Q11 & Q12: Employee Creations and IP Ownership
Updated: Feb 7, 2022
Nonprofits were asked if employee of the organization hold the rights to any of the intellectual property in use by the organization. Eighteen (18) respondents replied that no individuals hold rights to the organization’s IP.
Though one respondent did not answer this question, all nineteen (19) respondents answered the follow-up question of whether there is a written policy in place for the vesting of property rights for IP developed by an employee.
They shared that:
· Seven (7): Yes, there is a written policy for vesting of intellectual property rights
· Nine (9): No, there is not a written policy for vesting of intellectual property rights
· Three (3): Do not know if there is a policy
Diving Deeper into Nuance: Employees, Knowledge, and the IRS
Organizations unanimously indicated that individuals do not hold the rights to any of the IP, but twelve (12) indicate that either there is no policy, or are uncertain if there is a policy. Intellectual Property, as an asset category, is generally considered an intangible property meaning it's distinct from assets that appear on a balance sheet, like cash and real estate. But, it's an asset because it has some value - to your organization in some marketplace.
Gosseries, Marciano, and Strowel made several powerful arguments from my initial reading that it is difficult to separate an idea from its’ expression, but some delineation must be made for expression to transform into intellectual property. Knowledge is a highly transportable asset and without clear policies related to the rights assignment of employees’ work product the assumption that IP rights vest with the organization can be problematic. This is one of the reasons the Bayh-Dole Act was created to handle innovations in higher education and most colleges and universities have very explicit policies for the intellectual property rights of professors.
Let’s think about this on a practical, day-to-day level. Imagine that you’re the founder of a nonprofit organization. You founded the organization with a curricula that you developed in your free time from knowledge acquired from school and your own life experience. You use the curricula created prior to founding the organization, but highlight the curricula in your fundraising. Is it your intellectual property? The organizations? If you left the organization would the organization still have the right to use the curricula, particularly if restricted funding were being used to deliver it?
Now, imagine similar questions of the employees you hire into your organization. You’re likely hiring them because of a particular set of knowledge, skills, and abilities that will add value to the mission. The improvements, new curricula, marketing materials, branding, and tools they develop to improve the work of the organization might be a combination of previous work experience, professional development paid for by the organization, and their own personal interests. If they left tomorrow, do they own those improvements in such a way as to save them to a USB drive and take it with them? One professional association in the nonprofit sector is colloquially known as “Copy and Steal Everything” by its members. But those “everythings” are the intangible assets, possibly intellectual property, of other organizations.
Perhaps taking those improvements to another organization would create a “rising tide” situation for all parties, but that doesn’t address the IRS’s requirement that governance teams manage intellectual property assets like any other asset.
It could be entirely reasonable and in support of your organization’s vision, mission, and values to adopt a policy that claims no ownership of IP or explicitly adhere to an open source mindset regarding your own IP. But the key here is that those are deliberate choices the governance team has made and articulated as a part of their fiduciary duties when considering how intangible assets, like IP, are part of the organization’s strategy, business operations, and assets.
You can skip to the summary of all of the responses in the Social Entrepreneurs and Intellectual Property Management paper. Or, read through each of the blog posts tagged as Intellectual Property Data V1.0 for a more recent analysis of the data.