Intellectual Property Ownership

An Important Consideration in Employee and Contractor Relationships
Dave Tyrrell, Vertex Intellectual Property Strategies Inc.

Virtually all businesses have some form of Intellectual Assets, which provides them with a competitive advantage. In the case of high-tech businesses, a significant patent portfolio and proprietary know-how generally exists. At the low-tech end of the spectrum, intellectual property and proprietary business information may involve just the operations manual or customer list. While not as glamorous, these too could prove to be important business Intellectual Assets.

Regardless of the business situation, it is advisable to have an intellectual property ownership agreement with all employees and contractors. This could take the form of a separate agreement or it could be included in an employment or consulting contract. The purpose of such agreements is two fold. First, they would generally include a provision for employees or contractors to assign patentable inventions to their employer. Secondly, they would serve to assure that employees and contractors understand their obligations to safeguard the confidential information and knowledge of their employer or client.

Generally it is preferable to enter into such agreements at the time of hiring or at the onset of a contractor relationship. However, many businesses have grown from a small start-up business to a successful larger organization. Employment agreements were never considered in the early years of business development and similarly agreements with contractors were often rather informal. As the company matures, the value to the business of intellectual property and tradesecrets surfaces, and the need to put in place employee and contractor agreements that address intellectual property ownership and treatment of confidential information is identified.
Businesses that believe that they own the intellectual property right of inventions created by employees and contractors by virtue of paying for their services could be in for a costly, business-disrupting surprise. Potential problems of this nature can be mitigated through the implementation of an effective intellectual asset management program, and by having appropriate legal input in the development and implementation of suitable employee and contractor agreements.

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Toronto, Ontario
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