As an aspiring entrepreneur, one important aspect of business you should familiarize yourself with is the ownership of intellectual property. In many cases, your business’s ability to succeed will depend on how easily you can defend and monetize your intellectual property. Say you need to license your software technology to another company, or contract a freelance graphic designer to create logos and marketing images, or protect the ownership of your brand materials, you’ll need something called an IP Agreement. It’s important for every business owner to understand what intellectual property is and how to protect or transfer the ownership of your intellectual property through IP Agreements. To avoid someone stealing your business idea or protecting your intellectual property these agreements are the first step.
Read on for our guide to understanding Intellectual Property Agreements your business may require and why they’re important to the success of your growing company.
What is an IP Agreement?
An intellectual property (IP) agreement is a legally binding contract that protects or transfers the ownership of intellectual property. Intellectual property (sometimes also known as Intangible Property) are works that have economic or marketplace value, but may not be physical products. Some examples of intellectual property that a business may want to protect are:
- Websites
- Code or software
- Inventions or technology
- Brand, business name and logo
- Copyrights
- Patents
- Trade secrets
- Business methods and processes
There are many reasons you may want an IP Agreement in place. IP agreements are important to protect already existing intellectual property, as well as to ensure that you legally own any new intellectual property created by your employees or contractors. Some of the key reasons to have IP Agreements in place are:
- For technology businesses where their primary value is their intellectual property
- For businesses that are still developing their invention
- Protect company assets (existing and future)
- Act as a paper trail for investors to ensure there is “clean” ownership of a business
- Prevent future legal disputes if the business owner ever wants to sell
Common types of IP Agreements
IP Assignment Agreement
An assignment agreement transfers the rights of intellectual property from one party to another. This is the full transfer of rights of intellectual property to new ownership, often utilized in the sale of a business or a shift in strategic direction. Another use case is if you are contracting work to be created for your business (such as logos, marketing materials, etc) and you need to assign the license or ownership of that intellectual property to your business. These types of Assignment Agreements help protect your company’s intellectual property and prevent employees or independent contractors from sharing intellectual property with third parties or otherwise financially benefiting from your owned intellectual property.
There are several more types of intellectual property assignment agreements. We’ve outlined the ones that small business owners should be aware of below.
Technology Assignment Agreement
A Technology Assignment Agreement protects and assigns the ownership of technology or software that is developed by an employee or independent contractor for a company. For example, if a software company hires a contract developer to create an update or add-on to their existing technology, the Technology Assignment Agreement would specify that the existing technology and all intellectual property created by the contractor in service of the project are owned by the company.
Invention Assignment Agreement
Similarly, an Invention Assignment Agreement is a contract that gives an employer the rights to ownership of intellectual property developed by an employee or independent contractor in service of their work for the company while under contract. For example, if a startup employee develops a business process that is integral to the business, the company owners would want the protection of that invention covered through the Invention Assignment Agreement in the employee’s contract.
IP License Agreement
An IP license agreement grants one party the right to use another party’s intellectual property based on agreed-upon terms. Those terms may include:
- Limited duration of time
- Geographic area
- Field of use
- Number of users
- Payment of royalties or revenue earned
An IP license agreement gives more flexibility in the terms of the agreement, while still allowing the creator of that intellectual property to maintain their ownership. This is commonly used for software or for creative works, like a television show being licensed to a streaming service.
Collaborative IP Agreement
A collaborative IP agreement is an agreement between two parties pooling existing intellectual property to work collaboratively on a joint commercial venture. Often, the two parties will use their existing intellectual property to collaborate on new intellectual property (such as an invention or software) to take to market. For example, two medical companies may collaborate and use their existing medical patents to create a new medicine.
Common elements and clauses of an IP Agreement
The terms included in an IP agreement will vary, but there are some common clauses that should be present. They include:
- Definition and description of the intellectual property including any patents, trademarks, copyrights or other proprietary information
- Assignment of ownership of the intellectual property including whether full or limited title is guaranteed
- Confidentiality and non-disclosure agreement are essential protection before entering into negotiations
- Payment terms, whether in cash, company equity or royalties
- Warranties and indemnities to cover third-party and non-infringement rights
- License and terms of use
- Quality control requirements and other terms (especially important for license agreements)
- Dispute resolution provisions
- Governing jurisdiction
Ownr’s Tailored Legal Document Library
When you incorporate your business with Ownr, you’ll have access to both General and Founder IP Assignment agreements as part of our legal library. By answering a few simple questions, Ownr can generate customized IP Agreements that are unique to your business. You can save time and money with IP Agreements, NDAs, Employment Agreements, and much more.
Final thoughts about IP Agreements
A well-drafted IP agreement will help your business maximize the commercial potential of intellectual property. As such, it is best practice to have your businesses IP agreements drafted by qualified legal professionals. There are lawyers who specialize in the field of intellectual property and can ensure the protection of your company’s inventions and intellectual property. This is especially key for those in the technology space, particularly if you sell a SaaS product.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.