Two important issues face companies active in the internet environment:

  • Who owns the code and other technology used to support and define your business?
  • What ownership rights do your employees have in new technology that they create while they are working for you?

Understanding why these issues are important to your business will allow you to effectively address them, and manage any risks that might be associated with the creation of technology.

Work Made for Hire

When your employee creates someting for you, you generally own it. This is a “work made for hire.” When you contract with a third party to design a piece of software for your business, who owns that software? Unless you specify otherwise, the contractor owns the software. Under copyright law, the creator of the work – in this case, the contractor – owns the copyright interest in the work. This concept is unfamiliar to many new businesses. As a result, many companies who believe that they own all right, title and interest in their business often face ownership claims from contractors and developers.

This issue can be critical when you seek to sell your business or get fiancing. In most cases, buyers and investors will ask to see your development contrqacts. If you are not able to provide sufficient assurance of your ownership of your business, these transactions may be put in jeapordy.

The information on the right may be helpful to you in understanding this concept, and creating strategies to address this issue.