Intellectual property
Legally protected creations of the mind such as patents, trademarks, and copyright.
Definition
Intellectual property (IP) covers intangible creations protected by law, including copyright, patents, trademarks, designs, and trade secrets, giving the owner exclusive rights to use and exploit them. Contracts must state who owns IP created during the relationship and what rights, if any, are licensed or transferred. Without express terms, default ownership rules (for instance, that a contractor generally retains copyright unless assigned) can produce unexpected results.
Example
A design agency's contract assigns all IP in deliverables to the client on full payment, while the agency keeps its pre-existing tools.
Why this is a business risk
IP ownership disputes are among the most damaging contract failures because the affected asset is often a core product or brand. Companies that do not obtain an express written IP assignment from contractors or employees risk discovering that a key piece of software, design, or content belongs to someone else. Similarly, granting an overly broad IP license can give a counterparty rights that far exceed what the deal intended.
How to manage it
- Include an express written assignment of all IP created under the contract: "agrees to assign" is not enough; use "hereby assigns".
- Define pre-existing IP (background IP) and confirm that the contractor keeps it but grants a license to use it in the deliverables.
- Tie the IP assignment to full payment: ownership transfers only when the client has paid, which incentivises timely payment.
- Check that any third-party components (open source, stock images) used in the deliverables are licensed in a way compatible with how the client wants to use them.
Legal references
- Auteurswet (Aw) Dutch Copyright Act
Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.
Frequently asked questions
Common questions about this term.