13 March 2023
Intellectual Property is a creation of the mind. Accordingly, its ownership vests in the person who brings it into existence unless there is a contract to the contrary. It is a statutory presumption that the employer owns the intellectual property that an employee creates in the course of his employment. However, an employer would be careless to assume that all rights of the employee over such intellectual property are extinguished. The employee could still claim rights of an author, moral rights and rights to object to alterations to work. Hence, it becomes critical to include terms determining the ownership of intellectual property in employment contracts, independent contractor agreements or agreements with a consultant or designer.
What is intellectual property rights?
The term "Intellectual Property Rights" or “IPR” has not been defined under any Indian statute. As per the World Intellectual Property Organization (“WIPO”), Intellectual property refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Primarily, there are nine categories of Intellectual Property:
Some of the key attributes of IPR are as follows –
Meaning of IPR in employment
In case of employment, IPRs are created in various forms. The most common and well-known IPR are copyright, industrial design, patent, trademark, geographical indication, trade secrets etc. In the past, business processes, internal systems, the pre-existing codes of the company, internal guidance notes, manuals, client lists, business models were covered within the meaning of Trade secrets. In India there is no specific law for protection of trade secrets. Therefore, the same needs to be protected by including confidentiality clauses in the contract of commercial relationship between the parties.
Since the employees of the company have access to all these assets of the company there is a commercial risk of stealing the data and sharing with the competitors. Hence all those IPRs require protection from being leaked or stolen.
Ownership of IPR in employment
For any business, the employees are the biggest asset. After appointing an employee, the company invests in the form of salary, use of the company’s infrastructure, other facilities etc. In return the company expects its employee’s work, ideas, intellect, etc. which is going to contribute towards the business growth of the company. Thus, anything and everything that the employee creates during his employment vests with the employer.
As a default legal principle, IPR belongs to the employer for everything created by the employee for the basic reason that the employer pays them consideration in the form of salary, unless there is specific contrary understanding effected between the parties. Unless the work created by an employee is completely unrelated to the company’s business, the employer would usually tend to retain the IPR over all the work created by the employee during his employment.
Nevertheless, no blanket rights are granted to the employer. There are some factors which are key factors while deciding the dispute between employer and employee about the ownership of IP in employment.
Legal provisions for IPR
As for the matter of fact, the IP ownership in India varies under different IP laws. The below mentioned are the various IP laws that govern the ownership of IP rights in India:
In such cases there can be a situation of occurrence of dispute between employer and employee regarding ownership rights. Thus, it is advised to include the terms in the employment contract itself clearly specifying how the IPR developed by the employee in the course of employment will be dealt with.
Key factors to decide the ownership in IPR
Agreements to execute between employer and employee to avoid dispute
At the time of hiring of an employee, it is recommended to execute a very exhaustive and detailed Employment Agreement with inclusion of specific details mentioning the ownership of IPR generated during the course of employment. Since Employment Agreements act as a vital evidence in case of dispute between the employer and employee, it is always prudent to include the following clauses in it –
If the employer wants to acquire the intellectual property created by an employee which is not falling under his nature of work, then the employer can acquire the same by executing an Intellectual Property Assignment Agreement with the employee. In such an agreement proper terms and conditions with regard to the ownership rights on IPR created are mentioned and appropriate fee for assignment is specifically defined.
We can conclude by saying that in every business, be it small or big, the employer needs to understand his rights along with those of the employee in order to protect its IPR. Employers can-not always be the deemed owner of IPR created by an employee during the employment. But by executing proper contracts between the employee and employer, the risks can be mitigated to a large extent. In order to avoid disputes between the employer and employee, terms and conditions of ownership rights in IPR created during the employment need to be executed on paper with the help of a lawyer to dilute the prospective risk of tussle for ownership rights.
The content of this article is for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Author / Treelife Consulting is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.
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