First ownership

A pre-requisite for protecting intellectual property rights in a business is ensuring that the right person or entity actually owns those rights.  Intellectual property developed by third parties, such as freelance IT contractors, may not automatically vest in the business.  The general rule is that in the first instance intellectual property is owned by the person who makes the necessary intellectual endeavour, though there are exceptions to this.

Employee inventions

Generally speaking works created by employees in the course of their employment usually belong to the employer.  The rules are not entirely straightforward though, particularly in the case of patentable inventions.  Where a person leaves his or her employment in order to start up a business based on a new invention for example, there is sometimes a question whether the invention has in fact been created in the course of the employment.  By the same token, the use by a new employee of a previous employer's confidential information or other intellectual property rights may compromise the ownership of rights in a new business concept.

Commissioned works

A new business will often rely on the contribution of a number of parties having different formal or informal relationships with the new company or entity involved in the start-up.  Very often these parties will not be employees or partners in a legal sense.  In the case of a registered or unregistered design which is specifically commissioned by someone, the law actually provides that rights in the design belong to the person commissioning it.  But in all other cases, in the absence of an employment relationship, ownership of intellectual property rights will be determined by the terms of the contract between the commissioner and the person creating the work.  Ownership of intellectual property should always be expressly dealt with, whether the commissioning party is seeking ownership or simply a licence. 

Joint ownership

Joint ownership will arise when there is a genuine collaboration between two people involved in the development of a new concept.  However, joint ownership has its own complications and is often something to be avoided.


© Davenport Lyons 2003.  All rights reserved

This document reflects the law and practice as at May 2003.  It is general in nature, and does not  purport in any way to be comprehensive  or a substitute for specialist legal advice in individual circumstances.