Summary: the second in an intermittent series on lawyers and startups—this one on owning what you create. Basically, a written agreement must affirmatively assign rights of anything put to (digital or other) paper.
This is the second in a series of posts about the landmines startups face when they skip using lawyers. You can indeed not use a lawyer, just pay attention to what has to be done. And, as usual, this is not legal advice.
OK, so you have a few employees and some independent contractors–let’s say someone building your website and someone programming your nifty new mobile app.
So who owns what gets created? The basic principle is that the person that creates something owns it, with some exceptions–among them employment or an agreement assigning rights.
You Make It, You Own it.
Generally, what employees create while employed is owned by the employer, without the need for a written agreement. But to be safe, many companies have employees sign an assignment agreement, also known as a Proprietary Rights & Inventions Agreement. This expressly specifies what is and is not owned by the employer.
Look at it this way. It is rare that a company does not have employment agreements for key employees (say, the core management team). If you are looking for venture capital, you can be certain that such agreements will be nothing short of mandatory.
For the independent contractors, the law is pretty explicit. Typically, an agreement is necessary, one that either assigns the rights or makes it clear that the work being done is, by the nature of the engagement, owned by the party contracting the services of the independent contractor–i.e., the startup. The latter sort of relationship and agreement is called “Work-for-hire” under federal law; the former is usually called an “assignment agreement.” Be careful: usually, you cannot have a work-for-hire agreement that applies to work already started.
When it comes to the website itself and the programming, you’ll have to pay attention to just what is being owned. Well, you say, it is the website. Well, yes, but does the website include technology already created by the developer? Similarly, does the programming include code written by the programmer that he or she used in a previous job? Do you own it?