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Ownership Rights for Work Paid to Others

Business owners should be aware of work paid to others where there is potential development of creative works or inventive ideas. Such creative works or inventive ideas can take on the form of copyrightable materials or patentable ideas respectively. Designs of logos and other images can also be subject to trademarks to build a brand. When work is paid to others (as in a subcontract) it is important for a business owner to consider who owns the rights to above intellectual property (IP).

It is common for business owners (sponsors) hire others (contractors) without any agreements in place. Sponsors should recognize the potential for intellectual property especially when it comes to new designs or ideas. As an example, a sponsor may rely on a contractor to design and build custom equipment that processes fresh harvested crops. Does the contractor have the right to make these for other customers? Will the contractor have any entitlement to the profits generated by the sponsor? Without an agreement a contractor could argue, document, and claim inventive or creative steps to justify some ownership over the finished product or design. Without an agreement the contractor can claim joint intellectual property rights and share in the income. Agreements need to have language to specify who owns the rights to what is created or developed. Failure to do so can result in disputes and unnecessary court costs and settlements

Sponsors should consider having agreements addressing ownership rights to any intellectual property created. If at all possible it is desirable to have an agreement with language specifying total ownership by the party that pays for the work. The cost of providing such an agreement will be far less than addressing a dispute. It is highly recommend that a sponsor consult with legal counsel on this matter.