• Does your School Really "Own" its Intellectual Property?
  • December 29, 2010 | Authors: April Besl; David J. Lampe
  • Law Firm: Dinsmore & Shohl LLP - Cincinnati Office
  • The creative use of technology in public schools will be a key factor in the education of school children in the 21st Century. Virtually all school districts rely on information technology professionals to maintain information systems. It is not uncommon for these professionals to develop new software or other creative works in the scope of their school employment. Sometimes these creative new works have the potential to be marketable to third parties. Given this possibility, school districts would be wise to define who owns these creative works, and take appropriate measures to protect the school district's intellectual property rights.

    Say, for example, the Northbridge School District hires a computer technician to develop, maintain, and service the technology it uses in its schools. As part of her employment, the technician develops a new piece of software that will revolutionize the way Northbridge securely maintains and accesses its records. Implementing this software will increase efficiency and security, and will decrease costs associated with maintaining these records. Northbridge soon realizes that this new software could be valuable to outside schools and/or organizations. To capitalize on this potential new revenue source, Northbridge enters into license negotiations with a third party, School Software, Inc., who would sell the software and pay a revenue-based license fee back to Northbridge.

    However, during negotiations, School Software requests that Northbridge provide proof of ownership of the software for its own protection. Northbridge then realizes that its employment agreement with the technician did not include an assignment of rights in any works or inventions created during the course of her employment. The question becomes, does Northbridge own and have the right to license the software to School Software without that assignment?

    The answer depends on the intellectual property rights at issue. When it comes to works and inventions created by school district employees, there are two relevant intellectual property rights that arise: copyright and patent. A copyright protects any creative work that is “fixed” into something tangible, i.e. a book, photograph, CD, blueprints, or software. A patent protects any new, useful, and non-obvious idea that has been turned into a prototype, drawings, designs, or even the invention itself.

    Turning first to copyright, Northbridge would own the copyright in the software, as it currently exists, because the technician created the software within the scope of her employment at Northbridge. Software, as you may know, is made up of code that works in certain “steps” to achieve the desired outcome. However, while Northbridge owns the copyright in the software's “steps” as they current exist, Northbridge cannot prevent the technician from modifying these “steps” so that the software performs the exact same function, but in a different way. In such instance, the technician would own the altered version of the software, even though it achieves the same results or outcome as the Northbridge software.

    With regard to patent rights, even though she was an employee when she made the software, the technician would own the right to patent the invention. This means that, if the technician applies for and obtains a patent with the U.S. Patent Office; she can prevent Northbridge from selling the software through School Software, even though the district owns the copyright in the current version. Northbridge would still be allowed to use the software in its schools though, under what is known as a “shop right,” because the technician used the resources available to her as a result of her employment in creating the software. However, the revenue stream Northbridge was anticipating from sales of the software would be completely cut-off by the technician’s superior rights.

    Simply put, without an assignment of rights by the technician in her employment agreement, the technician can prevent Northbridge from doing anything other than using the software at schools within its own district. Thus, in order to ensure the stream of revenue it had anticipated from its contract with School Software, Northbridge would have to negotiate with the technician to secure an agreement to assign away her rights in the software, post-development, and with full knowledge of the software’s value to the district.

    School districts wishing to avoid this scenario should ensure that all employees who may create new intellectual property expressly assign all their rights in these works or inventions as part of their job. Even current employees, either immediately or upon a renewal of their contracts, should be asked to sign a revised employment contract to address the assignment of these intellectual property rights. Otherwise, school districts may find themselves in the same expensive shoes as that of Northbridge.