Tove Olaussen Freeman

Intellectual Property and Risk Manager

May 6

4 min read

Who Owns the IP? Tips for Working with Second and Third Parties

Intellectual property rights (IPR) are one of the most important protections a company can invest in. The reason is simple.

An IPR, such as a patent or a trademark, allows its owner the exclusive right to commercialize and, in some cases, prohibit other companies from commercializing on the same idea. It is the value of exclusivity that dramatically increases the worth of a company. For this reason, companies must prioritize keeping track of who owns the IP when working with outside parties, such as consultants and contractors.

The question of IP ownership has become increasingly complicated. As it has become more common to outsource parts of the innovation process or otherwise collaborate with other parties, it has also become more difficult to determine who owns the output. In the worst case, companies can risk being left without significant rights to the intellectual property they have invested in.

Luckily there are several mitigations companies can do to make sure that they maintain the rights to their IP:

1. Create an IP inventory

The first step every company should take before starting to work with a third party is to compose an inventory of every IP asset the company owns. In the event of a lawsuit, where it is unclear who owns what IP, an IP inventory can prove to be an invaluable asset in proving ownership.

Patents, trademarks and copyrights should be documented and stored in a safe place. Unfortunately, little legal framework exists around the protection of trade secrets such as client and supplier lists, algorithms, positive and negative know-how (things that didn’t work). Therefore, companies should exercise extra measures around protecting this type of IP. In the IP inventory, every trade secret should be labeled as a trade secret and access to it should be limited and recorded, especially if it’s another party. Should an IP inventory be kept digitally, a company must make sure that extra security measures, such as encryption, are taken.

2. Ensure that you have taken the proper legal precautions

Every company should have at least the following in their legal arsenal:

  • Confidentiality agreements (also known as non-disclosure agreements) – which ensure that confidential information shall not be shared with unauthorized people. These should be tailored to each situation and signed before a collaboration begins.
  • Non-compete contract clauses - which prohibits contract workers from using or spreading proprietary information or starting up a competing business.
  • Third-party agreements - which define the terms of the collaboration. This agreement should explicitly state who owns the IP created during the project.

3. Adopt an IP Conscious culture

Companies should consider implementing the following:

  • Create and enforce a company-wide IP policy – IP policies establish best practice in a company. Each policy should describe how IP, both that owned of the company and that owned by other parties, should be handled.
  • Invest in IP awareness and education programs – Regularly educating employees on IP best practice will reduce the risk of IP information being spread. Unauthorized spread of IP information can affect ownership claims.
  • Establish security best practices - Invest in services that increase security. Consider using access controls and the highest grades of SSL file encryptions where applicable. Remember to give and revoke access to information only as needed.

A company’s IP is one of the most valuable assets a company has and should be protected accordingly. Documenting and protecting IP alongside with a conscious IP culture will significantly reduce the risk of loss of ownership.