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Clarity in the Ownership of Intellectual Property Assets

Over time, owners, officers, employees and contractors of a business typically create or enhance various intellectual property assets used by the business, including inventions, creative and artistic works, trademarks and trade secrets. It should always be crystal clear to all parties involved who or what owns such assets.

Three of the most common models for structuring the ownership of intellectual property assets are as follows.

  1. Intellectual property assets are owned by a corporation that uses the assets in its operation. Owners of the corporation have do not have any direct ownership interest in, or control over, the assets.
  2. Intellectual property assets are owned by a holding corporation that licenses the assets to one or more operating corporations for use their operation. Owners of the holding corporation have do not have any direct ownership interest in, or control over, the assets.
  3. Intellectual property assets are owned by the creator (e.g. inventor, author, etc.) of the asset who licenses (implicitly or explicitly) the assets to one or more operating corporations for use their operation. Commonly, the owner of the assets has an ownership interest in such operating corporations.

Any of the above models can be workable so long as they are properly structured. The first model is probably the simplest and least expensive to implement. However, where there are multiple owners, care needs to be taken to lay out in the corporate charter how intellectual property assets can be transferred or sold, and how such assets are to be distributed in the event of corporate dissolution. In particular, care should be taken to insure that one or more owners cannot transfer or sell assets of the corporation without the concurrence of all, or at least a strong majority of the owners of the corporation.

The second model carries a little more overhead, but shelters the intellectual property assets from the liability of the operating corporations. As before, care should be taken to insure that one or more owners cannot transfer or sell assets of the corporation without the concurrence of all, or at least a strong majority of the owners of the corporation.

In the case of the third model, care needs to be taken that the operating corporations have strong licensing agreements with the owner of the assets, ideally exclusive licenses only terminable in the event of clear and substantial breaches of the agreements.

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