Assignments of rights and interests

As stipulated in U.S. intellectual property law, the creation automatically belongs to its creator. All registrations of the IP do not give ownership right, as many think. They prove it. The ownership right in intellectual property emerges at time of creation. The owners, who can be either creators or companies if the work was made for hire or buyers of the IP, register their rights to put the world on notice of their interest and prevent disputes.

 

Keeping the above-said in mind, if several people work together as partners or if the company retains employees/independent contractors, and there is a possibility or expectation that certain IP will be developed, it is crucially important to have all parties sign Assignment of Rights and Interests to the company in advance. In case when partners develop something and it is not assigned to the company, one of the partners can later leave and continue using the IP for his personal benefit. In some circumstances he can even prevent other partners from using it. When IP is developed by employees/contractors, the situation is similar. Due to the nature of IP, it may not be easy to prove what exactly was intended as ‘a work for hire’. Often people have initial ideas, and then during the work process they evolve into something different.

 

While it is important to execute all agreements before IP is created, parties should be careful not to assign more than they intended. For example, if the agreement is overbroad and state “everything during the course of employment”, it literary means everything, including things a person may work on that are unrelated to the business of the company.

 

Another aspect is that either partners or employees may bring some IP to the company from outside (e.g. from previous employment). In this situation it is important to make sure that another company/person does not have interest in this IP. Usually this is done by reviewing an employment agreement, if there is any, and making a person to state in writing how he acquired the IP at issue and that to the best of his knowledge there are no other parties with ownership interest. Then, if this IP is to be used for the company’s business, it should be also either assigned to the company or leased. It is proper to have the spouse of the assignor sign these agreements as well to avoid any claim of marital property rights in the asset being assigned.

 

As I wrote in other articles on this site about intellectual property and related agreements, all assignment and licenses should contain detailed description of the IP being assigned/licensed, geographical area, time period, exclusivity to use, purpose of use, and all other terms and conditions the parties may want to consider with the assistance of an experienced attorney.

More in this category: « Spin-offs Non-compete agreements »

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