A lot of intellectual property (IP) business disputes revolve around whether a person’s creation or invention was “work made for hire” or not. When a person is employed by a company, anything they create or invent as part of their job should be considered work made for hire.
That means only their employer can trademark, copyright, patent or otherwise profit from it. Their payment comes in the form of their salary or other compensation from their employer. If an employee for a toy manufacturer, for example, comes up with an idea for a new doll, for example, their employer can trademark it. They might give the employee a nice bonus, but the employee can’t go out and sell that idea to another company. This needs to be codified in all of your employment agreements.
What about independent contractors?
The same applies to any independent contractors you may bring in to work on a project. However, again, it needs to be codified in your agreement with them. Whether they’re writing copy for a website, designing software or creating anything from signs to new products, it’s wise to have a “work made for hire” clause in their contract.
You’ll note that the key here is having a contract. Where things often get complicated – and end up in legal action – is when there’s a more informal relationship and no contract.
This happens more often with small businesses than larger ones. Maybe the owner offers the relative of an employee who is between jobs a chance to draw an image or take a photo for their website or other marketing purposes. It becomes popular, and others want to use it.
What can happen if there’s no contract?
Even if those who want to use it aren’t your competitors, you don’t want your brand diluted. However, without a contractual relationship, the creator may have the right to copyright it themselves or at least give others permission to use it – for free or at no charge.
The best way to prevent this is to hold everyone who does any work for you at all to a contract. It doesn’t have to be lengthy or complicated, but it needs to protect your rights and stipulate that any work done for you belongs to you. Having experienced legal guidance as you do this can save you from needing it later.