Protection of Intellectual Property
All intellectual property commercialization requires that the party seeking to commercialize the intellectual property has sufficient rights to do so. As a result, no discussion of intellectual property commercialization would be complete without a discussion regarding intellectual property protection. Early stage companies often expend so much time and energy organizing their business entity, engaged in development and innovation and conducting fundraising efforts, that certain housekeeping matters are often ignored or overlooked. Despite the necessity of participating in these key business functions, one issue that should not be overlooked, however, is the importance of ensuring that the company own, or have sufficient rights to, the intellectual property rights that it seeks to commercialize, and that all rights in any inventions, technology, or products or services created, developed or contributed by any persons or entities on behalf of the company, including employees, independent contractors and consultants, are properly assigned to the company.
The bundle of rights associated with any given intellectual property asset is determined by a mix of federal and state laws, and by contractual agreements entered into between interested parties. Ownership of copyrightable works created by employees in the course of their employment typically vests with the employer under the “work made for hire” doctrine under US copyright law; however, the doctrine has limited application outside of the employer-employee relationship and does not cover patentable inventions or other forms of intellectual property, such as trade secrets or other valuable non-public company information. As a result, it’s imperative that early stage company ensure that all employees, contractors and consultants enter into agreements which affirmatively assign any intellectual property developed for the company (and all rights to such intellectual property) to the company and include obligations to protect and keep confidential the company’s proprietary and non-public information. Depending upon the scope of activities performed on behalf of the company, these agreements may also include non-solicitation and non-compete provisions, as well obligations to execute any additional assignments as may be necessary to reflect the company’s ownership of all rights in any intellectual property created or developed on behalf of the company, such as an assignment of an inventor’s rights to a patent or patent application.
It’s also worth noting that these agreements should be entered into before the employee, contractor or consultant begins any work on behalf of the company. First, it’s necessary to do so to ensure that all inventions and work product are covered by the assignment agreement and second, as a practical matter, it is much easier to obtain signatures to these agreements prior to the creation or development of assets that may increase in value and importance and before these relationships may end, especially if there is a disagreement or falling out.
The bundle of rights associated with any given intellectual property asset is determined by a mix of federal and state laws, and by contractual agreements entered into between interested parties. Ownership of copyrightable works created by employees in the course of their employment typically vests with the employer under the “work made for hire” doctrine under US copyright law; however, the doctrine has limited application outside of the employer-employee relationship and does not cover patentable inventions or other forms of intellectual property, such as trade secrets or other valuable non-public company information. As a result, it’s imperative that early stage company ensure that all employees, contractors and consultants enter into agreements which affirmatively assign any intellectual property developed for the company (and all rights to such intellectual property) to the company and include obligations to protect and keep confidential the company’s proprietary and non-public information. Depending upon the scope of activities performed on behalf of the company, these agreements may also include non-solicitation and non-compete provisions, as well obligations to execute any additional assignments as may be necessary to reflect the company’s ownership of all rights in any intellectual property created or developed on behalf of the company, such as an assignment of an inventor’s rights to a patent or patent application.
It’s also worth noting that these agreements should be entered into before the employee, contractor or consultant begins any work on behalf of the company. First, it’s necessary to do so to ensure that all inventions and work product are covered by the assignment agreement and second, as a practical matter, it is much easier to obtain signatures to these agreements prior to the creation or development of assets that may increase in value and importance and before these relationships may end, especially if there is a disagreement or falling out.