Consultants through their work create Intellectual Property (IP), whether it be electronic or print resources or other tools. It’s then important that as a consultant, you are aware of who owns your IP.
IP is a broad term applicable to material that is created, invented, designed or written by a person. It is an intangible form of property that is treated as a tangible asset. It can be sold, transferred or leased. The categories of IP include trade marks, patents, designs, copyright, circuit layouts, trade secrets and confidential information. It is important to protect these IP rights as it gives the owner the right to use, control and profit from the IP, especially if you perform consultancy work.
When an individual is providing services to a business, questions of IP ownership will inevitably arise. The parties involved must always first turn their minds to whether the worker, be they a consultant or otherwise, is engaged as an employee or a contractor.
Where IP arises from a person’s employment, or engagement as a contractor, the issue of ownership will be different. As a consultant, you can either be engaged as an employee or contractor and so it is important to know your IP rights and protect them.
Where an employee creates IP in the course of their employment, the employer generally owns that IP. An employee can claim ownership if he or she creates the IP outside the normal course of their employment duties. The scope of work the employee is engaged to complete should be clearly stated in the employee’s contract to avoid uncertainty about IP ownership.
A contractor, however, without any document stating the contrary, will own the IP they create, whether or not it has been tailored for the hiring business. In some cases, a hiring business may wish for the Contractor’s Agreement to distinguish between ownership of the contractor’s own tools and resources, and new IP that arises during the engagement. A hiring business may want the contract to specify that they receive ownership of the latter.
For example, an employee engaged in consultancy work in respect of business or employee development may create tools or content to be used for analysing employee or business performance. This IP will be the property of the employer. If the consultant is a contractor, these tools and content will remain their property, and any contractor agreement should deal with this in detail.
Assignment and Licencing
If you are a consultant working as a contractor, you may wish to commercialise your IP by licencing or assigning some or all of the rights to the IP you create.
If you licence your IP, you retain ownership and grant the other party or parties the right to use the IP on the terms outlined in the Licence Agreement. The licence can be exclusive, which means you can only grant one and may not use the IP yourself for the duration of the licence, or it can be non-exclusive. You can also grant a licence and retain a right to use the IP yourself. Whatever the case is, you should charge fees to reflect appropriately the limitations placed on the licence.
An assignment is different to licencing, as you are permanently transferring ownership of your IP. Many employment agreements specifically provide that all IP created during employment is an assignment to the business. If you are a contractor and decide to enter into an assignment agreement, you may consider charging a higher fee as you will only receive one payment.
Is it Better to Assign or Licence my IP?
Whether you decide to assign or licence your IP is entirely up to you. It will depend on what you think will generate commercial value for your work and what payment structure you prefer. A licence will give you continuous royalties for the duration of the licence, whereas assignment will give you a lump sum.
If you have any questions about licencing or assigning your IP, get in touch with an Intellectual Property lawyer on 1300 544 755.