IP Ownership & Clearance for Technology

August 29, 2019

Generally speaking, it is recommended that a company own all IP created for its company by employees or contractors. The originality of software or other design materials can be covered by terms in employment agreements, contracts with third parties, and through company employee policies.

Whenever working with an outside party (e.g. a contractor or joint development partner) on product or technology development, it is important to have an agreement in place not only defining the working arrangement, but also the ownership of IP developed during the relationship. Without an agreement in place, jointly developed inventions will generally be regarded as jointly owned between the parties. This is not always desirable. Developed IP can have real value, and as such, an agreement and associated compensation structure between the parties must take into consideration IP ownership.

The ownership and/or control of IP created pursuant to joint or collaborative efforts with outside entities, such as business partners and contractors, is often disadvantageous to a company unless well defined in a written agreement. As a result, it is important that a Company not jointly or collaboratively develop technology unless the ownership of all IP developed in such efforts is well defined in writing prior to initiation of such development. Additionally, in order to maintain proof of conception, new technology and ideas should be well documented internally before being shared with a third party.

IP Ownership Topics

Licensing & Acquisition
IP Communication
Technology & Invention Documentation
Agreements with Third Parties
Discharging Employees
Employee Confidentiality Agreement

Patent Clearance Topics

Competitive IP Intelligence
Notice & Marking Clearance Review for Products
Freedom-to-Operate

IP Ownership

Licensing & Acquisition

IP Ownership/Licensing Clearance Review for Products or Services

It can be important that a company owns or has a license to all IP used in a product or service of that company. Accordingly, all product designs should be audited early in the design cycle for IP ownership and/or licensing. This should be completed before detailed design is initiated and again prior to launch of the product. For sugegstions, refer to the guidelines provided within this section.

In-Bound Licensing of IP

Where the ownership of IP is not possible, a company can obtain a written license to such IP with terms that provide the company rights to modify and distribute such IP worldwide for as long as reasonably required to support any respective product in which the IP is included.

For acquisition or licensing-in of third party IP, a company can develop a process supported by checklists, reviews and approvals, etc. The In-Bound IP Licensing Checklist provided in the guidlines of this section is a start on developing a process/infrastructure to attend to in-bound IP licensing issues.

IP Communication

The content of communications, especially written messages (email, regular mail, memos, internal notes, etc.), can be damaging if discovered during the course of litigation.

The guidelines within this section provide suggestions to help ensure that the necessary patent-related communications are protected by attorney-client privilege and do not contain damaging characterizations, representations, and/or admissions.

Technology & Invention Documentation

An example of when it would be important to claim priority is when a company is disclosing a new technology development initiative, design, or innovation to an outside entity (such as customers, sub-contractors, development partners or collaborators), or when the invention is believed to be extraordinary.

The documentation of a company’s innovations should be prepared before the initial disclosure to the outside entity and continuously throughout the period of interaction with the entity.  This should be done even if the disclosure is covered under a confidentiality agreement. In such circumstances, the company’s innovations can be documented in writing in as much detail as possible, contemporaneously with or as early as possible after conception, and prior to disclosure of the innovation. The documentation should be date stamped and a copy should be retained in the company records.

Agreements with Third Parties

Contractor IP Agreements

Agreements with IP provisions can be used any time a contractor or outside party is engaged in a project where IP may be used or developed. An “IP Contractor”is any person or entity engaged by the company to assist in any way with the creation of IP. Such parties could include:

• Software developers or software development companies
• Technical personnel/engineers
• Technical/engineering companies
• Marketing or advertising personnel/companies
• Any other independent contractors involved in IP Creation

The following IP terms can be considered for inclusion in contractor agreements:

• Work Done by Personnel Under Contract. Warranty that all work done for the company will be done by personnel that have agreed in writing to abide by all the terms and conditions of the agreement.
• No Violations of Third Party Agreements. Warranty that work for the company does not violate any non-compete or other contractual obligations to third parties including prior employers. This includes disclosure of any agreements restricting the work that a contractor can perform for the company.
• Warranty of Originality. Warranty that the contractor will provide only original IP to the company.
• Disclosure of Inventions. Agreement to disclose to the company inventions made or conceived while contracted to the Company.
• Assignment of Inventions. Assignment of all rights for inventions made pursuant to or related to the engagement to the company.
• Fully Paid Up License to any Third Party IP. In the event the contractor incorporates any non-original IP, the company should arrange to receive a fully paid up, world-wide license to the subject IP.
• Works for Hire/Assignment of Copyrights. Assignment of all rights in copyrights to the company and an agreement that any qualifying copyright works are to be treated as works made for hire.
• Execution of Documents. Agreement to execute documents in support of the assignment of rights or pursuit of IP rights.
• Nondisclosure. Protection of confidential information of the companyand an agreement to not disclose such confidential information outside the of the company.
• Non-compete. Non-compete provisions when possible. For example, a developer will not work on similar projects for competitors.
• Economic Espionage Act. An incorporation by reference of the Economic Espionage Act.
• No Solicitation. A covenant not to solicit other company employees.
• Return of Property. A requirement to return all company property, including written or electronic information, upon separation.

Discharging Employees

Engaging/discharging an employee could include the following steps:

• Perform exit interview
• Identify any un-submitted or unfiled inventions
• Have employee return all IP materials and acknowledge their return and/or destruction as applicable
• Review employment agreements and applicable policy restrictions in the exit interview for the employee. Also send a termination letter with a reminder of the employee’s obligations

Employee Confidentiality Agreement

The following are general descriptions of terms that can be considered in standard employee agreements (to the extent permissible by local law):

• No Violations of Third Party Agreements. The employee should attest that the employee’s work for the company does not violate any non-compete or other contractual obligations to third parties.  This includes prior  employers and disclosure of any agreements restricting the work that the employee can perform for the company.
• Warranty of Originality. The employee should warrant that he or she will provide only original IP to the employer.
• Disclosure of Inventions. The employee should agree to disclose (to the company) the inventions made or conceived while employed by the company, except as exempt by state law.
• Assignment of Inventions. The employee should agree to assign all rights in inventions to the company.
• Works for Hire/Assignment of Copyrights. The employee should agree to assign all rights in copyrights to the Company, and Agreement that any qualifying copyright works are to be treated as works made for hire.
• Execution of Documents. Employee should understand and agree to execute documents in support of the assignment of rights or pursuit of IP rights.
• Nondisclosure. The employee should protect confidential information of the company and not disclose such confidential information outside the company.
• Non-compete. [Optional – in consultation with Legal]
• Disclosure of Inventions at Termination. The employee should also agree to disclose all inventions made at the company that may have not previously disclosed before exiting the Company.

Related Resources

Patent Clearance

Competitive IP Intelligence

A company can utilize a process to monitor competitor IP protection activity to identify overreaching, and potentially invalid matters. Additionally, the identified IP can be challenged (including pro-actively) when it is determined to further business interests of the Company.

In order to maximize a company’s IP opportunities and minimize IP risks, it can be important that R&D management maintain situational awareness in the IP domain. This awareness could be maintained by:

• Tracking the intellectual property activities of known competitors, and in particular patent activity.
• Maintaining a strong understanding of the company’s own intellectual property position, and in particular its patent rights.
• Working with outside patent counsel on a continuous basis to maximize the value of those rights.

To further these objectives, R&D management and company legal personnel should discuss opportunities and activities to maintain or improve situational awareness, maximize opportunities, and minimize risks. Collaboration with outside IP counsel can be sought to assist and advise.

Periodically, R&D management and/or company legal should review the results of competitive IP monitoring. The purpose of the review is to avoid clearance concerns and also to identify overreaching, and potentially invalid matters. In some cases, action can be taken to challenge the identified IP when the challenge will further business interests of the Company.

Notice & Marking Clearance Review for Products

The following notices and markings should be verified:

• All products should include all applicable patent markings or a proper marking
  URL. For further information, see the patent marking guidlines within this section.
• All products should include all applicable copyright notices. For more information, refer to the Copyright and Personality Right section of the SLW Institute.
• All required copyright registrations should be completed or initiated. For more information, refer to the Copyright and Personality Right section of the SLW Institute.

Freedom-to-Operate

The ability of a company to sell its products without interference can be an important factor to the company’s success. As a result, the company should make reasonable efforts to assure that its products are free from infringement of third party intellectual property. In particular, this includes the copyrights, patents or confidential information of third parties or competitors.

A proactive patent freedom-to-operate (FTO) investigation should be considered on all new product designs starting early in the product design cycle. FTO investigations can determine if a company product or process constitutes infringement of a valid patent, and identify options to avoid, counter or mitigate risk presented by such patents.

Prior to the launch of a new product, the product can be subjected to a final “scrub” review to assure that there are no outstanding IP ownership, licensing or patent clearance incidents.

Information concerning infringement of third party patents should be kept strictly confidential. E-mail or voice mail should not be used at any time to communicate infringement matters. Instead, these matters should be discussed in face-to-face meetings or in telephone conversations.