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IRAC Scenario and Answer
[edit]John invested $500,000 in his educational platform startup in Boston, Massachusetts. He decided to have four core departments - Information Technology, Marketing, Finance, and Customer service. John wants to outsource the technical expertise to manage his finances but he does not want to lose control of one of his core departments. After his research, he decided to in-house the technical expertise required for the daily operations of the company. He dedicated $100,000 to the IT department as it has a competitive advantage and is essential to run this startup. He spent $30,000 on marketing and $70,000 to set up the office. He hired ten people with strong Technical background, five people with a Marketing background, one Charted Accountant to manage his audits and three people who have experience with Salesforce in CRM in the Customer Service department. As this is a young company everyone in the office is committed and dedicated to their work and eventually went into profits in a year. John being compassionate announced that he would give everyone $1500 in bonus in addition to their regular pay. One day there is an issue in the software and the whole system collapsed. Two people from the technical team developed an algorithm using a software program to improve the performance of the software ensuring minimum system breakdowns. John celebrated their invention and praised stating "everyone in the technical team worked overtime if there is an issue and always been accountable for the work" and soon asked his auditor to increase their pay and file for Intellectual Property Rights under the company name for this new invention.
Issue:
[edit]A. Are the workers really employees?
B. Who owns the Intellectual Property Rights?
Rule:
[edit]A. The relationship between the employer and worker:
Generally, if you are closely supervised & controlled, provided tools, in the same line of work as the employer and paid regularly, you are really in an agent-principal relationship.
B. IPR:
Generally, If the employer and the worker are in an agent-principal relationship, then the inventions created with the Intellect of the employees are owned by the company
Analysis:
[edit]A. Here, the company provides all the resources and facilities for the workers and paid them regularly with occasional bonuses.
B. Here, the two employees invented the software with the time, money and other resources provided by the company. The invention is only possible with the resources and support from the company.
Conclusion:
[edit]A. Therefore, the workers are in agent - principal relationship.
B. Therefore, the Human capital or the Intellectual Property of the new invention belongs to the company.
Neutral Voiced Summary
[edit]A major issue for any business is to understand the relationship between the worker and the employer. There are two types of workers, independent contractors, and employees[1] who are differentiated based on the level of control the employer has on them. If a worker is provided tools and resources, closely supervised, paid regularly, working in the same field, given benefits then he is called an employee of the company. Employees act in the best interest of the employer sharing the agent-principal relationship. Employee ownership of intellectual property subject to change[2] based on the scope of invention.
Intellectual property is the vital asset of the business,[3] employees add value to the company[4] by creating Intellectual Property. As per Trade Related Aspects of Intellectual Property Rights(TRIPS), Intellectual Property is personal property.[5] Intellectual property is used as competitive advantage[6] by big companies to protect themselves from rivalry. Given the conditions[7], if the worker is in the agent-principal relationship, he is the employee of the company, and if the employee's invention is in the scope of employment i.e. if the employee creates a new product or process to increase the productivity and create organizations' wealth by utilizing the resources of the company, then the Intellectual property solely belongs to the company. New business products or processes are protected under Patents[8]. However, there are many typical opinions on Palatable inventions one such argument is Software inventions. However, there are many arguments and opinions on patenting software inventions: under the case Diamond v. Diehr the United States supreme court decided that Diehr is patent- eligible because they improved the existing technological process, not because they were implemented on a computer.
Reference
[edit]- ^ "ABC Test". LII / Legal Information Institute. Retrieved 2020-04-06.
- ^ "The 'Outsourcing Offshore' Conundrum: An Intellectual Property Perspective". www.wipo.int. Retrieved 2020-04-12.
- ^ "The Value of Intellectual Property, Intangible Assets and Goodwill". www.wipo.int. Retrieved 2020-04-06.
- ^ "Paid Program: IP Risk in IPOs and M&As". Aon. 2019-10-09. Retrieved 2020-04-12.
{{cite web}}: CS1 maint: url-status (link) - ^ "WTO | intellectual property (TRIPS) - what are intellectual property rights?". www.wto.org. Retrieved 2020-03-29.
- ^ Conley, David Orozco and James (2008-05-12). "Shape of Things to Come". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-04-06.
- ^ Johnson, Antone (2012-05-10). "5 'IP' Mistakes Start-ups Should Avoid". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-04-06.
- ^ "General information concerning patents". www.uspto.gov. Retrieved 2020-04-06.