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Whose IP is it anyway? Luke Moulton (associate) of Wright Hassall explores the ownership of key intellectual property rights, as well as confidential information, and practical steps to protect these rights.

All types of businesses, from large-scale R&D companies to a family-owned furniture manufacturer, deal with intellectual property (IP). In carrying on commercial activities, many businesses rely on their employees and consultants with whom they contract. Whether those commercial activities include researching and developing new products or manufacturing processes, or creative endeavours, IP will be generated. This could be the business' competitive advantage, and failing to protect it could have serious adverse consequences. Two key issues therefore arise in relation to the IP that is created: (1) who owns it? and (2) how should it be protected?


Broadly speaking, in the context of the employer-employee relationship, the law favours the employer. The general rule is that an employer will own IP that is created by employees during the course of their employment. This general rule is contained within the various statutes ft that govern IP rights.

Furthermore, for any inventions which are patented, an employee may be entitled to statutory compensation if the invention delivers an 'outstanding' (that Is, more than substantial, significant or good) benefit to the employer.

For each IP right, the creator must be a person employed under a contract of employment and the work must have been created in the course of employment. In other words, was the employee employed to do the kind of work in question? If so, the employer would own the intellectual property.

Whether the employee created the work during the course of their employment is assessed by various factors, including:

* the employee's job description

* whether the work done is of the kind of work that the employee was employed to do

* the time the work was created and the source of the materials used--was this during or outside working hours and using materials owned by the employer. Notably, the time of creation is not conclusive factor. The fact work is done outside normal working hours may not mean it is not done in the course of employment--there is no clear demarcation of hours of work for many employees today

* whether there is any agreement between the employer and employee. For every IP right (other than patents), it is possible for an employee to enter into an agreement that transfers ownership of past, present and future IP to the employer. This is typically found in an employment contract.


Notably, the position differs for consultants. A consultant is independent, so unless there is an agreement to the contrary, the consultant will be the first owner of the IP and not the company who engaged him or her.

The only exception to this is for UK design rights for designs created before 1 October 2014, because in these cases the commissioner of the design is the first owner--but this does not apply for any designs created on or after that date.

There may be legal arguments as to whether the company engaging the consultant has the benefit of an implied transfer of the IP or a licence, but this is by no means a certainty. Accordingly, a written agreement addressing IP is particularly important in the context of a consultancy relationship.


Strictly speaking, confidential information is not IP, because there is no clear property to own. For example, Coca Cola's recipe and manufacturing process is recorded in a document, and the Coca-Cola Company would most likely have owned copyright of that literary work. However, an employee or consultant could misuse that information without copying or taking the document. Ensuring confidential information remains secret is therefore the most important issue.

An obligation of confidence will be implied during the course of employment between an employer and employee because of the nature of the relationship. However, to ensure that there is no doubt, and to put the employee on notice of his or her responsibilities, it is advisable for the contract of employment to include express obligations of confidence. Between a company and a consultant, there Is unlikely to be an implied obligation, so the terms of the consultancy agreement are particularly important.
IP right                   What does it protect

Confidential information   Commercially-sensitive, confidential
                           information. In order to be protected, the
                           information must have the necessary quality
                           of confidence and be disclosed in
                           circumstances that impose an obligation of
                           confidence. There is no system of
                           registration in the UK.

Copyright                  Copyright arises automatically on the
                           creation of an original work. Copyright
                           protects original artistic, musical,
                           dramatic and literary works, including
                           computer programs, sound recordings, films,
                           broadcasts and typographical arrangements of
                           published works. There is no system of
                           registration in the UK.

Design rights              Design rights protect the way a novel/
                           original product looks. There is an
                           automatic form of protection which arises
                           when an original design is recorded in a
                           design document or an article is made to the
                           design. The unregistered system sits
                           alongside a system of registration which
                           provides stronger protection. (See also

Patents                    Patents protect inventions; that is,
                           innovative products or processes. A patent
                           is a published document disclosing an
                           an invention and provides the owner a
                           complete monopoly to exploit the invention.
                           Broadly speaking, whereas design rights
                           (above) protect the appearance of a product,
                           a patent would protect how it works. To
                           obtain patent protection, the product or
                           process must be new, capable of industrial
                           application and not be excluded from
                           protection. (See also pp. 26-7)

Trademarks                 These are words and symbols used by traders
                           to distinguish their products and/or
                           or services. To be protected, the mark must
                           be distinctive and be capable of
                           distinguishing the relevant goods and
                           services. (See also

IP right                   Examples

Confidential information   * Trade secrets
                           * New or improved to products or
                           * Business methods
                           * Customer lists and information
                           * Financial information

Copyright                  * Product manuals
                           * Graphic designs
                           * Product photography
                           * Software

Design rights              * Novel product designs

Patents                    * Innovative products or processes

Trademarks                 Words, logos, names, slogans and colours
                           that distinguish the origin of goods and/
                           or services
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Author:Moulton, Luke
Publication:Engineering Designer
Date:Nov 1, 2019
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