Document and register your intellectual property rights
As a corporate/intellectual property lawyer, one thing that I see again and again is that clients in technology and entertainment are in the habit of doing things informally. As a consequence, they often don't take care of legal requirements. This will usually come back to haunt them, especially when they are about to receive investment funding, sell their business or take the business public.
When this occurs, the investor, purchaser or underwriter will often be represented by a lawyer like me, who is, among other things, responsible for making sure that the company owns the intellectual property they claim to own. If the owner has not taken the steps necessary to establish ownership of all such intellectual property, he or she will end up in a mad scramble to correct the problems - which may or may not be successful.
There are two important steps that should be taken in connection with any transfer of intellectual property.
First, patents, copyrights and trademarks should be assigned in writing. All agreements with employees and independent contractors and assignors of intellectual property should be in writing. Second, patents should be registered in the United States Patent and Trademark Office in the name of the inventor(s) and all assignments recorded. Trademarks should be registered in the United States Patent and Trademark Office in the name of the owner and all assignments recorded. Copyrights should be registered in the United States Copyright Office of the Library of Congress in the name of the author(s) (which may be an employer if the work qualifies as a "work made for hire") and all transfers recorded.
Copyrights can be owned without registration in the Copyright Office and trademarks can be owned without registration in the Patent and Trademark Office. However, for a variety of reasons, it is much better to register them. When copyrights are not registered in the name of the author with all assignments recorded, creating a recorded paper trail, a second sale of the same rights or a bankruptcy filing by a previous assignor can divest a subsequent owner of all rights.
Examples of gaps that have come up in connection with business deals that I have worked on include:
- A movie production company paid for movie rights in a book, and received the assignment in writing, but did not record the assignment in the U.S. Copyright Office. This made those rights subject to being lost if the writer of the book (contrary to the terms of his agreement) ever assigned those rights to another party or filed for bankruptcy.
- A small software company had hired an independent programmer to write a portion of the code needed for a new version of its software. That code was written and delivered by the programmer and the software company paid the programmer. The company did not obtain a written assignment of those copyrights. The software company then entered into negotiations to sell its assets to a much larger company which required a written assignment of the software. When asked for the written assignment, the independent programmer insisted on being paid a substantial additional amount for the assignment.
In each of these cases, owners had to spend time, effort, legal fees and sometimes more money establishing rights in intellectual property for which they had already paid. It is much easier to do it right from the beginning.
Rob Hassett is a lawyer with the Atlanta law firm of Casey Gilson Leibel P.C.
