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Don’t forget IP when selling

Jan 14, 2014
When selling a company, the usual items are generally considered by both parties such as purchase price, banking matters, and the list of assets. However, often the most valuable asset is left unmentioned; intellectual property. Here Joanna McKenzie from Keystone Law offers some advice.
Intellectual property is often of great value to a company but few consider it fully and that can lead to issues if it is not dealt with correctly. You not only need to consider what intellectual property rights your company uses but whether or not the company actually owns them or whether they are owned personally by a director or employee. This article aims to provide a general guide on how to consider and deal with your company’s intellectual property rights.

Does your company have a logo? If so, who designed it? It is likely that the initial design drawings will be covered by copyright, which is a right that arises upon creation of the drawing (or protected item). There is no registration involved. Protection, generally speaking, lasts for the lifetime of the author plus 70 years. If you commissioned an artist, designer or photographer to create a logo, copyright will initially belong to the person commissioned to do the work, regardless of whether or not they have been paid for it, unless you have agreed otherwise. You should enter into an agreement with someone regarding intellectual property rights if you commission work, as copyright initially belongs to the author.

If an employee has created the work in the course of their employment, generally speaking, copyright in the work will belong to the employer. However, this can be agreed otherwise. It is always a good idea to record the agree position in the employment contract. This prevents any issues arising later on with regard to ownership of intellectual property. If drawings were done, these should all belong to the company. If photos were taken by an employee in the course of their employment, again these should belong to the company. Each photo will have its own copyright, and so if multiple photos have been taken of the same item, ensure that the company has ownership of the rights in all of them.

If the logo has become a brand for your company, has it been trademarked? This is a registered right that you apply and pay for. If it has, ensure that the trademark is in the name of the company and not one of the directors or shareholders. If the brand is being developed or is already a big name, it will hold tremendous value and goodwill. The trademark details will need to be contained within the Sale Agreement; these can be found on the Intellectual Property Office’s website.

Most businesses these days have a website and this again can involve a myriad of intellectual property rights. Consider who wrote the text contained within the website and took the pictures used on the website. These will be covered by copyright and the owner has, inter alia, the right to stop anyone from copying it. Most photos that are not taken by a company employee or a commissioned photographer are obtained from specific websites who sell a licence to use a photograph on behalf of the photographer. If this is the case, you will need to ensure that the licence to use the photo is transferred to the seller and is appropriate for your needs. If someone has copied a photo from a website without permission, you may find a claim being made against you for fees for the use of the photo.

The domain name of the website is not technically an intellectual property right; however, clearly this should belong to the company and not to a director, shareholder or even an employee personally.

Ultimately there are many intellectual property rights that exist within a company, and therefore it is important to obtain advice on what those rights are and how you can deal with them to protect you and the company from future litigation.

Should you need further advice on any of the issues outlined above, please contact Joanna McKenzie on 020 7152 6550.

Joanna McKenzie

Joanna joined Keystone Law in 2013 as a consultant in the firm’s Dispute Resolution team. Joanna is a general commercial and civil litigator who deals with a variety of disputes ranging from debt recovery to professional negligence claims to breach of contract claims. She also has a keen interest in Intellectual Property disputes including copyright, trademarks, design rights and passing off. Joanna represents individuals and companies of all sizes. She has an LLM in commercial intellectual property and is a frequent lecturer on the subject of brand protection.


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