During the course of an employment contract, employees may create work products or inventions that are protected by intellectual property rights. Many employers try to ensure that these rights will be vested within their company. The owner of the intellectual property has the exclusive right to use it and to prohibit third parties from using it. The question who owns the intellectual property often comes up for discussion once the contract is terminated, especially if a person starts using the intellectual property for his or her own benefit or for the benefit of a new employer.
By operation of law, a large part of the intellectual property rights created by employees vest in the employer. The employee is considered to be compensated for that loss of intellectual property by receiving salary. However, the division of intellectual property rights between the employee and employer is generally not a matter of mandatory rules. Both the employee and the employer can benefit from more favourable arrangements under the employment contract. Such arrangements require more attention if the person concerned is involved in material Research and Development or software development, especially if it is likely that the person performing the work is a freelancer. The reason for this is that the legislative mechanism that allocates a large portion of intellectual property rights to the employer does not apply to freelancers. Many software developers work on a freelance basis, often under their own general terms and conditions. It’s not uncommon that such freelancers leave the company and still own the intellectual property rights on the source code that they developed.
We often see very wide “catch-all” provisions to ensure that all possible intellectual property rights vest in the employer. The wording of such provisions is unfortunately not always specific. Ideally, from an employers’ perspective, the contract states that certain specified intellectual property rights are “hereby transferred” and “hereby accepted”, followed by a further assurance clause under which the employee agrees to sign all deeds as necessary to complete or give effect to the transfer. Such further assurance clauses are rarely relied upon in case the transfer provision was drafted well. However, if the transfer clause lacks clarity, for example if the parties agree that intellectual property rights “shall vest” in one or the other party, the further assurance clause can be used to make the intended transfer actually happen.
