Intellectual Property: Who Owns It?

Businesses often hire people to create work that is considered intellectual property under the Copyright Act.  Examples include logos, books, newspaper articles, and (crucially in today’s environment) software code and website content.  In a traditional employer/employee relationship, the rights to intellectual property created within the scope of the employment belong to the employer.

However, companies are frequently hiring independent contractors to perform this work.  Many start-ups, for example, are hiring independent contractors to do web development or to write code.  If the intellectual property is created by an independent contractor, the default rule is that the intellectual property belongs to the independent contractor, not the company that hired the contractor.

This can create significant problems down the road.  Start-ups are learning that they don’t actually own parts of the software they are attempting to sell or use to raise capital.  This problem can easily be solved up front, by entering a written agreement with the independent contractor to specify that all intellectual property created under the agreement belongs to the company.  The problem can be very difficult, and costly, to solve after the fact.

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