In Short
- Freelancers usually own the intellectual property they create, even if your business pays for the work.
- Ownership of IP only transfers if there is a clear written and signed IP assignment.
- Without proper agreements, your business may not control or fully use important assets.
Tips for Businesses
Always use a written freelancer or consultancy agreement that includes clear IP assignment clauses. Confirm when ownership transfers and ensure the document is signed before work begins. Review older freelancer arrangements to check whether your business actually owns key assets, especially software, branding, or core content relied on for growth or investment.
Summary
This article explains who owns intellectual property created by freelancers and how businesses can protect their IP rights under English law in the United Kingdom. Prepared by LegalVision, a commercial law firm specialising in advising clients on intellectual property and commercial contracts, it outlines the risks of unclear ownership and the importance of written IP assignments.
Intellectual property (IP) refers to a key business asset, including:
- business-critical software;
- content;
- branding;
- designs;
- logos; and
- marketing materials.
Many businesses mistakenly believe that paying a freelancer alone gives them ownership of the work and all IP rights. However, this is not the case, and businesses need to take steps to own the IP a freelancer creates.
This article explains who owns IP created by freelancers and how to protect your business from IP risk when you are using freelancers.
Who Owns IP Created by Freelancers?
Under English law, the creator of a work usually owns the copyright, unless the work is created by an employee as part of their job. Copyright protects original creative works that are recorded, such as written content or music.
When you hire a freelancer to create work or materials for you, they will typically own the copyright or other IP rights in what they produce. This applies even if the freelancer creates work specifically for your business and you pay in full. Payment, detailed instructions, or even the supply of materials to the freelancer alone will not transfer ownership to your business. In practice, you will need a written, signed agreement to transfer ownership of copyright.
Courts might, in very limited scenarios, recognise an equitable assignment (i.e, transfer) of IP rights where both parties’ intentions are exceptionally clear. However, businesses should not rely on this, as it is uncertain and risky. A clear written IP assignment is much safer and is generally relatively straightforward to put in place.
The Commercial Consequences
For a lot of businesses, copyright is the main IP right in freelance work. It protects original materials they commission, such as:
- website text;
- software code; and
- marketing content.
If your business does not own the copyright, your rights to use the work may be limited. In practice, this can restrict how you:
- use;
- reuse; or
- commercialise the relevant IP.
This can be hugely problematic if a freelancer builds a core asset, such as a bespoke app or software platform. If the freelancer owns the code, your business may depend on rights it does not fully control.
Continue reading this article below the formContractual Ways for Securing IP Ownership
Businesses will typically secure ownership of works created by a freelancer through an IP assignment. An assignment transfers the ownership of IP from the freelancer to the business, generally giving the business full ownership and control.
Once the assignment takes effect, the business can use the IP freely. This includes:
- adapting it;
- commercialising it;
- licensing it to third parties; or
- selling it on.
Under English law, an IP assignment must be in writing and signed by the person transferring the rights. The agreement should clearly identify the IP being transferred and state when ownership passes, for example, on creation or on payment. Assignments can also include future IP, but ownership will only pass once the IP comes into existence.
A business will generally use a freelancer or consultancy agreement, which contains robust IP assignment clauses. Legal advice can help a business ensure the wording is legally correct and effective in assigning all required IP rights.
There are also certain formalities you may need to comply with, for example, you might need to execute the IP assignment document as a deed (rather than a simple contract) where consideration is not provided.
This is a simplified overview of key issues to consider, and an IP solicitor can guide you on the full details of what an IP assignment with your freelancer needs to cover.
Commercial Risks of Neglecting Freelancer IP Assignments
If a freelancer agreement or contract does not clearly state who owns the IP and transfer the rights, the freelancer may keep the rights your business needs.
IP ownership risks can arise where businesses commission freelancers to create core assets such as: inc website development, branding and logo design, and digital products.
Without clear contract wording covering IP assignment, the freelancer may own the IP by default, leaving the business without the rights it expects to use those materials.
Problems can also arise where freelancer agreements do not contain correct assignment clauses to assign IP to the commissioning business. Unclear IP ownership can cause disputes that take time and money to resolve.
Ownership issues also affect funding and transactions and have a commercial hit. Investors and buyers will expect clear evidence that a business owns its key IP. A funding round or acquisition will almost always include questions about ownership of core assets. If ownership cannot be evidenced, deals may slow down, be renegotiated, or fall away where IP assets are central to the transaction.
A business may also struggle to enforce its rights. If it does not own the IP, it may lack standing to stop third parties from copying or misusing the work, or may need the freelancer’s cooperation.
Taking Legal Advice to Manage IP Risk
Legal advice can help businesses put the right contractual agreements in place to correctly assign IP rights. An IP lawyer can draft or review freelance agreements to ensure IP ownership transfers are correctly documented and follow legal requirements.
They can also advise whether an assignment is appropriate, as opposed to more limited licence rights. There may be scenarios where a freelancer refuses to transfer ownership of the IP to your business and insists on giving you a licence (limited right) to use it instead, but keeps ownership.
Legal advice is particularly important where third-party IP rights are involved in the materials the freelancer creates, as freelancers cannot assign rights they do not own.
Legal advice can further help ensure the correct formalities are followed, including:
- whether an assignment should be executed as a deed;
- whether consideration should be included in the assignment;
- whether warranties (contractual promises) should be obtained from the freelancer; and
- whether the assignment should be registered.
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Key Takeaways
Freelancers will generally keep ownership of the IP they create unless they agree to a written contract that assigns it to your business. Paying for work alone does not transfer rights. Clear, written agreements with freelancers covering the transfer of IP rights are crucial in order to effect and evidence ownership, to prevent disputes over IP ownership and to protect your business from risk.
LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
If your business needs full ownership and flexibility over the IP the freelancer creates, you should sign a written IP assignment with them. They might demand a higher fee if so. In some cases, a licence may be sufficient, depending on how you intend to use the work. You should take legal advice if you do not understand the differences and the impact on your rights.
You can seek an assignment, but the freelancer is not obliged to agree and may ask for additional payment. It is easier and cheaper to deal with IP ownership before work starts. You can achieve this by including IP assignment clauses in your freelancer agreement or services agreement.
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