TRADEMARKS: How to manage your intellectual property (IP) with employees and independent contractors

Business owners often seek advice from family and friends regarding hiring an employee or independent contractor (IC) to perform a particular job in creating a process, a product, a name, etc., for their brand.

The business owner has worked hard and diligently in creating their business name, brand and products, and which illustrates a level of success that they wish to continue.

The fatal mistake that the business owner will make, however, is not asking an attorney for advice. Why? Sometimes, a simple employment agreement is not enough.

Considerations for the Business Owner

1. Federal Registration in place prior to agreements to improve the brand by an employee or IC:

Have you filed any federal registrations to protect your current IP? If not, this should be your first step before allowing someone to take your brand and improve it.

Furthermore, simply because you file for federal protection and your application is accepted does not mean that your brand will remain protected in perpetuity. You'll need to file the proper filings to renew along with the fees when necessary.

Also, you'll need to have counsel police your brand by making sure there are no persons out there using your name/brand for their own and professional gain.

2. "Assumption of Ownership" may not create exclusive right in the I.P. if you fail to put proper measures in place.

Necessarily, simply creating your business name, for example, may not give you exclusive ownership of that brand if you did not do more than filing a simple registration to protect it as stated above in number one.

When you allow others to work on your brand, improve any process, write books or articles under the umbrella of the business, the IP rights may not belong to you without a separate contractual agreement.

3. It's imperative to use CONTRACTS to help further protect your IP rights in the employment context.

The type of contract that is necessary to implement is called an assignment of inventions” or “ownership of discoveries.”

When employees and IC's are hired by your business and they are making processes, products, designs etc. for your, that employee or IC owns the intellectual property they create unless you have the employee or IC assign all of their interests or ownership in any IP they create while working for the business.

If you fail to implement an assignment of inventions after the employee or IC is hired and performing work on your brand, you'll have to pay additional consideration to obtain exclusive rights in that IP which I'll discuss in number four below.

4. Sufficient Consideration for assignment of inventions must be tendered.

What does this mean? You cannot just simply say, your consideration is the paycheck you receive. It's not. For instance, you can provide additional sufficient consideration when the agreement is entered into prior to the commencement of any work and indicate in the agreement that but-for signing the agreement, the employee or IC would not be considered for the role.

Furthermore, if the agreement is entered into after the commencement of any work, you will want to provide additional consideration to acquire those rights by giving a bonus, stock, additional vacation time, etc.

5. Track and Manage who owns what.

A necessary component to protecting your IP rights is having the employee or IC identify IP rights they believes they own and track any ongoing IP that the employee or IC may create to determine whether such IP has been created with your business’ resources and time.

Understanding this early on can help you to determine what IP rights you legitimately own and what IP rights belong to the employee or IC.

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It’s very important to keep in mind that you need an attorney who is competent in advising business clients regarding their business IP that can often become cumbersome when dealing with issues of ownership in the employment context.

At SLD, we understand the imperative nature of protecting your IP through federal registration, policing and implementation of proper contracts with your employee or IC’s. We're ready to help.

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This article is a service of SL DeBarros Law Firm, LLC. We offer a wide array of business legal services and can help you make the wisest business choices throughout life and in the event of your death. We also offer a Business Protection Start-Up Session or a Business Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

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