Businesses often rely on employees and independent consultants to develop their intellectual property assets and naturally assume that they have ownership rights to those assets under the principle of “I pay, therefore I own.” Intellectual property can include software, articles, scripts, plans and design drawings, new logos, products or processes, product packaging, industrial designs, business plans, inventions, and the outcomes of other creative efforts. The question of who owns the rights to the products created by employees is not always straightforward and can vary significantly from country to country and even within a specific country, depending on legal frameworks and the specific circumstances of the employment relationship.
Ownership of Functional Improvements (Patents/Exclusive Patent Rights)
In many countries, employers own the patents for inventions created by employees if the invention relates to the employer’s business activities, unless otherwise specified in the employment contract. Conversely, in other countries, intellectual property rights regarding inventions generally belong to the employee who created the invention unless there is a different agreement in place. In some countries, such as the United States, employee inventors may have rights to exploit patents, but employers are typically granted non-exclusive rights (often referred to as “shop rights”) to use the invention for internal purposes if there is no specific contract stating otherwise. However, special rules may apply to inventions created by faculty or researchers in universities, as outlined in the intellectual property policies of those institutions.
Some countries grant employee inventors the right to request fair and reasonable compensation or remuneration for their inventions if the employer exploits the patent rights associated with those inventions. Other countries may not provide compensation or offer very limited compensation in specific exceptional cases.
Ownership of Copyrights
In most countries, if an employee creates a literary or artistic work within the scope of their employment, the employer typically holds the default ownership of the copyright unless otherwise stipulated. However, this is not universally the case, as copyright law in some countries does not automatically transfer rights, and court decisions may apply in complex cases.
There are instances where employers may own all or some of the rights. For example, in most countries, if an employee creates newspaper or magazine articles, the employer may own the copyright for certain purposes, such as publishing books, while the employee retains copyright for other purposes. Nevertheless, when an employee creates software products during their employment, the employer usually owns the intellectual property rights to those creative works unless the employment contract states otherwise.
It’s also worth noting that moral rights (the right to be recognized as the author of a work and the right to object to changes in the work that may harm the author’s reputation) are generally inalienable. Therefore, these rights typically remain with the author even when the ownership of the copyright is transferred to the employer. However, in some countries (e.g., Canada and the United States), moral rights may be waived.
Ownership of Industrial Designs
Generally, if an employee is required to create industrial designs under an employment contract, the ownership of those designs will belong to the employer. However, in some countries, ownership of industrial designs created by employees during their employment may belong to the employee, unless otherwise agreed upon. In certain cases, employers may require employees to be compensated fairly, taking into account the economic value of the industrial design and any benefits the employer derives from using it. In other countries (e.g., the United States), the creator of the industrial design will be the owner unless they receive compensation for it.
