Recently one of our clients found themselves in an unfortunate situation. Having employed a tech start-up to create an app for them, the tech company found itself going into liquidation just a few short months before the completion deadline.

One of the key issues that was faced was securing the intellectual property rights in the work that had been completed thus far. Having key provisions of the software agreement being drafted poorly, our client was faced with the prospect of relinquishing their rights to all works completed due to key wording regarding the assignment of title only being available upon full payment and completion.

This presents us two issues both of which require keen attention when dealing with young tech companies that quite often fall as fast as they rise. One, the necessity of carefully framing and drafting the contractual terms of ownership of the intellectual property rights. Two, issues of what is to happen in the worst-case scenario i.e. the employed company going into liquidation.

Forbes magazine recently discussed the alarming figure that over 90% of tech start-ups fail within two years after their creation. Therefore, as with any contract, you must undertake an exercise of peering into the future to assess all possibilities and eventualities. In this instance, insolvency is not an unlikely event to occur in the tech start-up industry. Furthermore, this important fact is compounded given the courts ever-increasing tendency to attach copyright laws to source code.

If you have any questions regarding your intellectual property rights and would like us to review your contractual arrangements please contact us as soon as possible.