Every business owner understands the importance of legally protecting his or her company’s intellectual property. Your company’s intellectual property is anything that your company creates – art, blueprints, writings, software, formulas – along with your customer and sales data and your other vital business information. Intellectual property can include trade secrets, logos, brands, trademarks, designs, books, articles, photography, music, and art of all kinds.
While the importance of protecting your company’s intellectual property is easy enough for a business owner to understand, there is often some confusion about what can happen when intellectual property is jointly owned. That confusion can happen in connection with joint development arrangements, joint business ventures, subcontracting parts of the work, and other cooperative efforts involving intellectual property development linked to software, pharmaceuticals, medical devices, robotics, or other tech-based initiatives.
The joint ownership of intellectual property can happen when more than one person creates a patentable invention or co-creates a joint work. Joint ownership can also be established legally as the product of a compromise in a business contract. Although it may seem quite reasonable that intellectual property which is jointly developed should also be jointly owned, many of the implications of jointly owned intellectual property may not be what you think. Daytona Beach intellectual property attorney Melody Lankford advises, “The different types of IP are all treated differently in the court of law, therefore, the way these will be dealt with will be different too.”
HOW DOES JOINT OWNERSHIP AFFECT A COPYRIGHT?
The ownership of a copyright initially arises with the creation of the work and rests with the author or authors. Once the work is created, the copyright is freely transferable as personal property. To be effective legally, a transfer of copyright ownership must be in writing. Each owner of a copyright may freely copy, distribute, and prepare derivative works based on the joint work and may also exercise all of the other exclusive rights of copyright. However, joint owners of a copyright must account to each other for any profits received in connection with the jointly owned copyright. In other words, each owner has to share the profits with the other owners.
Subsequently and exclusively licensing a copyright takes the consent of all the owners of the copyright. A single owner of a jointly owned copyright cannot block the other owners from bringing an infringement lawsuit merely by refusing to join in the suit. And while each of the individual owners has the right to enforce the copyright to prevent others from using the copyrighted material, another owner can sidestep that enforcement by licensing the “infringer” with the right to use the copyrighted material.
The determination of co-authorship and the subsequent co-ownership of a copyright are issues that are addressed by the Copyright Act of 1976. Federal jurisdiction is exclusive in cases involving copyright. In the United States, the general rules of copyright ownership can be changed by an agreement between the co-owners, but any joint ownership agreement must be formalized in writing, and such agreements and transfers should be recorded at the U.S. Copyright Office.
The legal rules that allow a joint owner of a copyright to use the work without consent, yet to still be under an obligation to account to the other owners, may have quite a number of unforeseen consequences. This may be true especially when one co-author contributes a substantial portion of the work. Thus, it may be helpful to assign the respective use and ownership rights to any income stream created by the work with a written agreement as early as possible in the joint ownership relationship.
HOW DOES JOINT OWNERSHIP AFFECT A TRADE SECRET?
The law regarding the joint ownership of trade secrets is not at all as clear as it is for trademarks and copyrights. Frankly, it depends on the precise nature of the trade secret. The joint owners of a trade secret may have to account to one another for any profits that they may derive from the trade secret, but every case will be different. To license a trade secret exclusively will probably require the agreement of all of the owners, but again, every trade secret case will differ. The joint ownership of a trade secret can make maintaining secrecy difficult over time, although joint owners may have a default legal obligation or a contractual obligation to each other to keep the trade secret confidential.
HOW DOES JOINT OWNERSHIP AFFECT A TRADEMARK?
Joint ownership of a trademark, while it is conceivable, would frankly be quite unusual given that the primary purpose of a trademark is to identify a product and its source from a single company or individual. What is more common is that a jointly owned single company owns a trademark. As with jointly owned copyrights and trade secrets, the joint owners of a trademark will probably have to account to one another for any profits derived from the trademark. All of the owners of a trademark must agree in writing to any exclusive licensing.
WHAT OTHER ISSUES IMPACT JOINT IP OWNERSHIP?
The owners of jointly owned intellectual property can come to their own contractual agreements, subject of course to any overriding legal restrictions. The owners may modify their agreement by addressing particular issues in the contract. For example, the owners may determine that only one person will be responsible for the registration, maintenance, and prosecution of the intellectual property, and they may also determine the manner in which profits and/or royalties are divided and distributed. “It’s very important to have something in writing, like a contract on how the IP is owned, otherwise you’re left with the legal laws,” advises Daytona Beach intellectual property attorney Melody Lankford.
While the joint ownership of intellectual property makes good sense in a variety of circumstances, in other circumstances it does not. Often joint ownership may sound good in theory – or in the boardroom – but when companies fully understand the implications “on the ground” of the joint ownership of intellectual property, those companies may try to avoid joint ownership or to draft contracts to sidestep those implications. If your company’s intellectual property does not have the full legal protection it needs, you must let an experienced intellectual property attorney help you acquire the complete protection provided by federal law.