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Securing and Protecting Your Company's Intellectual Property Rights

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Samuel J. Frederick
Foster Swift Information Technology E-News
August 2008

In today's digital and knowledge based business world, intellectual property rights are the cornerstone of a business's value and competitive edge.  Intellectual Property rights are commercially valuable products of the human mind and include copyrightable works, trademarks, patentable inventions and trade secrets.  Many companies do not adequately secure these rights and therefore will, in many instances, forfeit their competitiveness or viability in the marketplace.

Securing your company's intellectual property rights can be as simple as including an additional form in the employee manual or implementing a written policy to have all employees and independent contractors sign a one page document, either acknowledging a "work made for hire" arrangement or an "assignment" of all rights, title and interest in a work.  The general rule under the Copyright Act states that a person who creates a work is the author of that work, unless the work is designated as a "work made for hire."  The Copyright Act defines a "work made for hire" as a work prepared by an employee within the scope of his employment or a work specially ordered or commissioned for use as a contribution to a collective work.

Unless a written agreement is entered into specifying ownership or assignment of rights, an employer does not own the intellectual property rights of a commissioned work that is performed by a consultant or independent contractor.  The consultant owns all of the rights in the work created and may use, resell, or make derivatives of the work created, even if the work was created on behalf of another company.

For example if a company hired a graphic design company to create its company's logo and a "work made for hire agreement" was not signed before the logo was created or an "assignment" was not executed after the completion of the logo, the graphic design company would own all rights, title and interest in the logo.  The graphic design company would be free to license or sell the logo to any other companies, as well as create derivatives of the work and dilute the market place with various, similar, images.  Without an agreement, the commissioning company would not control any rights in the logo or how it could or could not be used by others. 

The same analogy of a logo created by a third party can be equally applied to a computer programming company that is hired to create specialized software for a company to use or sell.  That same specialized software that a company paid a consultant to develop could then, absent a written agreement, be freely resold or licensed to other companies, including an emerging competitor.  The risk of loosing all ownership rights to a company's brand, Web site, specially created software programs, internal marketing reports and materials created by consultants is legally and quite easily avoidable if the proper documents are executed.  The consequences and actual damages to a company are devastating if it looses control of its sensitive and proprietary information.  The financial cost and difficulty to retrieve or obtain those intellectual property rights after a dispute arises far surpasses the cost and relative ease required to initially secure and protect those valuable rights.

Taking five minutes to review what proactive and protective measures your company has in place to secure its intellectual property rights, and thereby, its competitive advantage is a worthwhile investment to ensuring your company's financial success.  Please feel free to contact the author to discuss, evaluate and/or implement an intellectual property protection plan for your company at (517) 371-8103 or by e-mail at sfrederick@fosterswift.com.