Protecting Your Intellectual Property
The new lecturer wanted to continue discussing managerial issues with his mentor, his former lecturer who now holds the position of Head in the new lecturer’s department. He wanted to talk about intellectual property issues, as he had heard something about the department losing its intellectual property rights to its website. When asked, the mentor groaned, saying there was indeed such a loss and disaster. He said that ordinarily, he did not want to talk about it, but he would do so with his mentee because he did not want to see the disaster repeated in the organisation, and especially in his department.
What is ‘intellectual property’?
The Head, underlining the gravity of the situation, emphasised that intellectual property, or IP, is a fundamental concept. It encompasses intangible property rights like patents, trademarks, designs, and copyrights, all of which are the products of intellectual activity in various fields. The term 'intangible property' is used because IP is a collection of legal rights that cannot be physically touched. He further stressed that copyright, the most significant IP right for most managers, is 'the legal right to copy' and is the exclusive ownership given to the originator for a fixed number of years. This protection does not require registration to obtain legal protection.
Clear ownership agreements
The mentor, resolute in his mission to prevent future calamities, began by addressing the unfortunate loss of the school’s website IP. He stressed the pivotal role of clear ownership agreements in dealing with IP, a crucial aspect for all parties involved. The importance of everyone agreeing on the ownership of the output was stressed, and he gave examples such as a website or architectural plans, and the inputs used to create the output, such as reports. This clarity in ownership, he reiterated, can effectively prevent disputes and safeguard the parties' intellectual property rights.
Legal effect of copyright
He introduced the legal effect of IP law by stating that ownership allows the owner to prevent others from using your scripts, notes, photos, etc. The creator of the IP owns the copyright, except with an employee creator, where the employer owns what the employee has created "in pursuance of the terms of his or her employment.”
Commercialisation of research
The College’s science faculty has several high-powered academics who are making important discoveries that can be commercialised. This is where the school allows a corporation to use the school’s IP in return for a fee, called a royalty. The school earns considerable income from these arrangements.
The need for a specific website
Senior school management sought to create an ancillary website solely to operate the commercialisation process. Organisational governance requires purchasing goods and services, called procurement, to go through the procurement department. However, one of the award-winning professors ignored this requirement and ordered a very detailed and interactive website, and did this without seeking any assistance from the school’s procurement department. The cost was $100,000 (plus GST). Contrary to procurement policies for this purchase category and price, only one verbal quote was obtained when three written quotes were required. Then, without authority and reading it, he signed the contract with the website developer. The website was finally created and was very much what the school sought. However, it soon became clear that other add-ons were desirable.
Approaching the website developer
The professor returned to the developer and requested two minor but important improvements. The developer quoted $10,000 (plus GST) for these small changes. The professor said the amount quoted was excessive and would take the work elsewhere. The developer said that the professor could not because the developer owned the website IP.
Who owns the IP?
The professor was confused. He stated that purchasers of goods and services always own IP rights and gave the example of employers owning the IP of work created by employees. The developer laughed and said that the professor did not know his law. He said that the contractor always owns the IP, with the employer position being an exception, and suggested that he see the school’s lawyer to confirm this. In addition, he pulled the contract out, and there was the professor's signature, as well as a clause stating that the intellectual property rights would be owned by the developer. The professor’s face reddened as he realised that he had made two grave mistakes. The first is that he should have read the contract before signing, and the second and more important reason is that he should have referred the whole purchase to the procurement department.
Mea culpa
After confessing the transgression to the school’s Chief Procurement Officer, the professor was advised that a standard contractual term in any school purchase agreement dealing with goods and services is that the school owns the IP rights. Because the professor was so well-known and a leader in his field, he was just able to keep his job. However, he was severely reprimanded.
Loss of a key College website
The Chief Procurement Office now had a choice. Pay the $10,000 (plus GST) for the small necessary amendments or go elsewhere and buy a new website. The Chief Procurement Officer gazed into his coffee and thought to himself, “These b#$$%y arrogant academics …”
As they finished their discussion, the Head reiterated the need to deal with IP as it is a valuable commodity today. He pointed out that in our grandparents' time, most of an organisation’s value was in land, buildings, plants, and equipment. However, today, except for some big mining companies, an organisation’s wealth is in its IP. He gave the examples of Amazon, Apple, Google, and Netflix. He said that all staff need to know what IP is, as loss of IP can be very costly from a financial and reputational viewpoint.
Associate Professor Cyril Jankoff is the Associate Dean, Scholarship at UBSS and a member of the GCA Compliance Directorate
