An Intellectual Property (IP) clause is a contract section that records the ownership of creative work and/or permission to use the work. For businesses in the Screen Sector, these provisions can clarify who controls the rights to the work produced by employees during their employment and can alter the default rules on a case-by-case basis.
Creative work can be protected by different types of IP. The most common type of IP in this context is copyright, which protects original works like scripts, music, and films. A copyright is a legal right that gives the creator of an original work the power to control how and by whom their work is shared and copied.
Moral rights are also important, as they protect the integrity of and credit for creators' works. They are separate from copyright rights, but typically last for the same amount of time.
Under UK law, copyright in work created by employees during their employment automatically belongs to the employer. This default rule can be changed by the agreement of both parties (employer and employee).
By contrast, under UK law, copyright in work created by freelancers automatically belongs to the freelancer. Again, the default rule can be changed with the mutual agreement of the business and the freelancer.
An IP clause can clarify who owns this work instead of assuming everyone understands the rules. With a clear IP clause, an employer:
Can make the default rule clear, that the employer retains full ownership of all work created during employment.
Has the right to use, modify, or distribute the work without additional permissions.
Without a clear IP clause, an employer could face:
Legal Risks: Disputes over who owns the work.
Project Delays: Issues with licensing or distribution if IP rights need clarifying.
Reputational Damage: Negative relationships with employees due to unclear agreements.
Employers should state whether employees are entitled to moral rights, such as being credited for their contributions. This is known as the right to attribution, which is the right to be recognised as the author of a work.
Employers typically choose one of the following approaches:
Employer Owns the IP (the default):
The employer retains full ownership of all work created under the employment contract. This gives the employer complete control over how and where the work is used.
Example: A production company hires a full-time graphic designer to create promotional materials for a new film release. During their employment, the designer develops the official movie poster, social media assets, and animated trailers. Under the employment contract, the production company has the right to use the materials where they please.
Employee Retains Ownership:
The employee keeps IP ownership of the work but grants the business a license to use it for specific purposes.
Example: An employee composer licenses a soundtrack for use in one film only.
Joint Ownership:
Both employer and employee share ownership and control over the work.
Example: A television production company employs a screenwriter to develop a new drama series and expressly agree to share ownership and control over the work. During the project, the screenwriter collaborates closely with the producer, contributing ideas and writing key scenes while the producer shapes the overall vision and storyline.
In a shared ownership agreement:
Both the production company and the employee screenwriter jointly own the copyright to the script.
The parties could agree that the production company can use the script to produce and distribute the series, while the screenwriter retains rights to use the work for their portfolio or pitch it for adaptations (e.g., novels or spin-offs) with mutual agreement.
Royalties or revenue from the series are shared according to a pre-agreed percentage, ensuring both parties benefit from the show's success.
To avoid disputes, the agreement clearly outlines which decisions (e.g., licensing, merchandising, international adaptations) require mutual consent and how profits will be divided.
Note: This arrangement requires clear terms to prevent disputes.
To make sure an IP clause is effective and transparent, address the following questions:
Who owns the work? Does the IP clause state that all IP created during employment belongs to the employer?
What constitutes “in the course of employment”? Are there clear job descriptions to help if there is any doubt?
When does ownership transfer? Is it specified that ownership applies immediately upon creation or after payment?
Are there exceptions? Is it specified whether employees can retain rights to their work in special circumstances?
Here’s an example of an employee IP clause which sets out the default position:
“All intellectual property rights to the work created by the employee during their employment will belong to the employer. The employee agrees to transfer any rights they may have in the work to the employer and to sign any necessary documents to complete the transfer.”
Be Specific: Clearly define what constitutes as “work created by the employee during their employment."
Fair Terms: Address any potential for disputes by compensating employees fairly for additional contributions outside their regular duties.
Consult Legal Experts: For complex projects, seek legal advice to draft robust IP clauses.
Use Written Agreements: Document all IP ownership terms in employment contracts.
Understand Your Role: Make sure you know what counts as “work created during your employment” and how it applies to your responsibilities.
Discuss Fair Terms: If you contribute beyond your regular duties, consider having a conversation about fair recognition or compensation.
Seek Clarity: Don’t hesitate to ask for clarification on how the IP clause in your contract affects your rights, especially for work you might want to use in your portfolio.
Keep Records: Maintain a record of your contributions and any agreements made, ensuring there’s no confusion about your input or rights.
A strong and clear IP clause for employees allows employers to protect their projects, avoid disputes, and maintain smooth operations, ensuring the success of their business in a competitive industry.
A clear and fair IP clause helps employees understand their rights and contributions, providing transparency about how their work will be used. This fosters trust, ensures recognition where appropriate, and creates a professional environment where employees can focus on creativity and innovation without concerns over ownership disputes.
A reminder that material on this platform is not legal advice but we’re here to point you in the right direction if needed.