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The Way Business Is Moving

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Issue Date: November 2008

Who owns your IP?

November 2008
Lance Abramson - Spoor & Fisher

A company or individual engaged in commerce for obvious reasons wants to ensure that they own their intellectual property. This sounds silly but unfortunately ownership of intellectual property is often not given enough attention until it is too late and a company or individual finds that they have inadvertently given away their rights either partially or completely.

One example that occurred recently was during the launch of Google’s Chrome browser which was launched with a licence agreement that included a clause essentially giving Google royalty free rights to any content posted or displayed using the new service. This was picked up by an IP astute blogger and Google amended the clause to delete the offending clause.
This thankfully turned out to be a relatively harmless instance. More serious instances occur when different parties collaborate in a commercial venture or where one party hires another party for product development and the intellectual property ownership is not clearly set out between the parties. This could easily result in a party thinking they own their intellectual property when in fact they do not.
IP rights applicable to software
One interesting example could occur (in fact does occur too often) in the field of the development of computer software.
By way of background, the intellectual property rights that apply to computer software are as follows.
* Trademarks protect the name of the software and prevent another party from commercialising software with the same name.

* Copyright protects the code, source code, screen layouts etc from unauthorised copying.

* Patents protect the underlying novel and inventive functionality of the software irrespective of the coding language.
With the above in mind, let us imagine a communications engineering company ABC which invents a brilliant method that allows the compression of data by a scale not seen previously without compromising the data. Company ABC however feels that it does not have the coding expertise to properly implement the software and so employs a software company XYZ to write the code. In addition, company ABC employs a branding consulting company BRA to come up with a name and logo.
Critical mistakes
In its haste to get the product to market, company ABC makes a few critical IP ownership mistakes.
As far as the ownership of the patent rights is concerned, the method was invented by an employee of the company ABC. The Patents Act states that an invention made in the course and scope of a person’s employment is automatically owned by their employer and so company ABC will own the patent rights to this invention and can proceed to file patent applications in their own name.
However, the situation would not be so clear where company ABC presented the problem of data reduction to another company for a solution. In this case, absent of any agreement between the parties to the contrary, the other company would now in fact own the patent rights with ABC having to rely on an implicit licence granted to them to use the software.
Referring now to the copyright in the software written by company XYZ, copyright vests in the author of the software. In this case the author of the software will almost certainly be company XYZ. As there were no clauses in the contract between the parties dealing with ownership of the copyright between the parties the default position applies which is that the author of the software (company XYZ) owns the copyright in the software.
Finally, company ABC failed to read the fine print of the contract with the branding consulting company BRA. BRA conceives of and puts together a fantastic name and logo for the new product which company ABC uses to launch the new software. However, unbeknown to ABC, the fine print states that the name and logo developed by BRA remains the property of BRA. Company ABC now finds itself in the invidious position of having to challenge the contract to validate their ownership in what they thought to be their trade mark!
The above scenarios seem to occur all too often where companies and individuals do not pay sufficient attention to the ownership of IP and then down the line find that they in fact do not own their IP as can be seen by this simple but not far-fetched example.
Opinion
What is also obvious from this example is that with a little attention and well placed advice all of these pitfalls can be easily avoided as was the case with the Google Chrome browser where after a little noise, Google amended the offending clauses. This small amendment in fact had a large impact on the ownership of the rights to the content as discussed above. So after all is said and done – who owns your intellectual property?


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