The UK economy is now more dependent than ever on the creators within companies who innovate. Over 50% of global patent applications now involve software of some kind. This is an amazing statistic when you think that under UK and EU law, software per se is not patentable.
However, the technical effects of a patent may be protected and British companies are getting better at identifying and protecting key areas of their business. There are strong economic benefits of having such intangible assets. Software, for example, runs the world. We all thought the worst would happen with the Millenium bug – luckily there were few problems, although I do recall being in Singapore at New Year 1998 when the taxis all stopped running as the year clicked over to 1999.
Who owns the IP?
This then begs the question, who owns this IP? The answers are less clear than you might imagine. Most technologists and creatives have clauses in their employment contracts which expressly grant all rights in the deliverables from employees as belonging to the company that employs them. A greyer area, however, are rights created by founders, directors and the self-employed. Here the law is far less clear cut. By way of example, third party designers, software engineers and others should enter into a formal contract and assign over the rights they create. Some don’t wish to do this as they frequently “reuse and recycle” elements of the creative process. Similarly, founders and directors may have created material before the company was created or indeed in their own time and for their own purposes. This can cause many problems down the line and especially at the investment or exit stage for the director / founder involved.
Formal agreements
Another elephant trap for the unwary arises where inventors create technology and then leave the company. All employees in this situation should formally agree to assist the company with patent application and surrender any rights to further remuneration. This second issue arises where a patented product or process is outstandingly successful and the statutory intention under the Patents Act 1977 is to ensure that such inventors are remunerated down the line after leaving the company.
At least after signing such an agreement, any further dispute is likely to be limited and the company knows that the inventor will always cooperate in signing agreements to patent overseas where so required.
We suggest that all companies who employ people in the creative world, be it TV production, software or technology, regularly review the IP clauses in employees’ and directors’ contracts to avoid future disputes.
If that is you, please drop me a line at liz@virtuosolegal.com
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