In today’s innovation-driven economy, intellectual property (IP) is often one of a company’s most valuable assets. Whether it’s software code, creative content, or inventions, these creations form the core of many businesses’ competitive advantage. But here’s the legal pitfall many founders and business owners miss: just because your company paid for something to be created doesn’t mean you legally own it.
The Hidden Ownership Problem
Let’s say you hired a developer to build your app or paid a designer to create a brand identity. Months of work go into it, and thousands of dollars. But unless you have a clear agreement in place to transfer the intellectual property (IP) to your company, the person who actually created it still owns the rights.
It may sound shocking, but this is a common issue for companies that fail to properly assign intellectual property rights. Under the law, the default owner of intellectual property is typically the individual who created it, even if that individual is your employee or independent contractor. Unless clear and valid IP assignment agreements are in place, the creator often retains the rights, not the company funding the project.
Why It Matters
If your company doesn’t legally own its IP, it can create major problems down the line. This could involve losing control over essential tools or content, facing roadblocks during fundraising, or raising red flags for investors. It also opens the door to disputes over something that could easily be avoided.
When and How to Secure IP Rights
The solution is straightforward: get IP assignment agreements signed before any work begins or make sure an IP assignment agreement is executed after. Whether you’re working with employees, freelancers, or third-party developers, it’s essential to have clear, written agreements in place that assign all intellectual property created to your company. These agreements should be part of your onboarding or contracting process and revisited periodically as your business evolves.
Take the Next Step
If you’re not completely sure your company owns the rights to everything it’s built (or paid to have built), it’s time to double-check. It’s much easier and cheaper to fix this before there’s a problem.
If you’re unsure whether your business owns the rights to its creations, or if you need help drafting effective IP assignment agreements, contact Kamden Crawford, Associate Attorney at kcrawford@psbplaw.com.