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Contracts & Employee Agreements

A contract is the result of an offer and an acceptance, with due consideration being offered in return for performance.

Many contracts result in a transfer of intellectual property. A software license is an obvious example of such a contract. However, in today's ever increasing recognition of intellectual property, many, if not most, business contracts involve at least some intellectual property.

A services contract may involve a contractor who provides a patented process, copyrighted operations manuals, or the contractor's exposure to your trade secrets. What happens if the contractor invents or improves some aspect of your business? Does the contract stipulate who owns the improvement or invention?

If you license a computer program to run a portion of your business, what happens if the seller's computer program is practicing a patented process owned by someone else? Who pays for defending against an infringement? Who pays to provide an alternate computer program that is not infringing?

If someone writes a training manual for your business, do you automatically own the rights to that manual?

Who owns the rights to the company's website and domain names? Are the hosting and website construction contracts clear?

If an employee creates artistic or engineering designs, or invents or improves a portion of the business, is there an employee invention policy and agreement in place?

These and many other examples illustrate a typically overlooked aspect that intellectual property brings to increasing company worth and mitigating risk exposure.

On a final note, most contracts can be described as having three components: compensation, scope of work or product, and legal protections. It is difficult for the other components to make up for a deficiency in any component. For example, a poorly defined compensation or scope of work can not be fixed by legal clauses and vice versa. Contract evaluation is a process of looking at all three components to identify their interactions and possible deficiencies.