One of the costliest — yet easily prevented — disasters for any business is the failure to secure ownership of its intellectual property (IP).

Under the law, ownership of copyrights and inventions may actually belong to employees or independent contractors unless there’s a legally defensible written agreement to the contrary. U.S. copyright laws, as well as the laws of most states, do leave openings for employees and independent contractors who invent products, write materials or develop software to claim ownership of the IP rights.
For example, in some states, an employer may have only a limited license on an invention that an employee creates while working for that employer.

Fortunately, you can easily prevent this type of catastrophe. All U.S. states permit employers to require employees and independent contractors to sign IP agreements that give all rights to the employer.
A well-drafted agreement can be less than a single page in length and should be written by an attorney. It should require the employee or contractor to turn over or legally assign all rights to a named IP asset to the company. In addition, the agreement needs to require the employee or independent contractor to assist the company’s counsel in securing and enforcing the rights.

Another good practice is to, under the agreement ask employees or independent contractors to disclose all preexisting inventions. These will be excluded from your purview. However, the individual must also agree that any new inventions related to your business are covered by the agreement — even if developed during the employee’s nonworking hours.

For instance, let’s say your company makes billing software. An IP agreement should prevent one of your software developers from claiming that he came up with a time-management program at home during his off-hours that could be of use to your company or its competitors.

By creating a sound IP agreement, business owners can avoid tremendous aggravation and potentially crushing financial losses. If you haven’t already, consult a qualified attorney about protecting your IP.