Signing Contract

How to protect the intellectual property rights of your dental practice

Aug. 6, 2014
It's important for dental practices to protect their right to intellectual property created for them. Signed agreements should be in place that the practice retains rights to the property, or lawsuits will begin.

Many dentists hire independent consultants to develop their website or perform marketing services to brand their dental office. However, most dentists are unaware that without a written contract that includes certain provisions, the independent consultant retains ownership of the intellectual property created. This can create problems for dental practices that do not protect their rights.

Copyright law protects work from the time it is created. The general rule under the Copyright Act states that a person who creates the work is the author of that work, unless the work is designated as “work made for hire.”

For example, if a dental practice hires a graphic design company to create its company logo, and a “work made for hire” agreement was not signed before the logo was created, the graphic design company owns all of the right, title, and interest to the dental practice’s logo. The graphic design company is free to license or sell the logo and dilute the marketplace with similar images. The dental office would have no control over its own logo.

The “work made for hire” doctrine also allows an employer to be considered the author of the work even if an employee created the work.If an employee creates intellectual property for an employer, the employer will own the exclusive rights to work created, if the work was created within the scope of the employee’s employment. Although work created by an employee is considered to be “work made for hire” and is owned by the employer, a cautious dental practice owner will have employees sign an employment agreement that transfers ownership of work, ideas, and inventions to the employer. Because many employees work from home or at odd hours, it may become unclear if an idea was created during the course of employment.

If an independent contractor is performing the services for a dental practice, the contractor is the lawful owner of the work unless the “work made for hire” requirements are met. The “work made for hire” doctrine requires that three conditions be satisfied in order for the hiring business to own the original work. First, prior to the commencement of the work, the parties must agree in writing that the work will be considered “work made for hire.” Second, the work must be “specially ordered” or “commissioned” by the hiring party. Finally, the work must fall within at least one of the nine statutorily mandated categories of commissioned works listed in the Copyright Act. A “work made for hire” is defined in the Copyright Act (15 U.S.C. § 101) as “a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas.”

These requirements call for the parties to have a written agreement with specific work-for-hire provisions. Since it is not always clear whether the work product falls into one of the nine specified categories authorized by statute, a well-drafted independent contractor agreement should include language that assigns all of the intellectual property rights associated with the work created to the dental practice contracting for the work.

Since more dental practices are hiring independent contractors and consultants rather than full-time or part-time employees, the question of ownership regarding intellectual property rights has created a substantial amount of litigation. The consequences of failing to take the necessary steps in order to protect your dental practice’s intellectual property rights can be very problematic, particularly if there is a dispute over payment or the quality of work with the independent contractor or consultant.

In today's digital and knowledge-based business world, dental practices are not always careful to protect their “work made for hire.” Intellectual property rights associated with work created by employees and independent contractors can be the source of expensive litigation if a dental practice becomes successful. Intellectual property is also an important subject of review during any due diligence period that may be conducted for the purposes of financing and selling a business. As a matter of general practice, and especially when the intellectual property is crucial to the long-term growth of the practice, well-drafted employment and/or independent contractor agreements must be in place.

Stuart J. Oberman, Esq., handles a wide range of legal issues for the dental profession, including cyber security breaches, employment law, practice sales, OSHA and HIPAA compliance, real estate transactions, lease agreements, non-compete agreements, dental board complaints, and professional corporations. For questions or comments regarding this article call (770) 554-1400 or visit Visit Oberman's corporate Facebook page,dental Facebook page, on Twitter, LinkedIn, or their blog.