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Consulting Agreements: Who Owns Intellectual Property Created On A Project?

business consulting agreement

Many consulting agreements don’t cover who owns the intellectual property (IP) created by a consultant while working on a client’s project. And that can lead to misunderstanding, soured relationships, and even costly lawsuits over ownership.

Now experienced business consultants often create proprietary resources they can reuse on multiple projects for different clients over time.

On the other hand, most clients don’t give IP ownership a thought, mistakenly presuming payment to the consultant purchases that intellectual property. Few think about that same material being used later by the consultant on behalf of others, including competitors.

Of course, if you’re a business consultant, you’ll want your consulting contracts to clearly protect what you own. And, under some circumstances, grant a client a limited license to use this intellectual property while you retain ownership.

What if a client insists on owning what you create? If the IP isn’t essential to your consulting business, you may want to consider charging a premium (e.g. 3x to 5x your standard rate) for ownership to change hands.

Even then, you should consider retaining in your consulting agreement a license back to you of the intellectual property from the client so that you have some rights to reuse what you’ve created even after the client owns it.

If you need help fixing your existing consulting services agreement, or want a professionally prepared contract designed to protect your interests, it’s time to call Business Lawyer Mike Young.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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