IP Documentation for IT: How to Protect Your Business
Any activity in the IT field is, one way or another, connected with handling intellectual property (IP) objects. This manifests in many ways: from creating copyright objects (code, design, written materials) to using signs, logos, and names — both one’s own and those of other companies. Improper IP documentation can lead to internal company problems related to disputes with the team, accounting, taxes, and liability.
On the other hand, IP rights are also an extremely important aspect of client cooperation, and negligence in this area is equally a risk of disputes arising, the need to compensate for damages, and reputational losses. We therefore propose to examine and analyze the key aspects of handling intellectual property rights and IP documentation, a correct approach to which will help protect a business from risks.
Transfer of IP Rights under IT Agreements
Modern agreements in the field of information technologies must not only govern the manner of interaction between the parties regarding the subject matter of the agreement (performance of work, provision of services, payments, and so on), but also establish a specific legal regime for intellectual property rights. This is primarily connected with the client’s natural desire to receive the results of the services provided and subsequently be able to use them without issues, transfer them for temporary use, sell them, and so on.
This can be achieved through proper contractual documentation of the transfer of IP rights to the created objects. In doing so, the following matters are subject to regulation: the fact of the transfer itself (with a list of rights and identification of the corresponding objects being transferred), the moment of their transfer, the financial terms, requirements relating to them, exceptions, and so on. The specifics of the jurisdiction whose law governs the agreement must also be taken into account. More detail on the aspects of documenting the transfer of intellectual property rights under an agreement — including software development agreements in particular — can be found here.
But before anything can be transferred, it must first be created or at least obtained for use. Otherwise, the transfer of IP rights will not take place legally, and the client may initiate a dispute and demand compensation for damages. Since modern IT companies engage subcontractors (sole proprietors, gig specialists, or regular individuals) to provide services (perform work) for the end client, properly documenting the transfer of IP rights requires a considered approach to contractual relationships with engaged specialists as well.
In practice, the key points to pay attention to remain the same as in client agreements, but here it is necessary to weigh things from the perspective of your interests as the recipient of the rights. A complete absence of documentation of relationships with contractors, or errors made therein, may result in the loss of IP assets and significant damages.
We cannot fail to note that the risk factors described may also arise in the context of intellectual property relations between an employee and an employer. A properly drafted employment agreement will be the key to avoiding problems in this regard. Our lawyers discussed the aspects of formalizing employment relationships with software developers in this article.
As we can see, the chain of intellectual property rights transfer is a key part of IP documentation and consists of several links, weaknesses in any of which may directly affect the others. Identifying risks and eliminating them in order to protect an IT business is impossible without paying attention to and auditing the documentary formalization of legal relationships with clients, contractors, and employees alike.
Registration of Trademarks and Copyright
Another important aspect of any business’s activities — not only in the IT sector — is the use of its own designations to identify its products or services, strengthen their recognizability, and build a brand. A commercial name may be used for this purpose, the right to which arises from the moment of use and does not require mandatory registration. However, this type of individualization does not cover designations in the form of graphic elements, color combinations, fonts, and so forth, and does not provide the owner with significant protection options — particularly in certain jurisdictions.
An IT business that wishes to actively develop its brand and have the ability to genuinely and effectively protect it against encroachment by third parties has the option to officially register its own trademark. This process involves, among other things, analyzing the chances of successful registration, modifying the desired word mark or logo if necessary, and selecting the jurisdiction of registration — which may be individual countries or, for example, the EU as a whole.
During the registration process, it may also become necessary to communicate with registration authorities and respond to oppositions from other rights holders. We can assist with all aspects of trademark rights formalization, and you can learn more about the procedure and its pitfalls here.
And what about IP rights that constitute the company’s assets? These may include portions of code, complete programs in the form of applications or games, design objects, written materials, and even books. Sometimes, having a properly documented chain of intellectual property rights transfer is not in itself a guarantee of protection against violations by former contractors, clients, or third parties.
In Ukraine and a number of other jurisdictions, the possibility of registering IP rights is provided for at the legislative level, even though such registration is not mandatory. Copyright registration is intended solely to formalize the fact of the acquisition of rights that already legally exist in a particular person. This procedure may be relevant in certain situations — most commonly when a client wishes to be confident in the product they are receiving and to have the possibility of similarly registering it in their own name (following the transfer of rights). Registered IP rights will be easier to defend against potential encroachments, and state registration is also an important piece of evidence in cases of rights infringement by third parties.
We wrote in detail about all aspects of protecting property rights in court here. In any case, in order to understand and assess for oneself the relevance or necessity of registering intellectual property rights, a comprehensive audit of the potential object must be conducted with the involvement of competent lawyers.
Use of Third-Party Objects
The relentless and rapid development of the IT field has led to a situation where very few companies can manage without establishing mutually beneficial cooperation with other market players, the need to reference other brands, or simply populating a portfolio with current case studies. All of this frequently leads to the need to use third-party IP objects — such as a commercial name or trademark, portions of code or design objects developed and transferred to a client, and so on. But is this lawful, and how can one use the intellectual property objects of third parties without violating their rights and thereby endangering one’s own business?
First of all, it is necessary to identify the cases in which your company has already begun public use of intellectual property objects and to determine whether there was a legal basis for doing so. Typically, cases of lawful actions are provided for in the contractual terms between the parties or are agreed separately in writing.
Some companies develop separate brand policies that define the conditions for using their trademark and other signs and names. Violation of another party’s IP rights may lead to the aggrieved party initiating a dispute and recovering damages through the courts. The application of certain enforcement measures by state authorities — administrative or even criminal liability — is also not excluded.
At the same time, planning future use of third-party copyright objects also requires a considered and analytical approach — for example, formulating and including the necessary provisions in draft agreements, and researching the policies of companies and the legislation of individual states. All of this requires the involvement of a qualified legal team that can help develop and implement lawful ways and mechanisms for using third-party IP objects. Incidentally, our lawyers discussed certain nuances of such use under US and Ukrainian law in this article.
IT business is thus permeated by numerous aspects of creating, using, and disposing of intellectual property rights. Proper handling of IP rights consists of many elements, most of which are directly or indirectly connected with the process of properly preparing IP documentation: concluding agreements, primary documents, obtaining permissions, licenses, and so on. An incorrect approach to these matters creates risks of significant material and reputational losses for any company.
In order to protect your business from adverse consequences, a comprehensive audit must be conducted, and based on its results, changes must be made to the business’s operating mechanics as a whole. If you need assistance with any matters related to intellectual property rights (registration, transfer, etc.) or conducting a legal audit of your company’s activities, please contact us. We will be happy to analyze the situation, prepare conclusions with recommendations, and help protect your interests to the fullest extent possible.
