1099.law / Knowledge
What is IP?
Intellectual property — what it is, who owns it by default, and how to make sure the right person owns it after the work is done.
The plain-English answer
Intellectual property (IP) is anything you create that the law protects — code, designs, written content, inventions, brand identity, confidential processes. The four legal categories:
- Copyright: Protects original creative works automatically upon creation — writing, code, designs, music, photography. No registration required for protection, though registration strengthens enforcement. Copyright lasts the life of the author plus 70 years for individuals.
- Trademark: Protects brand identifiers — names, logos, slogans — that distinguish your goods or services in commerce. Requires actual use in commerce and, for the strongest protection, federal registration with the USPTO.
- Patent: Protects inventions — processes, machines, compositions of matter — that are new, useful, and non-obvious. Requires USPTO registration and has a 20-year term (utility patents). Software and business methods have complex patent eligibility questions.
- Trade secret: Protects confidential business information that has economic value because it's not publicly known — formulas, customer lists, pricing models, manufacturing processes. No registration; you protect trade secrets by keeping them secret (NDAs, access controls, confidentiality policies).
What it means for your business
The default rule: the creator owns it
Under US copyright law, the person who creates a work owns it. For employees working within the scope of employment, their employer owns the work product — this is the "work for hire" doctrine as applied to employees.
For independent contractors, work for hire is much narrower. Only nine specific categories of commissioned works qualify as work-for-hire under the statute (contributions to collective works, parts of motion pictures, compilations, instructional texts, tests, answer materials for tests, atlases, translations, and supplementary works). Most service work — custom software, website design, marketing campaigns, written content — does not fall into any of these categories.
Assignment vs. license
An assignment transfers ownership permanently. After a written IP assignment, the assignee owns the copyright as if they created it. This is what clients typically need for custom deliverables — especially software, websites, and marketing assets.
A license gives permission to use the work without transferring ownership. Licenses can be exclusive or non-exclusive, limited or unlimited in scope. Most background IP is licensed, not assigned — the vendor retains ownership but grants the client the right to use it.
Background IP carve-outs
Most service providers build their work on pre-existing foundations — code libraries, design systems, templates, proprietary workflows. These are background IP. If your MSA assigns all IP created during an engagement, you may inadvertently be assigning your background IP too.
The standard approach: assign the foreground IP (what was created specifically for this client) and license the background IP (what you brought in). The license for background IP is typically perpetual, irrevocable, and sublicensable — so the client can use and maintain the work going forward.
Residuals
Some agreements include residuals clauses — the right of a party's employees to use general knowledge, skills, and ideas retained in unaided memory, even if they were exposed to confidential information during the engagement. This matters for contractors who do similar work for multiple clients. It draws the line between using general expertise (permitted) and using specific confidential information (not permitted).
Trade secrets in contractor relationships
If you're sharing confidential business information with a contractor — pricing models, customer lists, product roadmaps, proprietary processes — an NDA is essential. A standalone NDA or confidentiality clause in the MSA protects the information during and after the engagement.
Trade secret protection ends when the secret is disclosed publicly, even accidentally. The NDA is your primary enforcement mechanism — and it only works if it was signed before the disclosure.
Where 1099.law fits
Our agreements include the right IP language for both directions of the contractor relationship:
- If you're the contractor: SMB Essentials ($49/mo) gives you contractor agreements with background IP carve-outs and residuals language that protect your existing tools and methods from inadvertent over-assignment.
- If you're hiring contractors: Customer Contracting ($79/mo) gives you the MSA with the IP assignment clause your business actually needs — full ownership of custom deliverables, with a clean license back for the vendor's background IP.
- Both directions: Full Suite ($99/mo) covers you when you're both hiring contractors and providing services as a contractor yourself.