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Excuse me, Is That Your IP?

Congrats! You’ve just been offered that dream job you thought was impossible in this down economy. As you review your offer package, you see in your employment agreement a provision requiring you to give your potential new employer power of attorney to prosecute copyright/patent applications or otherwise act in your stead with respect to intellectual property matters for work done for your potential new company. You wonder, is this is acceptable/necessary? In a word, yes.

If a work is made for hire, an employer is considered the author even if an employee actually created the work. The employer can be a firm, an organization, or an individual. Even though US IP law is pretty clear, these kind of power of attorney "POA" provisions are not untypical. They are common in employment agreements, and independent contractor agreements where there is a contemplated work-made-for-hire relationship. Preceding the POA language is usually an express statement that any product of the employment/contractor relationship is a work made for hire, and is owned by the employer. The POA language that follows is usually couched in terms such that to the extent there is any question about the work made for hire nature of the work product, the employee grants the employer a limited power of attorney to execute such documents as are necessary to properly reflect the party’s agreement – e.g. copyright registrations, or assignments of copyright. What’s more, even if the employee never assigned rights to the firm, a court of law may find that the company has the right to make use of the invention through the so-called “shop right”. The employer thus can not be sued by the employee for intellectual property infringement, and accordingly, may attempt to capitalize on the value of the IP, as the firm is allowed to use the work in the routine operation of its business without royalty payments.

While cases involving employers/employees are relatively more straightforward, who owns the IP is a bit trickier where independent contractors are concerned.

A work created by an independent contractor can be a work made for hire only if it (i) is specially-commissioned and falls within a statutorily-defined category of works, and (ii) subject a written agreement between parties specifying that the work is a work made for hire. Accordingly, if the employer contracting the independent contractor wants to ensure it gets the benefits of IP ownership, a written agreement specifying the work is being made for hire, along with the POA language is not only preferred, it’s likely necessary.

Maybe you’re still unclear or need some help interpreting your IP rights? Or maybe you’re the employer in the above scenario, and need to ensure that you’re getting all the IP rights you believe you are paying for? Contact me, and we’ll figure it out!