Business Law: Nick Attwell on issues surrounding the ownership of intellectual property rights

Nick Attwell

Nick Attwell - Credit: Archant

THE East of England is an innovative region, full of small and medium size businesses which often, whether by accident or design, invent new designs and ideas which improve the way that things are done.

Let’s suppose that one of your employees has come up with a fantastic design which has the potential to earn your business a lot of money. Who owns the intellectual property (IP) rights to that design: you or your employee?

IP is anything that is created by the intellectual effort of individuals. The simplest example might be the writing of a book. The IP, in this case the copyright, in that work automatically belongs to the author unless they sell or transfer those rights to someone else, such as the publisher.

In addition to copyright, IP can also include designs, diagrams and plans, databases and patents. All of these can be thought up by your employees – after all that’s what you pay them to do. But now let’s imagine that an employee has come up with a fantastic idea, say a new marketing plan, and he’s put it all down on paper. Trouble is he doesn’t actually work in the marketing department. Who owns the IP rights to that design?

The Copyright, Designs and Patents Act 1988 says that where an employee creates a work, or IP right, “in the course of their employment” it will belong to their employer. This is an automatic right and you don’t need to put anything in writing to protect your position. The same is true of any inventions that they come up with; under the Patents Act 1977; these will belong to you if an invention resulted through either the employee’s normal duties or a specific task assigned to them outside their normal duties.

This means that our example employee with the cunning marketing plan would have no IP rights; it would belong to you. But what if the same employee had thought of it while lying in the bath and then drew it up on his own time – would that change anything?

Where a design is created by an employee outside of normal working hours but is connected with their work, the courts will generally find that it’s owned by the employer, so again, in this situation, our example employee would lose the IP rights.

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Note, however, if he had created a new type widget, for example, but you aren’t in the business of making those widgets or doing something along similar lines, that invention or idea will belong to him.

Although you don’t have to preserve your IP rights in writing, it’s sensible to have a clause in your contracts so there can be no doubt over the legal position. A typical clause might state that the employee waives their IP rights and also demands that they promptly disclose all IP rights which they create or conceive during their employment.

: : Nick Attwell is managing partner and a commercial lawyer at Attwells Solicitors,