Protect your Brilliant Ideas

Posted on June 22, 2015 in Commercial , Intellectual Property (Tags: Commercial Law, Intellectual Property, Software Development)

One of the common challenges we face when seeing a client who wishes to commercialise a new idea or invention is that they may have got well down the path to product or service development before seeking professional advice about protection of the idea. In many cases, the task becomes more complicated and expensive because the client may have unwittingly passed on rights to a third party as part of the development process, or alternatively, limited the ability to secure exclusive rights for him or herself to develop the concept further. Let’s use a typical software development project as an example. Two friends come up with a concept for a cellphone app which they believe will revolutionise monitoring of employee downtime in the civil engineering field. One of them is already employed by a local authority who wants more accountability from its contracted service providers, and has industry knowledge of how the app might be used, likely sales channels and desirable price points. The other is a software developer employed by a large IT company, and has been working on the idea in her spare time. The two friends meet regularly over the course of a few months in their spare time defining the scope of the app, and the developer writes the code for a prototype which she demonstrates on her smartphone (provided by her employer). Once the demo is sufficiently bug free to ‘go live’, the other friend arranges for it to be installed on the smartphones of a few mates who happen to work in the target industry to test it, and the results are very positive. One of the unexpected benefits of the app is its ability to generate data which can be collected and potentially onsold. Both friends leave their jobs with a view to putting all their energies into developing the app. What issues might they face from having approached the development in this manner? One of the key issues is of ownership of the intellectual property in the app and in the business model as a whole, and of the data generated. In the absence of any contractual framework, there is no clarity around each other’s rights to ownership, and potentially one or both of their employers may have a claim to ownership depending on the terms of their employment contract. Even without a contract, if the employer of the developer can argue the app was developed in the course of her employment, it could claim ownership of the source code. The workers who demonstrated the product may have an issue with the data being sold or used in the future for other purposes. Frequently in a scenario like this the developer is a contractor which imposes its own terms of contract on the service provided, and these terms could undermine the ownership rights of the two entrepreneurs. The simple solution to avoid any future issues with regard to ownership of intellectual property, or use of data, is to agree in writing at the outset what the parties intend, and to check that no other person such as an employer or contractor has any conflicting rights. The agreement does not need to be extensive, but it does need to address certain key issues. Taking the following steps at the beginning could save you a lot of time and money later on should things go wrong: