- In many cases, intellectual property (IP) created on behalf of a business in exchange for compensation is considered the property of the business that commissioned it.
- The terms of a signed business agreement might stipulate who owns any intellectual property created on company time or using company equipment. Review all agreements carefully before signing.
- Though intellectual property laws favor businesses, employees have rights. Consult with an attorney if you believe a business agreement you've signed violates state or federal law.
- This article is for professionals and creatives who regularly develop intellectual property on behalf of businesses and need to know who owns the rights to their work.
Intellectual property rights are designed to protect various types of creative expression, but what happens when that creative expression occurs on company time or within the confines of an employment relationship? Do you own the ideas you come up with in the workplace? This guide will serve as an introduction to intellectual property rights in the workplace and what you can expect when it comes to retaining the rights to your creative labor.
What qualifies as intellectual property?
Before you can understand whether you own the intellectual property you develop in the workplace, it helps to define the term.
"Intellectual property refers to an exclusive right to a particular form of creative expression," said Omid Khalifeh, intellectual property attorney at Omni Legal Group. "This could be artistic expression as with copyrights, utilitarian and functional as with patents, or related to branding, like with trademarks."
Copyrights, patents and trademarks are mechanisms by which the owner of intellectual property can protect it from misuse or unauthorized replication. They are related, but each applies to specific types of intellectual property:
- Trade secrets: Trade secrets fall under intellectual property laws. The information holds commercial value in that it could potentially be very lucrative. Trade secrets may only known by a limited number of individuals in the company, and companies may require that employees sign a nondisclosure agreement.
- Industrial designs: An industrial design involves the visual or aesthetic design of an object. It can be the proprietary design of a company's flagship product that differentiates it from similar products.
- Copyrights: Copyrights technically exist the moment a work is created, but they are practically unenforceable unless you register your copyright with the U.S. Copyright Office. Copyright protections expire after the author's lifetime plus 70 years (or 95 to 120 years, depending on the nature of the intellectual property). [Read related article: Copyright Infringement: Are You Stealing Intellectual Property?]
- Patents: A patent protects an invention for a limited duration of time. They cover things like machines, manufactured goods, industrial processes and chemical compositions. A patent extends the exclusive rights to the owner of the intellectual property to produce, use and sell the invention.
- Trademarks: Trademarks relate to company branding. Under common law, you can claim a trademark by placing a "TM" superscript at the end of your brand or product name. If you register your brand with the U.S. Patent and Trademark Office (USPTO), you may affix the encircled "R" symbol at the end of your brand or product name.
While copyrights, trademarks, and patents protect intellectual property from theft or misuse, they do you no good unless you are in fact the owner of the intellectual property. So, who owns the intellectual property you've created on company time, or using company tools?
Key takeaway: Intellectual property refers to creative works, inventions and branding. To protect intellectual property, owners can file for copyrights, patents and trademarks.
Intellectual property rights in the workplace
During the workday, an employee might create a wide range of intellectual property. But who maintains ownership rights to that intellectual property: the employee or the employer?
"Within the scope of their employment, people may come up with many new ideas stemming from the demands of their job," Khalifeh said. "A designer may make an ad poster or a new garment design, whereas an engineer may invent a new widget."
While those creations might have been entirely conceived of and developed by the individual employee, oftentimes, they are generally owned by the employer. According to William H. Honaker, an intellectual property attorney at Dickinson Wright, there are four types of workplace intellectual property that are most common.
"Intellectual property in the workplace is typically thought of as falling within four broad categories: patents, protecting inventions; copyrights, protecting creative works; trademarks, protecting a company's reputation; and trade secrets, protecting what a business can keep secret," he said.
"As a general rule, an employee might own patents or copyrights, but not trademarks or trade secrets," Honaker added. "Trademarks and trade secrets depend on use and procedures that are tied to the employer, and don't exist independently of the employer."
However, the exact nature of intellectual property rights in the workplace is largely dependent upon any agreements or contracts an employee signed as part of the onboarding process. Just because an employee might retain patent and copyright ownership doesn't necessarily mean that is the case.
Key takeaway: Intellectual property rights in the workplace heavily favor employers. However, the terms of signed business agreements could influence who owns intellectual property.
What is an employee intellectual property agreement?
An employee agreement is usually signed when an employee is hired and joins a company. Often, these agreements include clauses that relate to intellectual property and its ownership. These clauses explain what rights a person has to any creative ideas they've created while at work, and what rights belong to their employer.
"Most businesses require employees to sign an employment agreement," Honaker said. "These agreements often have provisions regarding the ownership of intellectual property created while employed. Typically, these require an employee to assign any business-related intellectual property to the business."
This is known as IP assignment, and a written agreement, including an assignment clause, could transfer ownership rights to any intellectual property that would otherwise belong to the employee to the employer.
In most cases, employees are thought to forfeit the rights to intellectual property created for the employer in exchange for compensation in wages or salary. That means signing any boilerplate employee agreement likely forfeits your right to maintain ownership of intellectual property you create at work.
"Because it is widely accepted that employees are being compensated for their ideas as part of their salaries, they will have to be proactive if they wish to hold on to any of their intellectual property rights," Khalifeh said. "This means negotiating rights ahead of time and making sure these are outlined in the terms of their employment agreements."
Key takeaway: Many business agreements include a clause in which the employee forfeits rights to any intellectual property created on company time or using business-owned equipment.
What if there is no employee intellectual property agreement?
If you were not required to sign an employee agreement, or the documents you signed make no mention of intellectual property rights, patent and copyright ownership laws apply to those types of intellectual property created in the workplace, Honaker said.
"If there is no Employee Intellectual Property Agreement, or if the agreement is invalid under your state laws, then you have to look at the patent and copyright ownership laws," he said. "Each of these will have different requirements."
Copyright laws cover creative works, including written materials, photographs, videos, drawings and computer programs.
"The creator of a copyrighted work owns the copyright unless it's a work for hire," Honaker said. "A work for hire has two requirements: the creator is an employee of the business [not an independent contractor], and creating the work was within the scope of the employee's job requirements."
If both work-for-hire requirements apply to creative work you created in the workplace, your employer likely owns the intellectual property.
Patent laws protect inventions and are only relevant if the creator applied through the USPTO. The inventor (or inventors) is usually considered the owner(s); however, ownership, or at least certain rights, could still be reserved for the employer.
"The courts will typically require the inventor to assign their rights to the business if inventing was part of the inventor's job requirements," Honaker said. "If you were hired to invent, then it seems only fair that what you invent is owned by the business that pays you.
"Even if the employer doesn't get ownership, if the invention was made using the employer's equipment and resources, the employer will typically be given at least a shop right," Honaker added. "A shop right is a nonexclusive right to use the invention."
Key takeaway: In the absence of an intellectual property agreement, state and federal laws apply. Consult with an attorney if you believe your intellectual property is being misused.
What rights do employees have to intellectual property in the workplace?
While it seems that employers have a great deal of power when it comes to intellectual property in the workplace, there are limits. Employee intellectual property agreements are influenced in part by state law, so noncompliant agreements are unlikely to hold up in court. Further, if the creation of new intellectual property does not pass the work-for-hire test and no legal agreement has been signed assigning those rights to the employer, then ownership is retained by the employee who created it.
"Employers need to remember that an employee using work equipment to create IP is not reason enough to claim the intellectual property," said Reuben Yonatan, founder and CEO of GetVoIP. "So, if you employ a developer to create a system for you, but in the process [they] use the work computer and any other resource to create a social media platform that blows up, it does not mean you own any part of that social media platform."
Although many intellectual property laws favor the employer, employees have rights. If you are concerned about an agreement you've signed with your employer, consult with an attorney to determine whether it is indeed valid under your state's intellectual property laws. As an employer, you should always consult with your attorney when devising any employee intellectual property agreements to ensure you are abiding by state and federal law.
Key takeaway: Know your rights. Not all situations favor the employer when it comes to claiming ownership of intellectual property created in the workplace or with company resources.