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Who owns the IP on product improvements?

The very real situation is often this: 

2-3 friends decide to create a world changing product together. Time passes, where the product becomes improved or modified, there are more people interested in their product, there may be more money on the line & increasing pressure from others wanting their attention (i.e. investors, customers, staff, family) etc.

Overall, the priorities of the friends can change where they may drift apart. One or all of them may even want to leave the business and take the product with them. So who actually owns the IP? 

The answer can be surprisingly be simple! What did the parties agree to?

Before we dive into more, we need to first ascertain some key points:

1st: What is IP? 
2nd: What is an improvement?
3rd: What did the parties agree to? 

What is IP?

IP or Intellectual Property is known as an intangible business asset. This typically means things you can’t touch but are very important for your business. For example, IP can include your logo design, confidential information & your brand’s relationship with the industry (goodwill). 

What is an improvement?

An improvement typically includes any update or modification to the product.  

What did the parties agree to?

What DID the parties agree to? Ideally, they would have turned their minds to instruct their lawyers to prepare an agreement to address IP ownership of the product and any of its improvements. 

How to protect product IP and its improvements?

Take home messages: 

  1. Define what is IP and improvements? The above definitions for IP and improvements are quite basic, where in real commercial agreements we can often see the specific wording ranging from paragraphs to pages (and for good reason too)! Typically, the more complex the business, its market and its stakeholders the parties will need specific definitions of IP and improvements.  
  2. To address IP ownership early in the relationship (ideally, before any work has taken place!)
  3. To not fall into the belief that IP is only for big businesses to document or deal with. IP ownership is a common dispute between business partners that can be readily addressed via contract. 

The main times where IP ownership is a key issue, is when the parties did not enter into a contract regarding IP ownership. Where there is “he said/she said” scenario where parties lack certainty as to who is entitled to what IP. 

To avoid ambiguity in IP ownership, reach out to Janey via the below contact options to discuss your options further. 

The above is purely for informational purposes. Every business is different, where the details of any IP ownership agreement needs to appropriately address your particular situation. 


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