Business Lawyers Blog
Independent contractors generally retain ownership of the intellectual property they create unless an agreement provides otherwise. Therefore, businesses that engage contractors should address this issue at the outset to avoid uncertainty over ownership of work product developed during the engagement.
A well-drafted independent contractor agreement can establish that intellectual property created in connection with the contractor’s services is assigned to the company. The Silicon Valley intellectual property lawyers at Structure Law Group, LLP regularly advise businesses on drafting and negotiating independent contractor agreements that address intellectual property ownership and related protections. Below are several key provisions companies should consider addressing in these agreements.
Work Made for Hire Clauses
Under copyright law, work created by an employee within the scope of employment generally belongs to the employer. That’s not the default rule for independent contractors, so businesses should consider a “work made for hire” clause.
With this clause the agreement can state that qualifying contractor-created work belongs to the company. This is a critical clause, which also puts the contractor on notice that the company is claiming rights to covered work product.
This clause is especially important for contractors who create software, designs, and marketing material, or written material. Contact our San Jose office if you need sample language to include in your contracts.
Independent Contractor IP Assignment Protection
If a contractor’s work does not qualify as a “work made for hire,” the agreement should address ownership through an intellectual property assignment clause. An assignment clause expressly transfers ownership of specified intellectual property rights from the contractor to the business.
In many agreements, the assignment is structured to take effect upon creation and applies broadly, so that intellectual property developed within the scope of the engagement becomes the company’s property and the contractor does not retain ownership rights in that work product.
Assignment language should be drafted with precision. Independent contractors often perform services for multiple clients and may also develop separate projects outside the engagement. For that reason, assignment provisions are typically limited to intellectual property created in connection with the services provided to the company, rather than extending to unrelated work developed independently.
An assignment clause should cover all trade secrets, trademarks, proprietary information, patents, and copyrights.
License to Background Materials
Sometimes background materials are embedded in the IP. You should seek a license for their use so that you are not subject to litigation. This license is usually perpetual and royalty-free.
Pre-Existing IP Clause
This clause helps protect the contractor by clarifying that they retain rights to the templates or processes they use when creating the deliverables. Usually, the contractor will list the pre-existing IP they will bring to a job. The clause then states that the company receives a license to use any of this IP that is incorporated into the work product.
Call to Speak with Our Office
Whether your company is an established technology business or preparing to launch a new software product, legal planning remains an important part of protecting intellectual property, structuring commercial relationships, and managing growth. Structure Law Group, LLP advises technology companies and entrepreneurs on the legal issues that arise throughout the software development and commercialization process, including intellectual property protection, licensing, and business transactions. To discuss these matters with an attorney, contact Structure Law Group, LLP at (408) 441-7500 or submit an inquiry through the firm’s online contact form.