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IP Ownership Primer

If you’ve developed a process or machine (or the idea for one), you should be thinking in terms of patent or trade secret or perhaps contract rights. Content, software code, images (including photographs) and other forms of expression will entail copyright, and sometimes trademark. Trademarks can include single words, short phrases, slogans and logos, but they must be used in commerce. (Note that single words and short phrases are not copyrightable, except under extraordinary circumstances.) If you’re dealing with pure data, think trade secret or possibly DMCA anti-circumvention law.

Ownership is important not only for determining who owns and has ultimate control over an IP asset, but it might be required to enforce the IP right. All of this is complicated by licensing. See our Licensing Primer for more.

PATENT: Patents are initially owned by the inventors. Unlike copyright, there is no “work made for hire” doctrine in patent law. Since it’s fairly common for patents to have multiple inventors, this can lead to there being multiple owners of the patent. This can be awkward because (unlike copyright) you need the approval of all owners of a patent to exploit it. You can “assign” (i.e., give away, for money or for free) your share of a patent to someone else, and most sophisticated companies require their employees to assign their inventions to the employer. Unlike other forms of intellectual property, patent rights don’t arise until the federal agency in charge (the United States Patent and Trademark Office) actually issues the patent. But if you leave out an inventor on the application, that can undermine the validity of your patent, especially if the omitted inventor isn’t obligated to assign their invention rights. Patents can, of course, be licensed.

COPYRIGHT: Copyrights arise any time someone “fixes” “expression” in a “tangible medium.” Human beings are pretty much constantly doing this: writing novels, taking photographs, banging out code, filming home movies, writing letters, putting together compilations, laying out a magazine spread, recording demos. If you’re unintentionally creating valuable IP, it’s most likely to be copyright. Copyrights are initially owned by their creator or, occasionally, their creator (or creators plural, if it’s a joint work). There is a huge exception to this rule, however: “works made for hire” are considered to have been created by the hiring party. The hiring party is most typically an employer, assuming the work was created during the course of employment, but, in certain limited situations and if the contract is written correctly, a work made for hire can arise with an independent contractor. Like patents, copyrights can be assigned, and multiple persons can own a copyright. Unlike patent, an owner of a copyright doesn’t need the other owners’ permission to exploit her share of the copyright, provided she accounts to the other owners. Copyrights, of course, can be licensed.

TRADEMARK: Trademarks arise when you start using a word, phrase, slogan or logo in a way that connects your product or products with a quality source (i.e., you, but the consumers don’t need to know it’s specifically you) in a distinctive way. Ownership is usually straightforward, since usually the person who came up with the trademark is the same person who uses it, who is usually the same person who benefits from it. When those interests don’t line up neatly, ownership issues can be knotty, for example, when someone else—a fan or even a competitor—applies a term to your products, and you decide to embrace the term. Such was the case when the New York Yankees successfully asserted trademark rights in EVIL EMPIRE, a derogatory term initially coined by Boston Red Sox fans, but which the Yankees had embraced to some degree. Joint ownership of trademarks is rare, but not strictly impossible. Trademarks are assignable, but great care must be taken. Similarly, trademarks may be—and frequently are—licensed, but again, great care must be exercised. A botched assignment or license can eviscerate trademark rights—the dreaded “naked license.” This is because there’s more to a trademark than just the mark—there’s also the goodwill and sense of quality that comes with it. You have to make sure the license or assignment takes that goodwill and sense of quality into account.

TRADE SECRET: The law governing ownership of trade secrets isn’t as formalized as for other forms of IP, but the owner is usually the person who came up with the trade secret or her employer (if developed during the course of employment). Since trade secrets can cover so many different things—not just processes, but data, like customer lists—companies actually own a good deal of trade secrets and are frequently developing more. The key with trade secrets is taking reasonable steps to keep the trade secret, well, secret. Joint ownership isn’t impossible under the right circumstances. And trade secrets can be sold and licensed, though it’s trickier than for most other forms of IP. Ownership is not strictly necessary to enforce a trade secret, but courts are still figuring out what non-owners may enforce a trade secret under what circumstances.

DOMAIN NAMES: Domain names are fairly easily bought and sold through procedures set down by ICANN, and many registrars are only too happy to assist you with your transaction. Beware, though, if the domain name comes with trademark rights…

PUBLICITY RIGHTS: You are, of course, the initial owner of your own publicity rights. Since they arise from you own image, it’s unclear whether and to what extent they can be assigned to someone else. At a minimum, however, you can certainly license them.

DATABASES: The information in a database cannot be copyrighted (though how it’s organized might be), but if you take reasonable steps to keep keep the information secret, there should be some trade-secret ownership rights—possibly bolstered by the DMCA anti-circumvention laws, if those reasonable steps included technological means.

CONTRACT RIGHTS: Don’t overlook humble contract rights. They are not automatically assignable, but they often are by their own terms (though if they involve IP, the rules governing transfer of IP might trump). Through contract, you can create valuable rights to otherwise unprotectable things, like pure ideas, pure data, etc.

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