Overview

The Intellectual Property clause handles the ownership of all intellectual property related to the agreement, including each party's pre-existing intellectual property.

The Intellectual Property clause can be found in virtually any agreement, though licenses and independent contractor agreements both have important variants with significant differences.

The Common Intellectual Property Clauses

The common Intellectual Property clause, used in most types of agreements, makes it clear that each party retains the ownership over their intellectual property; that is, unless the agreement says otherwise, that the agreement does affect the ownership of their intellectual property.

Common variants to this details how Intellectual Property created during the agreement, by one or both parties, will be owned — either solely by the party that created it, or jointly between the two parties as co-authors.

Intellectual Property Clauses in Licenses

In license agreements, the Intellectual Property clause makes it explicit that the only intellectual property rights that change hands are those specifically licensed in the License Grant clause. A license is not a transfer, sale, or assignment, it does not affect ownership; the licensee does not own the intellectual property licensed to him, the licensor retains ownership. The Intellectual Property clause in a license is to make it clear that the license is only that, a license, that it does not affect the licensor's ownership of the intellectual property, and that any existing goodwill in the Licensed IP, or good will accrued during the agreement, is for the benefit of the Licensor, not the Licensee (the 'ownership' of goodwill is most important in trademark licensing). 

On top of this, the clause can specify how modifications to the Licensed IP are owned. On the one hand, if the Licensee modifies or improves on the intellectual property, who owns that modification? If the Licensor owns it, is the Licensor required to "grant-back" to the Licensee a license to use that modification? On the other hand, if during the course of the agreement, the Licensor modifies or updates the intellectual property (for example, if a new version of licensed software comes out), does the licensor automatically get a license to that modification, or must it get a new license?

The ownership of modifications is highly-negotiable and highly-varied. We have included a pro-provider and pro-providee option for handling modifications, but the parties should carefully review these options and alter them to suit their purpose if need be.

Intellectual Property Clause in Independent Contractor Agreements — Ownership of Work Product

The Intellectual Property clause in an independent contractor agreement could also be called the Ownership clause, or the Work Product clause. Here, the clause says that the company, not the contractor, will own the work product—and all intellectual property rights in the work product—of the agreement. The simplest way to accomplish this is by assigning ownership of the work product, including intellectual property rights, to the company. Alternatively, the parties can include a Work Made For Hire clause, indicating that the work product should be considered a work made for hire, belonging to the company, not to the contractor. For more on ownership of work product, see our discussion section below.