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As a consultant, you may create intellectual property (IP) throughout your work. Regardless of the form of this IP (i.e., electronic, print, etc.), you need to know that the ownership of this IP may be vulnerable to a dispute. IP can include material 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, assigned or licensed. 

Some categories of IP that you may be aware of include trade marks, patents, designs, copyright, trade secrets and confidential information, among others. As a consultant, you will want to know who owns the IP that you create under your contract. This article will help you identify where you stand and what you should do to ensure that you own your IP. 

IP Ownership

If you are engaged as a consultant to assist with providing your employer’s services, your employer may own the IP you create. An important first step is determining whether you are an employee or a contractor. This is because IP ownership is different depending on whether the creator was an employee or a contractor at the time of its creation.

Employees

If you create IP while you are employed, the employer will generally own that IP. An employer can sometimes even claim ownership of IP created outside the normal course of a consultant’s employment duties. Because of this, you might want to check if the employment contract clearly states the scope of your duties as a consultant to avoid uncertainty about IP ownership later on. For example, in some cases, IP created outside of work hours on equipment provided by an employer (i.e., a laptop) can be claimed by the employer as their IP.

Contractors

If you are a contractor and do not have a document stating otherwise, you as the consultant will own the IP created under this engagement. Again, check if the agreement that you signed has any provisions that mention IP. If you are unsure what the implications are of a particular clause in your contract, you should have a lawyer review it.

Assignment and Licensing

If you are a consultant working as a contractor, you may want to commercialise your IP by licencing or assigning some or all of the rights to the IP you create.

Licensing

By licensing your IP, you will retain ownership and grant the other party or parties the right to use the IP as per the terms outlined in the licence agreement. A licence can be exclusive, meaning that 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 also have the option of granting a licence and retaining a right to use the IP yourself. 

Whichever option you choose, remember that you should charge an appropriate fee reflecting the scope and limitations of the licence.

Assignment

An assignment is different from a licence, because by assigning ownership, you are transferring ownership of your IP. Most employment agreements stipulate that all IP created during employment belongs to the business. If you are a contractor and decide to enter into an assignment agreement, consider the value of your IP, because you will only receive a one-off payment rather than the ongoing fees associated with a licence.

Should I Assign or Licence My IP?

Ultimately, it is up to you as to how you want to use and exploit your IP. Similarly, it is up to the business and the consultant to decide on the terms of engagement, including who owns the IP created by the consultant. 

Remember, a licence will give you ongoing royalties for the licence duration, whereas an assignment will only give you a lump sum. If you think you can still squeeze some value out of your IP, then a licence is often the best way to make the most of it without having to come up with new ways to implement it. 

Key Takeaways

As this article shows, it is important to understand if you actually own the IP created through your work as a consultant. You do not want to find yourself caught unawares or even taken to court over an ownership dispute. On this basis, we recommend that you remember the following key points when you work as a consultant:

  • ownership of IP will often depend on whether you are an employee or as a contractor. In many cases, employees will not own IP created throughout employment;
  • sometimes your employer will own IP created outside of employment, but using tools and equipment provided by your employer; and
  • if you are not using your IP, think about licensing it to someone else in return for royalties before you sell it.

If you have further questions about who owns IP that you create, LegalVision’s experienced IP lawyers can help. Get in touch with them on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

A company has contracted me as a consultant. Do I own the IP I create?

Generally, yes. However, make sure to review any agreements you make with the company to ensure that you retain ownership of your IP.

Is an assignment or licensing agreement a better option for me?

This depends on your individual circumstances. Consider whether you want to retain ownership over the IP you create, and how you will get the most compensation for your services.

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