A huge benefit to start-ups and established business alike has been the advent of the gig economy: lower cost, remote, ready and willing workers with unique skill sets that are ideal for one-off engagements. This revolution has aided in the realisation of some great ideas where previously idea originators lacked the know-how, resources or time to make their big ideas happen.
However, a common oversight in engaging contractors for such side projects or new business ventures is a failure to ensure that the hirer retains ownership of the intellectual property (IP) that is developed (or contributed to) by independent contractors in the course of their engagement. IP in such engagements can take various forms from computer code and software, graphic designs or artwork, product literature and other copyright protected material, or complex designs and inventions capable of being registered/patented.
A frequent misconception among small businesses in particular is that when engaging a contractor they are paying for the output (and thus the IP) rather than merely the service- the basic rationale being: “I paid for it so I own it”. Many businesses also mistakenly assume that a contractor relationship is akin to that of an employment relationship where, in many instances, it is presumed that certain IP created in the course of employment rests with the employer. This is unfortunately not the case, and circumstances often arise where contractors have taken the output created in one engagement and deployed it for another- or worse still, sought to commercialise it themselves.
What can I do to secure my IP?
Get your house in order with a good contractor or services agreement. This can be a template agreement (if multiple contractors are being engaged) or a bespoke agreement if the engagement is a one-off or complex. From an IP perspective, the written agreement (at a minimum) should:
- make clear that ownership and rights in any IP created in the course of the engagement are owned by you;
- set limits (and/or prohibitions) around the re-use of intellectual property for future engagements;
- deal with any rights of attribution and other moral rights; and
- set clear parameters for the use of any confidential information or commercially sensitive provided to the contractor for the engagement, ensuring that any such information is either returned or destroyed at the termination of the engagement.
Further, if you have particular concerns about the likelihood of a contractor to re-deploy the project output in an engagement for a competitor, perhaps consider the incorporation of non-compete/ restraint provisions. Whilst such terms can be difficult to enforce in the realm of contractor engagements, they may provide an important moral or psychological impediment to underhanded or dishonest conduct.
Lastly, it’s essential to make sure you finalise the written agreement with the contractor before you share your IP and confidential information. Often, in the excitement and energy of a project, negotiating and signing off on contractual terms is put on the back burner. This can be fatal- not only because your vital bargaining position can be eroded once the engagement is confirmed but also because, in many instances, the IP cat is already out of the bag when you are half way through an engagement.
DIY is for IKEA, not IP protection
Depending upon the form of your IP, the contractual protections required will vary. Integral to protecting your unique IP (and ensuring your rights are enforceable) is prudent and commercially sound legal advice that takes into account the nature of the IP and the type of contractor engagement. If you require guidance in securing your IP or advice on working with contractors generally, get in touch for some on-point and practical advice.
Joseph Carneli, Senior Associate