The importance of addressing intellectual ownership when sub-contracting development work on your innovation

Sub-Contracting 101 By Wayne Bryant

Within my role as a Business Innovation & Growth Manager I work with numerous businesses in the region who are in the product development phase of the innovation pathway. In-light of recent interactions with some of my clients I felt I would take the opportunity to shine light on issues surrounding Intellectual Property when sub-contracting development work.

Where a consultant’s standard contract/terms and conditions address intellectual property ownership at all, they will often state something along the following lines of:

“Any intellectual property generated within the scope of the project will remain the property of the consultant and shall be licensed to the customer for use on a royalty free basis.”

Or;

“Any intellectual property generated within the scope of the project will remain the intellectual property of the consultant pending project completion and full payment from the customer, at this point all intellectual property generated within the project will be transferred to the customer.”

The latter in most cases is the preferred outcome for the customer, however, can often be overlooked and I have seen on occasion situations where companies are unsure of the terms they have agreed to.

The consequences of not addressing these issues at source often won’t be realised until the innovation has started to gain traction. Even more importantly when said innovation has started to deliver a return on investment…

If an Intellectual Property ownership issue is raised at this stage and cannot be resolved amicably between parties, this could lead to dire consequences for the company. Recently in my role there has been an instance where the consultant took ownership of the product and the company lost everything.

If you are unsure about the clauses relating to intellectual property in any standard contract/terms & conditions please seek professional advice, in many cases myself or a member of the Pathways to Innovation team will be able to help.

Click here to find out more information on the Pathways to Innovation programme

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