Careful planning is required to avoid problems with present and former employees who may, in the future, assert ownership rights in what you thought was your company’s Intellectual Property (IP). We have seen a number of cases recently in which employees or contractors have asserted competing claims over ownership of IP rights against former employers. The employers, for a variety of reasons, failed to secure IP rights created while the employee was employed. IP is often the most valuable asset of a modern company. Like tangible property, IP can be appraised, used as collateral for a loan, sold or licensed to others. IP law gives owners exclusive rights, such as the right to exclude competitors (or former employers) from producing a product, using a process, offering a service or using a name or logo.

Trademark law generally protects words or designs (or other source identifiers) used by manufacturers, merchants, and service providers to identify their goods or services and distinguish them from others in the market place. Trademark rights are obtained when someone actually uses a mark in commerce and are owned by the first user of the mark, not the author or creator of the mark. It is possible to obtain Federal Registration for a trademark. A Federal Trademark Registration Application should name the employer as owner of the mark. We have seen situations in which an employee filed a Federal Trademark Registration Application naming himself as owner of a mark and later resigned, offering to sell the registered mark to the employer.

Copyright Law protects against copying of creative, original expression set down in a tangible medium. For example, computer program code is copyrightable, but copyright protection does not extend to the method, operational concept or idea executed by the computer program. Text, art work, sound recordings, and web site content are also copyrightable subject matter. Ownership of copyright in a work vests initially in the author or creator, unless the author is an employee working within the scope of his or her employment, in which case the ownership vests in the employer as “Work for Hire.” Whether an employee’s or contractor’s work is to be a Work for Hire can be agreed upon in advance, using a properly drafted agreement, preferably to be signed on the first day of employment.

Patent Law protects new, unobvious and useful inventions and discoveries such as machines for making things, articles of manufacture having new and useful features, chemical compositions, manufacturing processes and, more recently, computer software methods and methods for doing business. Ownership of an invention vests initially in the inventor, upon conception of the invention, but that ownership can be assigned to an employer. An obligation to assign ownership can also be part of that properly drafted agreement to be signed in advance, preferably on a new employee’s first day. Employers and employees know that patented inventions can give their owners a monopoly of seventeen or more years that may generate huge royalty fees. In spite of this awareness, owners of many small to medium size businesses often take no precautions against unexpected competing ownership claims made by their company’s employees. Such problems have turned up initially when an employee/inventor refuses to assign patent rights to the employer during the patent application process. The problem can also occur when a former employee seeks to have an issued patent corrected in order to list himself or herself as either a sole or joint inventor. An employer may not realize there is a problem