Whereas a company may have full use of another person's intellectual property (IP), this does not imply full ownership. The ownership of intellectual property varies between founders, workers, and third parties. Prior to the foundation of a commercial entity or organization, the originator of IP is attributed with the creation, development, and registration of IP rights, as well as any other connected rights. Founders can create unique algorithms, brand names, domain name registration, and web site development (Seedcamp, 2017). As a result, all intellectual property created by the founders prior to the establishment of a business belongs to the founders, not the registered entity. In some cases, founders get into service agreements with a registered entity and in the process they develop IP in the process of discharging their contract. In such circumstances, the IP would be owned by the founders and not the company.
However, in the case of employees, the company retains ownership of all IP that are developed on condition that they are created in the course of discharging assigned jobs. In case there are exemption, the employment contract should clearly delineate the circumstances within which employees can retain ownership of IP (Seedcamp, 2017). During the start-up phase of companies, third parties are often contracted to provide services such as the creation of information network infrastructure. The third party retains IP ownership unless it is expressly stated otherwise in the contract for services.
Consequences of Not Owning a Company’s IP
There are significant consequences for a company in the event that it does not own IPs. It may result in the company being exposed to numerous risks including being held at ransom, being hacked or being prevented to access critical services that may derail its business. A number of consequences that may arise include being compelled to “pay over-the-odds” for an IP that should have been its property. Such situations occur when a third party becomes hostile and unwilling to transfer ownership of the IP to the company (Seedcamp, 2017). The company be also be sued or prevented from access certain rights since it may infringe IP ownership rights. In addition, the company may be unable to prevent other competing entities from accessing and exploiting IP rights that it does not own to its disadvantage. In the case of founders, if one or more leave the company, they may use IP that were previously created.
Companies are business entities that are required to have full control of its assets and systems. Therefore, it a company does not own IPs it may cause investors and potential business partners to view the business as a high risk venture that may result in losses. Since businesses depend on information infrastructure such as IPs, it may cause the company to spend significant amounts in legal fees as it exercises its due diligence in in preserving a company’s ownership of IP (Seedcamp, 2017). In the event that it becomes public knowledge that a company does not own IP, then the investors may consider it less attractive in contrast to other companies. In the event that such a disclosure occurs during business negotiations, there is a deal being called off.
Ensuring the Company Owns it’s IT
The company must ensure that it owns its own IT infrastructure and assets through exercising due diligence when signing contracts with employees and third parties. A comprehensive record is critical in delineating the individuals that created and developed IP with the aim of ensuring that ideal contracts are signed. The company should enter in contractual agreements with the founders to ensure that they do not hold ownership rights of IPs after a company has been registered (Seedcamp, 2017). A transfer of ownership from individual founders to the company is essential to ensure that it is protected in the event that one or more founders decide to leave the company at a later date. Similarly, the company should make express provisions in its contractual agreements with employees and third parties indicating that ownership of all IP should be transferred to the company after or during the discharger of a service contract.
Company Assets
A company’s assets include both tangible and intangible assets. Tangible assets are physical items that can be touched; whereas, intangible assets are those that do not have physical constitution and cannot be touched. An example of tangible assets include buildings, equipment, vehicles, computers, inventory among others. Intangible assets include copyrights, domain names, IPs, Contracts, Blueprints, bonds and many others.
Non-Disclosure Agreements
Non-disclosure agreements often involve confidentiality and entails the preservation and protection of information shared between two parties that cannot be released or made public without prior consent of the concerned parties (FindLaw, 2017). Non-disclosure is critical in work that is based on the sensitive nature of the information that will be disclosed that could be potentially inflammatory, biased, prejudiced or defamatory. Any personal information provided by the employees and the company will be subject to confidentially and cannot for any purpose, other than their work be used in part or in whole without the express consent of the company. The information gathered from the employer in the course of discharging duties must be kept private at all times.
Any information that can potentially give away copyrighted material such as IPs will be kept confidential. The employees and third parties agrees to maintain confidentiality regarding the nature and scope of their work at the company. Therefore, the employee or third party shall not in and after the duration of the contract discuss or disclose the nature of their work or materials thereto with any other person except the company(FindLaw, 2017).
A number of internet sites require a user to purchase copyrighted content; however, other internet websites offer the same material in exchange of an equivalent upload while others offer the same material for free. This indicated that the internet is not subject to uniform rules and regulations. Therefore, it is almost impossible to control the extent in which copyright materials are used in creating IP.
A defined number of countries have stringent laws that govern the use and application of copyright materials while others have limited regulations. In light of this, if the law on the use of copyright materials does not indicate where a line is drawn when using copyrighted material; the onus is on the user. While the creation of IP might have a considerable advantage to the copyright owner, the extent in which copyright material is used should be limited. This should also be acknowledged in a professional manner in order to indicate that the creator does not represent the copyright materials as his/her own. Hence, there should be a significant difference between the original materials from that of the IP.
The legal, ethical and justifiable way of using copyright materials is through seeking authorization from the owners, especially where IP are to be used in the promotion of a business or a profit making venture. Additionally, if the use of the copyrighted material is expected to be extensive, then a contractual endorsement by owner is appropriate where parties to the contract benefit simultaneously (FindLaw, 2017).
Meanwhile, similar copyrighted material can be purchased online or in respective outlets such as music stores. Once, the copy right material has been acquired it should not be used in such a way that the original context of the copyrighted material is altered or abused. Additionally, the copyrighted material should be acknowledged accordingly. These factors will ensure that the copyright owners work is respected and preserved. Meanwhile, the ease in which information is accessible on the internet makes it significantly difficult to protect copyrighted materials and intellectual properties. This has led to increased instances of piracy, where copyrighted materials are duplicated without the owner’s permission (Digital Media Law Project, 2017). Therefore, the internet has become an avenue in which people can commit unethical acts such as piracy for their own benefits without considering the owner’s rights and entitlement in lieu of their copyrighted property. The use of another person’s intellectual property without authorization constitutes an infringement of intellectual property rights and unethical behavior. Consequently, the intellectual properties utility is lost since the rightful owners do not benefit from their work.
Hence, the need for non-disclosure agreements that ensure intellectual property and copyright material such as IPs are protected against abuse and misuse, exploitation and abuse to the detriment of the company.
References
Digital Media Law Project. (2017). Publishing trade secrets. Digital Media Law. Retrieved from http://www.dmlp.org/legal-guide/publishing-trade-secrets
FindLaw. (2017). A Nondisclosure Agreement. Retrieved from http://smallbusiness.findlaw.com/intellectual-property/a-nondisclosure-agreement.html
Seedcamp. (2017). Understanding intellectual property: Ownership. Retrieved from http://seedcamp.com/resources/understanding-intellectual-property-ownership/
