When you work with outside companies, contractors or business partners, you may share ideas, creative work or private business information. If your contract does not explain who owns that work or how others may use it, a dispute could put your business assets at risk.
Here are four terms to review before you sign.
IP ownership and assignment clauses
Ownership terms explain who owns work created during a business relationship. For example, if you hire a developer to build software, your contract should say whether you or the developer will own the finished product.
Under the federal Copyright Act, a transfer of ownership generally needs a written agreement signed by the copyright owner. Paying someone to create work does not automatically give you its copyright.
Licensing and usage clauses
Licensing terms set the rules for how another party may use your intellectual property without owning it. The contract should state what uses you allow, how long the rights last and whether the other party may share those rights. For example, if a partner uses your company logo, the agreement should say where and how they may display it.
Confidentiality clauses
Confidentiality terms help keep private business information from being shared or used without permission. The agreement should explain what information it covers and when the other party may share it.
Under California’s Uniform Trade Secrets Act, your business must take reasonable steps to keep valuable secret information private to qualify for trade secret protection. A clear confidentiality clause can help support those efforts.
IP indemnification clauses
An indemnification clause explains who must respond when someone claims that your business or a business partner violated their intellectual property rights. For example, a vendor may supply images for your website, but another company may claim those images copy its work.
Your contract should explain whether the vendor must handle the claim or pay certain costs. Check the limits and exceptions so you know what the clause covers.
Protect your intellectual property before signing
Each provision addresses a different risk, from ownership disputes to unauthorized use and infringement claims. Before signing a business contract, consider having an attorney review its terms and explain how they affect your intellectual property rights. A careful review can help you protect the work and ideas that support your business.