In business, there can be confusion about who owns a piece of intellectual property (IP), and sometimes an entrepreneur may take for granted that they own the IP rights. However, considerations such as academic affiliation, employer contracts and collaborations may complicate IP ownership. It is also important for founders of a start-up to correctly assign the IP to the company.
To commercialize an invention, entrepreneurs plan to take the intellectual property to market in some form, be it as a product or a service. But before they do that, they need to determine whether the IP is theirs to sell.
Although an invention or creation is usually thought of as belonging to the inventor, this may not always hold true. For example, if the invention was made during the course of employment, the rights to it may reside with the employer.
Ideally, an employment contract or independent contractor agreement would be in place that would set out who owns the IP and how it will be managed. As a first step in determining who owns the IP, it’s worth looking at your employment or independent contractor agreement (or the company policy) to clarify what the employer’s position is with regard IP ownership.
In the absence of an agreement, the invention or creation may still belong to the employer. If the work was done in the scope of the employment, the employee may be legally obligated to assign their work to the employer. As well, if a person is hired specifically to do work that would produce some intellectual property, it will likely belong to the employer.
The policy on IP ownership can vary greatly between workplaces, particularly with academic employers. Most often, the employment contract will state that the employee must assign the invention to the employer.
However, some universities provide the option to the employee to either develop the IP themselves or assign it to the employer for development.
Graduate students and postdoctoral fellows should also consider whether their invention belongs to their faculty supervisor or the institute.
Before you sell or develop a product from your company you should:
In the former case, you can negotiate terms by which they might assign the IP to you; for example, you might reach an agreement to share downstream revenue generated by the product.
There is a trade-off for obtaining the intellectual property from your institute. If you work with them to develop a product, they may be able to assist you, through finances and manpower, to file patent applications.
Once you have ownership of the intellectual property, consider whether that IP then has to be assigned from you personally to your company.
If your employer did not have to assign it to you and you own it as the inventor, you probably should assign it to your start-up. This assures investors that the value of the IP lies with the venture.
You can download the MaRS template of an IP assignment agreement—it is one of six sample funding documents freely available to entrepreneurs.
Note: The content in this article is for purposes of general information only. It is not legal advice.
Check out Ontario’s IP Ecosystem Map! Our partners at IPON designed this tool to help guide Ontario innovators & researchers on their IP journey. It’s an interactive PDF with info on IP service providers across Ontario.