Under copyright and IP laws, the original creator is the first legal owner of intellectual property — not the company. All IP created by employees, freelancers, co-founders, and service providers must be formally assigned to the company for the company to own it.
TL;DR
- All IP created by third parties must be formally assigned to the company for the company to own such IP.
- This is particularly important for software developers, in R&D agreements, and when contracting content creators, as well as in employment agreements or among co-founders.
- A good IP assignment clause/agreement includes (i) the assignment, (ii) a backup license, (iii) a waiver to exercise some rights, and (iv) an undertaking to assist in the registration process if necessary.
- Generate a free IP assignment on our website.
- Book a free call with us.
What is IP assignment?
Intellectual Property (IP) refers to intangible creations of the human mind.
Since we cannot physically possess intangible creations, the ownership of IP rights is decided according to the law. Generally, the IP is initially owned by its creator.
Any owned IP (or future-to-be-created-and-owned IP) can be assigned by its owner to a third party. The assignment can encompass all rights or a determined part of the rights (e.g., right to commercialise). Following the assignment, the assignee can benefit from the assigned rights as if they were the initial owner of these IP rights.
Why should I be able to prove ownership?
Not being able to prove ownership rights (or licensing rights if your product uses licensed IP) will raise questions from investors and contractual partners and may ultimately result in a failed exit or a missed commercial opportunity.
You should have a “paper trail” ensuring your ability to prove the validity of your rights on your IP, and, when needed, that those rights were transferred to you in the proper form.
Why should I be assigned IP?
Owning IP is a key element for companies. This is usually assessed in detail during a due diligence and can be a deal-breaker for investors if it turns out a company does not own all its IP.
If a company does not own the IP, but an employee, a third party (e.g., freelancer, service provider) or even a founder or co-founder does, they must assign the IP to the company. This is notably highly relevant when an employee or a service provider (e.g., freelancer, software developer company, content creator, R&D agreement, etc.) works on IP during the contractual relationship. This can mean writing some software code, participating in the invention process, drawing the trademarks or other brand elements of the company, etc. The same applies for IP created by (co-)founders: under copyright and other IP laws, the original creator is the first legal owner of the IP — not the company. If such IP is not assigned, the original creator may retain rights in the work and could restrict or prevent you from using it at any time.
How is an assignment done?
An assignment is made formally by contract, in which the assignor assigns and transfers a defined set of IP to the assignee.
It can either be a separate agreement (generate our standard agreement here for free), or a clause of a bigger agreement (e.g., founder collaboration or shareholder agreement, employment agreement, services provider agreement, software developer agreement etc.).
It can also be assigned implicitly (e.g., if a developer creates a specific IP for a client). However, it is not recommended to rely on implicit assignment, and an agreement should always be entered into.
We recommend ensuring that all IP assignments are validly signed and stored so that you can easily prove ownership of all your key IP assets.
In some jurisdictions, some IP rights (or some parts thereof) cannot be assigned. To cover for that, and avoid having a foreign law potentially applicable to a service provider stop your company from owning all relevant IP, an assignment clause should contain a backup license clause where the assignor grants a wide and irrevocable license to the assignee for all non-assignable IP.
You also want to make sure that the assignor waives their rights to the assigned IP. This notably includes all moral rights. Without entering into the details, IP rights are split between moral rights (e.g., the right to be called the author of a book) and commercial rights (e.g., the right to sell copies of a book). Moral rights (as well as some others) cannot be assigned, and the assignee ideally needs the assignor to waive them to ensure a peaceful use of the assigned IP.
Finally, some IP rights need to be registered (see for example Patents). Sometimes, only the author can register such rights. Therefore, you want to make sure that the assignor undertakes to assist you in the registration process.
- Proof and storage: The company can easily prove its rights to all its key IP assets.
- Wording: The following wording (or similar) is used: [Assignor] hereby irrevocably assigns and transfers to [Assignee] all right and title in and to [Assigned IP].
- Scope of assigned IP: The scope of the assigned IP is comprehensive and clearly delimited.
- Backup license: There is a “backup” license to all assigned IP that would be considered non-assignable in another jurisdiction.
- Waiver: The assignor (i) waives any rights that would prevent the assignment based on mandatory law (ii) and undertakes to assist in the registration of the assigned IP.
FAQs
Who owns IP created by employees or freelancers?
Generally, the original creator owns the IP, not the company. Under copyright and IP laws, the creator is the first legal owner. IP must be formally assigned to the company by contract.
What should a good IP assignment clause include?
Four components: (1) formal assignment and transfer, (2) backup license for non-assignable IP in other jurisdictions, (3) waiver of moral rights, and (4) undertaking to assist in IP registration.
Why is IP ownership important for fundraising?
IP ownership is assessed in detail during due diligence and can be a deal-breaker. Not proving ownership may result in a failed exit or missed commercial opportunity.
Can IP be assigned without a written agreement?
Implicit assignment is possible but not recommended. Always use a formal written agreement to ensure clear proof of ownership and enforceability.
How do I get this done?
Generate an IP assignment for free here. On the same link, you can also generate a standard employment agreement, including an IP assignment clause for employees, as well as an NDA.
Book a free call with us to discuss how we can best support you.
