Have A More Bodacious Business.
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Angela Grayson, CIPP/US, CLP is an author, speaker, and lawyer. She is the Principal and Founder of Precipice IP, PLLC. Angela is a patent, trademark, copyright, and technology law attorney with almost 20 years of experience helping science and technology companies protect products, brands, designs, and data from idea to launch.
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