The products, processes and designs that employees invent or create when they work for a company typically belong to their employer. That employer has the right to profit from them by copyrighting, patenting or trademarking them as their intellectual property (IP).
The employee indirectly profits from it through their salary, bonuses and other types of compensation. That’s true whether an employee has designed a new toy, a new and more efficient process for manufacturing something or new software. It applies to more creative work, like designs, photography and writing, as well.
Even though this is generally understood, it’s still crucial for employers to codify it in the employment agreements as well as their contracts with independent contractors in a “work made for hire” clause.
Why having a contract is always critical
Where things can get complicated is if there’s no contract in place. This is most likely to happen with smaller businesses, but it can happen anywhere if a person is doing work without an employment agreement or contract in place – or where their contract doesn’t address work made for hire.
For example, maybe a business pays a local person or the relative of an employee to take some photographs for their website. Without a contract in place giving the business the rights to those photos, the artist could potentially copyright them and sell or give them to others or simply use them for other purposes. Either way, that could dilute the business’s brand and confuse customers.
The best way for businesses of all sizes to avoid potentially costly litigation or other consequences is to clearly define “work made for hire” in their contracts and to make sure that anyone who does work for them has some type of contract in place. Having solid legal guidance can help with any IP questions or concerns.