Ownership of Rights in Product Development

Published in Intellectual Property Protection, Services We Provide on February 17, 2011

Ownership of Rights in Product Development

Intellectual property is comprised of various rights recognized by the law which were created to protect the result of creative efforts. Those rights can be embodied in such things as patents, trademarks, copyrights, trade secrets, rights of publicity, confidential information, shop rights, license rights, contract rights, know-how, and the right to fair competition.

Ownership of intellectual property is not an all or nothing proposition. Just because you may own a patent does not mean that someone else may not have the right to use the patented invention or a portion of that invention. In fact, it is not uncommon for an author of a book to own the copyright, but for the publisher to effectively control most of the rights emanating from that copyright.

What types of ownership should you be concerned with in product development?

  • You should be aware that copyrights are owned by the author unless it is otherwise assigned through a written agreement to someone else or was developed by an employee within the scope of employment. For example:
    • Software code is owned by the person who wrote it even if you paid that person to write it for you;
    • Illistrations in a book are owned by the artist even if you wrote the text of the book and paid the artist to incorporate the drawings into your book;
    • CAD or other models created are owned by the creator even if you paid a machine shop to prepare a prototype for you;
    • Recordings of music you wrote are owned by the recording company unless otherwise transferred through a written agreement; and
    • Advertising designs created by an advertiser on your behalf are owned by the advertiser.
  • You are not the “inventor” if you came up with the “idea”. An inventor is the person who takes an idea and develops it into something that actually works (e.g. a working prototype developed from the idea).
  • There may be multiple owners. Absent an express agreement otherwise, each joint inventor is presumed to have an undivided equal interest in the invention (and any patent covering the invention), and can exploit or transfer that interest without accounting to the other owner or owners. However, copyright owners may restrict use by joint owners and require owners to share the income from sale of the product.
  • Trade secrets are also valuable assets that may be owned. What may constitute a trade secret extends beyond what may be patentable, and includes any formula, pattern, drawing, device, machine, or compilation of information (including customer lists) that is used in a business and that gives the business an opportunity to obtain an advantage over competitors who do not know it or use it. If the owner of a trade secret attempts to keep confidential valuable and secret business information, the owner will have legal rights against others who use improper methods to obtain that information.

KEY TIPS:

Care needs to be taken to make sure that you understand and agree on ownership rights BEFORE you begin working on a project. In order to enforce that agreement, it must be in writing. Also, when multiple owners will be involved in the project, you should use an LLC or corporation to organize the ownership interests.

If you have questions regarding your website or other Internet law questions, please contact Jeffery Jacobson.

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