Title

April 29, 2021

Office of General Counsel

MINNESOTA STATE

Intellectual Property Ownership

and Licenses in Contracts

Four Types of Intellectual

Property

• Patents (inventions, discoveries, plants)

• Trade Secrets (non-public formulas, processes, etc.)

• Copyrights (novels, paintings, photographs, movies, songs,

presentations, etc.)

• Trademarks (distinct names, logos, symbols, non-

functional packaging)

In most Minnesota State contracts, the intellectual property

(IP) at issue will be copyright (more rarely, trademark or

patent rights are implicated). Because of this, we will only be

discussing copyright.

What is a copyright?

• The exclusive legal right to publish, print, perform, sing, record,

literary, artistic, or musical material

• Includes the right to authorize others to do the same

Protects only the fixed expression of original ideas

• “Captured in a sufficiently permanent medium such that the work

can be perceived, reproduced, or communicated for more than a

short time.”

Goals of Copyright Law

• Balance the interests of creators with that of the public

• Encourages the sharing and access of work by creating limited

exclusive rights

Federal Copyright Act

• Copyright automatically exists upon creation of work, but

registration provides additional benefits

What Type of Works Are Eligible?

• Literary works (words, numbers, or other symbols regardless of

the media, includes computer programs)

• Musical works (and accompanying lyrics)

• Dramatic works (and accompanying music)

• Choreographic works

• Pictorial, graphic and sculptural works (includes maps)

• Audiovisual works (motion pictures and television)

• Sound recordings (whether musical, spoken or other sounds)

• Architectural works

• Compilations (assembling select preexisting materials in a way

that the resulting work as a whole is an original work of

authorship)

What Type of Works Are Not

Eligible?

• Ideas, procedures, methods, systems, processes, principles or

discoveries

• Titles, personal or business names, short phrases, slogans, domain

names

• Mere listing of ingredients or contents or simple set of directions

• Works not fixed in a tangible form (improvisation or other live events

not recorded)

• Typeface, fonts, layout or design

• Blank forms (scorecards, graph paper, diaries, calendars, rulers)

• Familiar symbols (punctuation, common patterns, peace sign and

gender signs, hazard symbols, religious symbols)

• Duplications of public domain works

• Federal government works

Who Owns The Copyright?

• The author who created the work.

• Two authors are joint owners with an indivisible interest in

the whole if they:

▪ Created a single work with the intent to merge their contributions into

inseparable or interdependent parts of a unitary whole (versus a

collective work, where each author’s contribution is separate an

distinct from the ownership in the collective work as a whole)

• A third party upon assignment.

▪ If using a contractor and the work will not fall into one of the

enumerated categories eligible for “work for hire”, must get an

assignment (e.g., website design, photography, custom software) to

ensure ownership.

• The employer if the work is a “work made for hire.”

Works Made for Hire

• If a work is “made for hire” the employer is typically considered

the author, even if an employee or contractor actually created

the work.

▪ If an employee, it must be made as part of employee’s regular

duties.

▪ Software created by staff programmer

▪ Magazine article created by a staff journalist (not freelance)

▪ All work of Minnesota State administrators and staff (not faculty)

▪ If a commissioned work by a contractor, it must be specified in

the contract as a “work made for hire” and fall into one of nine

eligible categories (collective work, audiovisual work, a

compilation, instructional text, etc.)

▪ Many things we contract for will not be a “work made for hire” under the

FCA, so an “assignment” clause is necessary in the contract

What’s Included in a Copyright?

• A bundle of rights:

▪ Reproduction

▪ Derivative works

▪ First distribution by sale or other transfer

▪ Public performance

▪ Public display

▪ Action for infringement

Intellectual Property

and Contracts

Why Does IP Matter in

Contracts?

• In most Minnesota State contracts, the IP at issue

will be copyright (more rarely, trademark or

patent rights are implicated).

• Copyright protects the expression of original ideas

and applies to any creative work fixed in a

tangible medium – photographs, books, articles,

artwork, plays, music recordings, etc.

• Copyright controls who can use material going

forward.

Why Does IP Matter in

Contracts?

• Copyright does not require registration; in most cases

the rights automatically belong to the author or

creator.

• Because copyright automatically belongs to the

author or creator (and the work-for-hire doctrine only

applies in limited circumstances), if Minnesota State

wants to own or use materials produced under a PT

or other contract, we need clear contractual language

that says we have that right.

• If you use copyrighted materials of another, you must

have permission, or else you may be subject to an

action for infringement with large statutory damages.

How is Copyright Ownership

Transferred?

• Any or all of a copyright owner’s bundle of rights

can be transferred to another person.

• Transfer of copyright ownership is called an

‘assignment.’

• Formal permission without transfer is called a

‘license.’

• Copyright assignments and licenses are legal

agreements that need to be in writing. Oral

permission is not enough, which is why we have

included a written clause in our contract

template.

• In an assignment, the creator sells her ownership

rights (in whole or in part) and no longer has

control over how the buyer uses the work

• Assignment can be partial (e.g., assigning the movie

rights to one party and the tv rights to another)

• In a license, the creator maintains her ownership

rights, but gives permission for the buyer to

exercise some of the creator’s rights

• Licenses may also be partial grants of rights

What Does a License Do?

•

A copyright license is a formal document or contract

clause that spells out which rights are being granted,

the extent the materials can be used, and the length

of time the materials can be used.

•

A copyright license may grant all or part of the

•

Reproduction

•

Distribution

•

Making Derivative Works

•

Public Performance

•

Public Display

•

Digital transmission

•

Exclusive or Not-Exclusive – if the contractor is granting

Minnesota State a license, can they also grant a license to

other colleges and universities?

•

Royalty Free or Rights Managed – Do you owe the contractor

money for each additional use of the materials (royalties) or is

the fee for the development of the materials the only fee?

•

Transferable or Non-Transferable – Can you transfer the license

to another party?

•

Sublicensable or non-sublicensable – Can you grant another

party all or part of your rights?

•

Worldwide or geographically limited – Does the license give

you worldwide rights? Or only rights in Minnesota or the US?

•

Perpetual or time limited – Does the license expire?

•

Revocable or irrevocable – Can the creator terminate the

license in the future?

Performance License Example

• A common copyright license may allow a College

to publicly perform a well-known musical as part

of the theater program, but it may not allow you

to record the musical and sell copies of it.

• It may limit the performance geographically (only

in the US or only in Minnesota).

• The license only grants some of the bundle of

rights to the College.

Example License Language Found

in a Contract

The CONTRACTOR hereby grants the Minnesota State

a non-exclusive, perpetual, irrevocable, worldwide,

fully paid, royalty-free license to reproduce, modify,

distribute, publicly display, and use the MATERIALS

for internal non-profit educational purposes

consistent with this agreement.

• This license does not allow Minnesota State to use

the materials for any external or commercial

purpose.

Intellectual Property in

Marketplace

Marketplace provides three options for IP ownership

1) Institution will own the IP created by the Contractor (Standard)

2) Contractor owns all IP but grants a license to Minnesota State

3) Contractor owns all IP

Changing IP Language in

Marketplace

• Once you’ve drafted a contract in Marketplace

and answered the above question, if you need to

change the language, you need to go back into

the questions in Marketplace and change your

answer.

• The system will re-generate a new clause based

on your answer.

Which Option Do I Choose?

• What have you negotiated?

• The parties to a contract may have different desires

for who owns the IP resulting from a contract.

• When Minnesota State is paying someone to

create something for us, usually we want to own

the materials or at a minimum, be able to use the

material going forward.

• However, a contractor may not want to give up

their IP because they may want to be able to use

it later or sell it to others.

Option 1:

13. OWNERSHIP OF MATERIALS AND INTELLECTUAL PROPERTY RIGHTS.

a. MINNESOTA STATE shall own all rights, title and interest in all of the materials conceived or created

by the CONTRACTOR, or its employees or subcontractors, either individually or jointly with others and which

arise out of the performance of this contract, created and paid for under this contract, including any inventions,

reports, studies, designs, drawings, specifications, notes, documents, software and documentation, computer based

training modules, electronically, magnetically or digitally recorded material, and other work in whatever form

(hereinafter MATERIALS).The CONTRACTOR hereby assigns to MINNESOTA STATE all rights, title and

interest to the MATERIALS. The CONTRACTOR shall, upon request of MINNESOTA STATE, execute all papers

and perform all other acts necessary to assist MINNESOTA STATE to obtain and register copyrights, patents or

other forms of protection provided by law for the MATERIALS. The MATERIALS created under this contract by

the CONTRACTOR, its employees or subcontractors, individually or jointly with others, shall be considered “works

made for hire” as defined by the United States Copyright Act. All of the MATERIALS, whether in paper,

electronic, or other form, shall be remitted to Minnesota State by the CONTRACTOR, its employees and any

subcontractors, and the CONTRACTOR shall not copy, reproduce, allow or cause to have the MATERIALS copied,

reproduced or used for any purpose other than performance of the CONTRACTOR’S obligations under this contract

without the prior written consent of MINNESOTA STATE’S authorized representative.

b. The CONTRACTOR represents and warrants that MATERIALS produced or used under this contract

do not and will not infringe upon any intellectual property rights of another, including, but not limited to, patents,

copyrights, trade secrets, trade names, and service marks and names. The CONTRACTOR shall indemnify and

defend, to the extent permitted by the Attorney General, MINNESOTA STATE at the CONTRACTOR’S expense

from any action or claim brought against MINNESOTA STATE to the extent that it is based on a claim that all or

part of the MATERIALS infringe upon the intellectual property rights of another. The CONTRACTOR shall be

responsible for payment of any and all such claims, demands, obligations, liabilities, costs and damages, including,

but not limited to, reasonable attorney fees arising out of this contract, amendments and supplements thereto, which

are attributable to such claims or actions. If such a claim or action arises, or in the CONTRACTOR’S or

MINNESOTA STATE’S opinion is likely to arise, the CONTRACTOR shall, at MINNESOTA STATE’S discretion,

either procure for MINNESOTA STATE the right or license to continue using the MATERIALS at issue or replace

or modify the allegedly infringing MATERIALS. This remedy shall be in addition to and shall not be exclusive to

other remedies provided by law.

Option 1: Minnesota State Owns

All IP (Standard)

• Minnesota State will own whatever the

Contractor creates during the contract and can

use it in any way we like. The Contractor will have

no further rights to the material.

• In special cases, if we expect the Contractor will

be building on work he or she did before the

contract started, we may carve out “pre-existing

IP” and be clear they get to keep that. Contact

legal counsel to assist with this special condition.

• If in doubt, choose this option.

Option 2

13. OWNERSHIP OF MATERIALS AND INTELLECTUAL PROPERTY RIGHTS.

a. CONTRACTOR shall own all rights, title and interest in the materials conceived or

created by the CONTRACTOR, or its employees or subcontractors, either individually or jointly

with others and which arise out of the performance of this contract, created and paid for under this

contract, including any inventions, reports, studies, designs, drawings, specifications, notes,

documents, software and documentation, computer based training modules, electronically,

magnetically or digitally recorded material, and other work in whatever form (hereinafter

MATERIALS). The CONTRACTOR hereby grants MINNESOTA STATE a non-exclusive,

perpetual, irrevocable, worldwide, fully paid, royalty-free license to reproduce, modify, distribute,

publicly display, and use the MATERIALS for internal non-profit educational purposes consistent

with this agreement.

b. The CONTRACTOR represents and warrants that MATERIALS produced or used under

this contract do not and will not infringe upon any intellectual property rights of another, including,

but not limited to, patents, copyrights, trade secrets, trade names, and service marks and names. The

CONTRACTOR shall indemnify and defend, to the extent permitted by the Attorney General,

MINNESOTA STATE at the CONTRACTOR’S expense from any action or claim brought against

MINNESOTA STATE to the extent that it is based on a claim that all or part of the MATERIALS

infringe upon the intellectual property rights of another. The CONTRACTOR shall be responsible

for payment of any and all such claims, demands, obligations, liabilities, costs and damages,

including, but not limited to, reasonable attorney fees arising out of this contract, amendments and

supplements thereto, which are attributable to such claims or actions. If such a claim or action arises,

or in the CONTRACTOR’S or MINNESOTA STATE’S opinion is likely to arise, the

CONTRACTOR shall, at MINNESOTA STATE’S discretion, either procure for MINNESOTA

STATE the right or license to continue using the MATERIALS at issue or replace or modify the

allegedly infringing MATERIALS. This remedy shall be in addition to and shall not be exclusive to

other remedies provided by law.

Option 2: Contractor Owns All IP

but Grants a License

• This means that the Contractor owns whatever

they create, but Minnesota State is granted a

narrow license to keep a copy of the materials

and use them for limited educational purposes.

• If Minnesota State needs to be able to use the

material for non-educational purposes (e.g., for

marketing purposes), you’ll need custom license

language in the contract.

• Please contact legal counsel to assist with this.

Option 3

13. OWNERSHIP OF MATERIALS AND INTELLECTUAL PROPERTY RIGHTS.

a. CONTRACTOR shall own all rights, title and interest in the materials conceived or

created by the CONTRACTOR, or its employees or subcontractors, either individually or jointly

with others and which arise out of the performance of this contract, created and paid for under this

contract, including any inventions, reports, studies, designs, drawings, specifications, notes,

documents, software and documentation, computer based training modules, electronically,

magnetically or digitally recorded material, and other work in whatever form (hereinafter

MATERIALS).