When you embark on a new business venture with another person, it is easy to imagine that the enthusiasm and the vision you share with them will be aligned forever. Some business partnerships do indeed last the test of time. Many others are not able to survive very long at all. Either way, it is important to clearly establish early on how your partnership will manage the intellectual property that comes about as a result of your work together.
What Is Intellectual Property?
Intellectual property (IP) is a legal term for the creative results of a human mind. Broadly speaking, there are four types of intellectual property:
- Patents – A patent grants exclusive rights to a process or a product that brings a new solution to a problem
- Trademarks – A trademark is a symbol, phrase, word, or design that a business uses to identify itself and the goods or services it produces.
- Copyrights – A copyright protects original works of authorship, such as literary, dramatic, musical, or artistic works, as well as computer software, movies, and architecture.
- Trade Secrets – A trade secret is information that a business keeps private that endows that business with its competitive edge. Examples include recipes, methods, and other processes.
All of these forms of intellectual property can be owned by individuals, partners, or separate business entities, such as corporations.
Who Owns Intellectual Property That Is Created in a Joint Effort?
When you work in a partnership, determining whose ideas were most prevalent or critical in a creative process can be difficult to do in retrospect. This is why it is important to have formal agreements that outline and clarify expectations about such matters early on in the process. A written business plan can include agreements such as:
- What each person’s specific role is in the venture, and what they are expected to contribute or create within that role
- An agreement about the ownership of intellectual property, which can either be (a) joint ownership that is divided according to the written agreement or (b) sole ownership that allows the other partner to be compensated in some fashion for their contributions to the project
- Your agreement may also address administrative matters, such as who should be responsible for filing for intellectual property rights and how fees should be paid
What if I Bring My Own IP into a Partnership?
If you have an idea that you have already created, it is important that you take steps to protect that intellectual property before you bring it into a partnership. You should file for your IP rights, such as a patent or a copyright, before you go into business with your new partner. Furthermore, you should negotiate an agreement about how the business will compensate you for the use of your intellectual property in a wide range of potential scenarios before your company gets off the ground.
What Happens to a Partnership’s IP if the Business Dissolves?
Intellectual property is a business asset, just like physical property. For this reason, it is important that you have an exit strategy for your IP. This means discussing in advance what might happen to your partnership’s intellectual property should you and your partner(s) decide to go separate ways.
Generally, if you sell your business, the IP is sold along with it.
Contact an Experienced Riverside, CA, Business Attorney
If you are starting a new business partnership or if you are currently engaged in a dispute with your business partner about intellectual property, it is important to have an experienced Riverside business lawyer on your side. The skilled legal team at Wagner Zemming Christensen, LLP has the knowledge and experience necessary to work to protect your best interests. Contact us online or call us at 951-686-4800 today for a consultation.