Intellectual Property Clauses in Employment Contracts
Who owns work created by employees? Understand IP assignment clauses, inventions, and the Patents Act 1977 rules.
Intellectual property (IP) clauses determine who owns work created during employment and protect the employer's existing IP.
Types of Intellectual Property
| IP Type | What It Covers | Duration |
|---|---|---|
| Copyright | Written works, software, designs | 70 years after author's death |
| Patents | Inventions, processes | 20 years |
| Trade marks | Logos, brand names | Indefinite (if renewed) |
| Design rights | Product appearance | 15-25 years |
| Trade secrets | Confidential know-how | Indefinite |
Default Legal Position
Copyright
Under the Copyright, Designs and Patents Act 1988:
- Employer owns copyright in works created by employees in the course of employment
- The employee must be creating the work as part of their job duties
- Works created outside employment belong to the employee
Patents
Under the Patents Act 1977, inventions belong to the employer if:
- Made in the normal course of duties where an invention might reasonably be expected, OR
- Made in the course of specifically assigned duties where an invention might reasonably be expected, OR
- The employee has a special obligation to further the employer's interests (senior employees)
Otherwise, the invention belongs to the employee.
Employee Compensation for Patents
Employees may claim compensation if:
- The invention is patented
- The patent is of outstanding benefit to the employer
- It's just that the employee receive compensation
IP Assignment Clause
Even with default rules, a clear IP assignment clause prevents disputes.
What to Include
Scope of assignment:
"The Employee assigns to the Company all intellectual property rights in any works, inventions, designs, or other materials created during employment and in connection with the Company's business."
Types of IP:
"This includes but is not limited to: copyright, patents, design rights, database rights, trade marks, and all other intellectual property rights whether registered or unregistered."
Future works:
"This assignment applies to intellectual property created during employment and shall operate as an assignment of future rights."
Waiver of moral rights:
"The Employee irrevocably waives all moral rights in works created during employment to the fullest extent permitted by law."
Assistance obligation:
"The Employee shall, at the Company's expense, execute all documents and do all things necessary to give effect to this assignment, including assisting with IP registration."
Pre-Existing IP
If employees bring existing IP to the role:
- Document what IP exists before employment starts
- License may be needed if used in employment
- Keep separate from employment-created IP
IP Created Outside Work
For IP created in the employee's own time:
Belongs to Employer If:
- Related to employer's business
- Used employer's resources
- Created during working hours
Belongs to Employee If:
- Unrelated to employer's business
- Created in own time with own resources
- Outside scope of duties
Practical Considerations
For Employers
- Clear job descriptions - define expected creative/inventive work
- IP register - maintain records of all IP created
- Exit procedures - confirm IP ownership when employees leave
- Contractor provisions - ensure IP assignment from non-employees
For Employees
- Read the clause - understand what you're assigning
- Document personal projects - keep records of non-work IP
- Seek permission - if working on personal projects related to work
- Keep evidence - of when and how personal IP was created
Common Issues
Overlap with Personal Projects
An employee who develops an app similar to the employer's product may face disputes even if developed at home.
Solution: Get written agreement that personal projects are permitted and outside the employment IP clause.
Social Media Content
Who owns content created on company social media accounts?
- Usually the employer
- Include specific clause covering social media
- Address what happens to accounts when employee leaves
AI-Generated Content
Emerging area with uncertain law:
- Include AI-generated works in IP clause
- Consider who owns prompts and outputs
- Document use of AI tools in work products
Related answers
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Frequently Asked Questions
- Who owns intellectual property created by employees?
- Generally, the employer owns IP created by employees during the course of their employment. However, this depends on the nature of the work, the employee's duties, and any contractual terms.
- Can employees claim ownership of their inventions?
- Under the Patents Act 1977, employees may own inventions made outside their normal duties unless the invention arose from specifically assigned duties or was made in circumstances where an invention might reasonably be expected.
- What is an IP assignment clause?
- An IP assignment clause transfers ownership of intellectual property created by the employee to the employer. It should cover all types of IP and future works, with the employee agreeing to assist with registration if needed.