Previously in our Intellectual Property (IP) Best Practices series, we introduced step five to managing your IP: limiting access to sensitive information. Please check back every Monday for the next step in this series.
For all those who have absolute faith in humanity, being cautious is not the same as being cynical. Swearing on one’s honor and spit handshaking is all well and good but backing it up with signed documentation is even better. Always make sure you have your employees and clients sign iron clad contractual agreements protecting the interests of the company, especially your intellectual property (IP). I cannot stress this enough. This provides clear and irrefutable proof in case someone infringes your IP (here’s a great example of why intellectual property agreements are so important).
Having ownership documentation of your IP assets will help you avoid getting stuck in long drawn out litigation battles regarding such issues at a later date. Boiler plate contracts of employment agreements, licensing and service agreements, and Non-Disclosure Agreements (NDAs) are all available online but hiring a lawyer to ensure such agreements meet your particular needs is important. The expense is well worth it.
By default all intellectual property of a creation vests with the inventor. But the most common exception to this rule is work product created by an employee during the course of their employment. It is important to have an IP clause in all your employment agreements and also add a limited form of IP clause while hiring contractors.
Contracts involving products and technology still undergoing development should be drafted clearly, claiming ownership of the IP. When an outside party is involved with cooperative development there is always the possibility of conflicting claims of IP ownership at a later date. Small to medium-sized businesses with limited resources and funds rely on mutual exchange of services and products that complement their businesses. This helps cash-strapped startups further each other’s goals without having to dip into their funds. This is beneficial but at the same time dangerous. Such cooperative conduct is usually informal and accompanied by the disclosure of confidential information, which may lead to misuse of intellectual property if mutual NDAs are not signed.
But you should not rely solely on NDAs. A popular misconception amongst business owners conducting business with third parties is that a NDA in itself is enough to demonstrate proof of ownership. It is not. NDAs are an appropriate contract when interacting with prospective partners, clients, or investors. However, the NDA offers no answers to those engaging in development without a contract stating who the owner of the created IP is. In cases of cooperative development make sure to clearly define the division of the IP to avoid any confusion later on.
So to reiterate, legal documents are our friends. Courts resolving disputes love them, investors conducting due diligence love them, and if you do not already, you should love them too!
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