Employees and IP

Who owns intellectual property created by an employee?

Intellectual property (IP) is the lifeblood of many companies, whether this involves a product reliant on a patent or consists of designs or artistic creations. But the actual creators of IP are individuals – often your employees – so it’s vital that you understand your position regarding ownership of IP and how to protect any company IP assets.

The good news is that IP created by employees in the course of their employment is automatically owned by their employer. However, difficulties can arise if an employment relationship is not formally recorded. So it’s extremely important to ensure that all your employees are provided with a valid contract of employment, preferably including an IP clause.

What is the patent exception?

Although employer ownership of IP creations by employees also applies to inventions and patents, there is a proviso. In the case that an invention is of “outstanding benefit” to the employer, it may be possible for the employee to claim some form of compensation. For example, in one case (Kelly v GE Healthcare) two research scientists were awarded a total of some £1.5 million as compensation for their invention of a radioactive imaging agent which generated huge profits for their company.

How can employers protect their IP?

As already mentioned, make sure that all your employees have a written contract of employment – and consider including an IP clause for any relevant employees.

If you have dealings with any contractors or freelancers who are involved with the creation of intellectual property, you should make sure that their consultancy agreement or service contract contain a clause expressly assigning any intellectual property to you. You can also ask them to sign an Assignment of intellectual property agreement if necessary.

For more information read Employees and intellectual property or Ask a lawyer if you are concerned about your business’s intellectual property.