Agreement on the creation of an object of intellectual property

In accordance with the law, personal property and non-property rights to objects of intellectual property rights that are created belong to the author. However, the contract may provide for the provision of use of the object of intellectual property (without transfer of property rights) or the transfer of exclusive property rights to the object. Personal non-property rights are not alienable and belong only to the author.

When the need arises to develop a design or architectural project, usually address to qualified professionals or companies that provide relevant services. The result of such activity is the creation of intellectual property (design projects, graphic images, drawings, illustrations, etc.), the rights to which are protected by law.

Relations arising in this area between the customer and the contractor of services for the development of an object of intellectual property rights on an order are regulated by an agreement on the creation of an order and the use of an object of intellectual property rights. However, before signing the creation contract on order and using an object of intellectual property rights, it should be remembered that there are a number of nuances that need to be focused on in order to avoid disputes in the future.

Failure to consider the details in the development of a contract with the customer creates certain risks for the contractor. First of all, they are associated with an unusual subject of the contract, namely the creation of an object of intellectual property rights.

Let’s consider some of the features associated with the conclusion of service contracts:

1) Terms of use of the created object by the customer

The customer has the right to decide how to use the object. However, this should be spelled out in the contract.

2) Performance of work personally by the contractor

The customer is entitled to demand that the works were carried out personally by the contractor without the involvement of third parties. As a general rule, the contractor performs the work personally. Otherwise, third parties will co-sponsor the work and, accordingly, have copyrights to the created object, therefore this condition significantly reduces the possibility of disputes regarding property rights to the result of the work.

However, if the object of intellectual property is created by hired workers in accordance with the employment contract, then the property rights to the object belong in equal parts to the employer and the employee, unless otherwise specified in the contract. However, the employee may transfer property rights to the employer. It should not be forgotten that non-property rights are not alienated and belong exclusively to the author, that is, the employee.

3) List of the name and expected outcomes must be agreed upon by the parties and clearly defined in the contract

This will significantly reduce the likelihood of disagreements and misunderstandings between the parties, since the end result must meet the needs of the customer of the work, as well as meet the quality requirements established by the customer and the legislation.

4) Documentation

It is possible that in the course of the work the contractor will need certain documentation from the customer. In order to receive all the necessary documents from the customer in a timely manner, the contract should provide for the customer’s obligation to provide such documents, as well as the consequences of failure to provide the documents.

5) Provision of author’s supervision

The parties may also stipulate the terms of the author’s supervision in the contract. If the parties have agreed to provide author’s supervision services as an integral part of an agreement on the performance of work on an order, then it is necessary to determine the scope of rights and obligations of each of the parties, as well as note the scope of services, the order of delivery with a list of services and an indication of the final result of the services.

6) Transfer of exclusive property rights to the result of work under the contract

In this case, the moment of transfer of exclusive property rights must be clearly defined, and the amount of transfer of property rights must be determined. As a  rule, according to the Civil Code of Ukraine, the parties jointly acquire property rights to the created object of intellectual property on order. The condition on the transfer of exclusive property rights is not obligatory, but in the absence of such property, the property rights to the created works of fine art remain with the author. Often, the customer perceives the signing of the contract as the acquisition of property rights to the object of intellectual property rights, but the transfer of the object to the property does not mean the transfer of property rights to this object. It is advisable to distinguish in the contract the rights of both parties to the created object.

7) Work performance order

In practice, quite often there are situations when the perception by the customer and the contractor of the type of object is different. This is due to the presence of a subjective view on each side. The risk of a customer claiming a contractor is large enough. In this case, the parties should agree in advance on the mechanism for making comments by the customer and the contractor, the exchange of information, as well as the right of the party to terminate the contract, unless the parties jointly reach a common decision to resolve the differences. All comments and wishes of the parties in the process of performing the work under the contract should be expressed in writing (on paper or by electronic means).

8) Procedure for early termination of the contract

In the event of an early termination of the contract by agreement of the parties, it is important to determine the procedure for settlements between the parties, namely, payment for the work actually performed by the contractor. Given the specifics of the subject matter of the contract, it is imperative to note whether an exclusive property right is transferred to already performed works to the customer of services and at what point.

There are always risks of improper performance by the parties of the terms of the contract, however, in view of the specific subject matter of the contract for the creation on order and the use of an object of intellectual property rights, we recommend paying special attention to the points mentioned above.

In any case, the assistance of qualified lawyers in drafting a contract will help avoid or minimize the negative consequences of disputes between the parties.

Ekaterina Taraskina, Legal Consulting Center

Trademark registration and copyright protection for computer programs

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