In too many cases, a company does not know that certain assets are intellectual property or does not know that ownership of any intellectual property created by someone before joining the company as an employer or founder belongs to that person. One of the main documents that all businesses must insist employees and independent contractors sign, and in the case of a new business or start-up, all founders sign, is a Intellectual Property Assignment Agreement.

Many business managers incorrectly assume that intellectual property only applies to high-tech companies. Wrong (see below)! Whenever your business deals with anything creative, or has knowledge or information important to its success, the business owner or manager wants to make sure that ownership of any inventions or work created for the business is assigned to the business. In the field of patents, unless your company has signed the relevant assignment document with employees, all independent contractors and employees (except those in the restricted category of “hired to invent” employees) may own patents. personally all the patentable inventions you create.

Also, if the company does not have a written agreement on ownership of any original work of authorship, the author of the original work may own the copyright. The main exception is “made-for-hire” works created by employees acting within the scope of their employment, which automatically belongs to the employer.

So what about the website designer/developer that your company hired to create the “Front-end” and “Back-end” of your distinguished website? Under the law, if the designer/developer is an independent contractor, then the designer/developer owns the copyright and has the right to sell the same page layouts or computer code to someone else. If the website is designed by an employee in the ordinary course of her employment, then the employer owns the copyright.

Therefore, it is in the interest of the owner and administrator not to be involved in questions of fact, such as whether the works are created by an employee in the scope of their employment or who is an employee hired to invent, or whether the author of the work is an employee or an independent contractor. The company must negotiate for both employees and independent contractors to sign copyright releases in writing.

In some cases, the independent contractor will refuse to transfer the copyright to the work product, and in such cases, the company may negotiate with the independent contractor not to sell or license the invention or work product to direct competitors. . We have encountered situations where independent consultants refuse to transfer copyright ownership to their work product, and the commissioning company negotiates to limit the licensing or transfer of such copyright.

Many business managers overlook IP issues, assuming (incorrectly) that IP issues are relevant only to technology companies that have hacking engineers and employees. However, all businesses must realize that the following business assets have value and must be protected:

• customer lists
• custom software
• name or logo
• product literature
• confidential knowledge about how to do certain things
• secret formulas

In sum, a business owner or business manager must take precautions to clarify the ownership of the company’s intellectual property. All employees, independent contractors, and, in the case of start-ups and new businesses, all founders of a business must be required to sign assignments of inventions and confidentiality agreements giving the employer the right to market the idea, invention, work, prepared, conceived or put into practice by their workers during the period of employment. In the case of start-ups and start-ups, all founders and owners must be similarly obligated at the time of formation to assign ownership of the creative works (all copyrights, trademarks or patents) to the company .

In a start-up situation, to the extent the employee contributes to the “property” of Newco, including patents, copyrights, secret formulas, proprietary know-how, and other legally protected intangible assets, under Section 351 of the Code Internal Revenue, the entrepreneur can avoid taxes on his bargain purchase of Newco shares.