Intellectual property (IP) rights in further detail

There is a constant stream of cases involving intellectual property (IP) rights and employment issues. The high incidence of litigation reflects the difficulties parties face in trying to establish legal certainty in this area. This can arise from there being a conflict of understanding as to the ownership of the property and which can often be an issue in cases where work of a freelance or consultancy nature may have been undertaken.

IP rights will arise when developing new products or manufacturing processes but also in relation to other creative endeavours of a more literary, artistic or dramatic nature. An example of where this can occur is where web design companies outsource their work to freelancers. This is also known to occur with copywriters. In each case, it is important firstly to identify who owns the IP rights in the work that is to be commissioned and created and also to make sure the rights are clearly defined and secured. It is advisable to get an IP ownership agreement drafted and agreed before the project proceeds and commissioning works are created.

In relation to employees, where there is doubt as to whether an employee or their employer owns IP rights in the work, English case law generally tends to favour employers where the IP is created in the course of employment, except where the employment contract indicates otherwise. There are a number of cases which give an employer automatic ownership of patents, copyright, database rights, unregistered designs and registered designs in works created by its employees in the course of employment. In order to ensure that ownership of IP is clearly agreed and defined and there is no scope for misinterpretation, it is prudent and advisable to include the terms of ownership in the employee’s employment contract.

Ownership of IP rights that are created pursuant to consultancy work are more difficult to interpret. In case law there is evidence to suggest that even if there is no express IP assignment the customer will own the equitable title in the IP if it has paid for it and therefore in certain circumstances it can also demand transfer of the legal title. However each case revolves on its own facts and merits and in certain situations the consultant could own the IP. Therefore it is very important to clearly define and agree the terms of IP ownership in a formal contractual agreement signed by the parties prior to commencement of any work.

The key is to make sure the necessary provisions are formally agreed in a contract to ensure both parties are protected and there is a clear level of understanding between either party as to the nature and terms of IP ownership. Before any work proceeds, it is therefore advisable to agree the project plan/ specification so that both parties know the scope of the project and which party shall own the resultant IP.