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Intellectual Property Ownership Considerations for Employees and Independent Contractors

By: Christopher Heer, Ryan De Vries, Daryna Kutsyna | Last updated: August 15, 2018
A great deal of protectable intellectual property is created by employees and contractors. From inventions to new product designs to creative works, employees and contractors make many contributions.

As an employee or contractor, you may wonder whether you have a legal interest in what you are creating at work, or whether your employer has a legal interest in what you are creating at home. The answer often depends on the type of intellectual property right created, the nature of the job you have been hired to do, and your agreement with your employer.

How ownership is determined

When starting a new job or freelance contract, you will likely be presented with onboarding paperwork. Such paperwork sometimes includes a provision regarding ownership of intellectual property. Such provisions may only address ownership of intellectual property created in the course of employment, but they may also address ownership of intellectual property created outside company time and without the use of company resources.

In the absence of agreements addressing ownership of intellectual property, a number of default rules will apply. In the abstract, a patented invention is owned by its inventor, an industrial design is owned by its creator, and a copyrighted work is owned by its author. However, in the context of employee or contractual relationships further default rules may change the basic rules.

The Patent Act does not specifically address ownership of patent rights for inventions made in the course of employment, but case law has focused on whether or not an employee or contractor was hired to invent. While a number of factors have been considered by the courts, if you were hired to find or create solutions to technical problems or if you were asked in the course of your work to find a solution to a technical problem, your employer would likely be found to own any patent rights related to the solutions found.

The Industrial Design Act does include a provision indicating that if a design was executed by a creator for someone else in exchange for good and valuable consideration, the one for whom it was executed owns the design. While few industrial design cases have been heard in Canada, receiving a salary or other payment for creating a design may well qualify as good and valuable consideration.

The Copyright Act too includes a provision regarding employer interests in copyrighted works. The Copyright Act indicates that if a work is created in the course of employment the employer owns the copyright in the work. However, case law indicates that where a work is created by an independent consultant, the consultant will retainer ownership in the absence of an agreement to the contrary. Case law also indicates that express or even implied agreements that an employee will retain ownership of the copyright in their creations can vary the usual rules in some cases.

In sum, the facts surrounding your relationship with your employer and your act of creating an item of intellectual property are likely to be considered in determining ownership. Naturally, the default ownership rules can be varied by an agreement between employer and employee or contractor.

Protecting your intellectual property as an employee

Often the best time to address intellectual property ownership is when you are entering into a new employee relationship with an employer or when you are beginning a significant new project for your employer. Be sure to review any contracts or other documentation presented to you to see if any additional intellectual property obligations have been stipulated.

Some things to look out for include:

  • An obligation to assign ownership to your employer: Such obligations are often included in contracts for positions in which an employee is being hired to design marketing material, create literature, write papers, or find solutions to problems. Contracts may also address intellectual property creations you come up with in your own time, particularly when those creations are related to the work you are being asked to do.
  • An obligation to assist your employer in seeking intellectual property rights: Particularly when seeking patent rights, an applicant is often asked to submit a declaration from the inventor. In some cases, employment agreements may impose an obligation to execute documentation that your employer may need when seeking intellectual property rights, or may even impose a general and ongoing obligation to assist the owner of the intellectual property rights in obtaining or enforcing their rights. If your employer is asking you to commit to more than is reasonable, it is often best to negotiate a compromise before beginning a project.
  • A non-compete clause: Such clauses are common in some industries and may prevent you from working for a competitor for a period of time after the conclusion of your employment. Consider whether the terms of the non-compete clause are reasonable or excessive.
  • A request to provide information regarding your existing intellectual property ownership or obligations: In some cases, an employer may ask you to provide them with a list of your intellectual property assets or your obligations to others, such as obligations to previous employers to assist in seeking rights. Such lists may be needed in some industries to allow an employer to take note of potential conflicts or other issues.

In many cases, intellectual property-related clauses and obligations are just as negotiable as other terms of an employment contract.

It is also important to note that as an employee relationship evolves, you or your employer may seek to adjust intellectual property-related terms. In some circumstances if an employer varies the terms of employment without providing additional compensation, an employee may retain ownership or other rights despite assignments or other documentation indicating the contrary.

Protecting your intellectual property as an independent contractor

A contractual relationship generally imposes less obligations on the contractor to transfer intellectual property rights to an employer.

Typically, a contractor retains ownership of intellectual property rights arising during the contractual relationship, often even rights to works made at the employer's request. While there are exceptions, such as where a contractor is explicitly hired to produce a certain work, generally a contractor only gives up ownership rights to their intellectual property creations if the contract under which they are working obliges them to do so.

Be sure to carefully evaluate your contract, particularly for stipulations such as those listed above. Remember that in most cases contractual terms can be negotiated.

Transitioning to a new employer

When transitioning to a new employer or project it is often advisable to review the terms of any agreements made with previous employers. If you have accepted any non-compete agreements, check that your new position does not violate any terms. If you have knowledge of any trade secrets, it may be necessary to inform your new employer if there are any limitations on which projects you can work on or what you can discuss from your past work.

Take stock of any intellectual property you have created, and review whether you retain any ownership rights. If you have not assigned rights to your employer, and particularly if they have been licencing your property, then the end of your employment may vary the terms under which they are able to use your property. If rights have been assigned, make sure you are not infringing their property by using something owned by your previous employer.

An exit interview may be a good time to clarify any obligations you are uncertain about.

Conclusion

In the absence of an agreement, employees and contractors may retain more intellectual property rights then they realize. When entering into an employment or contractual relationship, be sure to review documentation prior to signing and to negotiate terms that are acceptable to you. If your continued ownership of your creations is important to you, be aware of how new and existing relationships with employers may affect your ownership.

If you want our help with IP ownership, contact us now for a complimentary and confidential initial telephone appointment with a member of our team.