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IR35 and Intellectual Property

IR35 is getting a lot of attention in the business community at present, and rightly so. If you are unaware, IR35 is a piece of legislation that allows HMRC to collect additional tax where a purported contractor is in effect an employee of a company in all but name. It is currently due to be rolled out in April 2020, though there are calls from some for this rollout to be delayed. Whether delayed or not, the prospect of IR35 is leading to businesses reviewing the contractual status of their employees / contractors. This review provides a golden opportunity to also consider the intellectual property position in those contracts.

Ownership of Intellectual Property

The general rule is that if you create something you retain the ownership to that creation. There are two exceptions to this general rule:

1. Anything created in the course of employment. Where there is an employer / employee relationship the intellectual property rights will automatically vest in the employer. Employers should be aware however of things like moral rights which would remain with the employee and certain other provisions which cannot be contracted out of. It is important to ensure employment contracts deal with these points.

2. Any agreement to the contrary. Intellectual property rights (with the exception of moral rights) can be assigned which means that the ownership, or partial ownership, transfers from one party to another.

The implication of the general rule on ownership of intellectual property is that if you commission or contract a third party to do a job for you (this could be creating a website, taking marketing photographs or designing products or packaging) they will retain the ownership of the intellectual property that they create, unless you put an agreement in place assigning those rights to you or your company. The practical effects of this could potentially be that they could stop you using what they have created in the future or could sell what they have created to other companies without you being able to stop them.

Conclusion

You should take the opportunity of any IR35 review of contracts to consider the intellectual property position. It is relatively quick and straightforward to include intellectual property provisions in these contracts to ensure that ownership transfers to you and you retain the benefit of the work that you have paid for. Inserting these provisions should deal with any future works that are created. Where works have already been created these can still be transferred to you through a standalone assignment document which will transfer the ownership to you. One note of caution is that certain transactions concerning intellectual property need to be registered with the Intellectual Property Office to be properly effective and enforceable.

If you have any questions or queries in respect of your intellectual property or any ownership issues surrounding this please do not hesitate to contact Adam Turley at Baines Wilson LLP on 01228 552600 / 01524  548494 or at a.turley@baineswilson.co.uk.

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