Newsletter
Who owns the design?
There are several ways an electronic design services provider can contribute IP to a project. How they handle ownership of that IP depends in part on their business model, including whether they make all of their money in design services or in a combination of design and manufacturing services.
Whether your company strategy includes patenting your products or simply protecting your trade secrets, it’s important to discuss IP ownership with any potential partners for outsourced design services before you start.
1. Design Advice
At Z-AXIS we offer both electronics design services and contract manufacturing. Customers who use our design services usually come to us with a product idea and ask us to develop the electronics. They typically have a user interface (UI) in mind – such as indicator lights, switches, displays, touch screens, mechanical features, etc.
While designing the circuit, we often come up with ideas to improve upon your original UI concept or other aspects of your design. We freely share our design ideas with you. The ideas and any associated IP belong to you, the customer.
Our goal is to make sure you get the best product possible. This is partly because of our professional pride, partly because we’re really nice people… but mainly because we understand that the more successful your product is in the marketplace, the more you will sell. And that means a greater opportunity for us should we win your long-term contract manufacturing business.
We also have customers who bring their own designs to us for turn-key contract manufacturing. Because our design team is not involved in the initial design, you would think that we would not contribute any IP. But our design engineers spend a lot of time in manufacturing, and often see how a design modification would improve your product or remove a potential failure point. We let your design engineers know where to look at making a change – again for free, with no claims to ownership of our ideas if you decide to use them. We just want you to be successful.
2. Trade Secrets
All experienced design engineers have a “bag of tricks” they use to solve common problems. Many of these tricks are not common solutions, but a combination of the engineer’s unique thought processes and lifetime of experiences.
In addition to using these tricks, on almost every new design we will come up with a novel way to implement a circuit or PCB assembly feature, to do what you need done in a way that’s better or cheaper for that application.
Most of our customers don’t want to pursue patents on these innovations, but do want us to protect them as trade secrets. We agree not to disclose the innovation or use it in competing products.
This is a pretty easy agreement for us to make, since having the trade secret in our own bag of tricks gives us an advantage over other design firms, and we never work on competing products for two clients in any case.
2. License Agreements
Many design firms have a library of IP that they own. They incorporate the IP into product designs for their customers, who have to sign and pay for a license agreement in order to use the IP in their product. The license may be for a limited amount of time or perpetual, exclusive or non-exclusive, revocable or not, involve royalties or geographical limitations… it’s complicated!
For some design firms, IP licensing is a significant source of revenue to supplement their project design fees. For you, it means you don’t fully own your product design, even if you buy an exclusive license to use the IP.
We prefer to keep things simple, and make sure you own the IP in your product – even if we design and build it for you.
4. Patents
Some customers want to patent some aspect of a product that was developed by an outsourced designer. However, under patent and copy right laws, simply paying a designer to create a work for does not mean that you own the resulting work. The inventor or designer maintains ownership of the IP until they officially assign it to another party, but they have no obligation to do so.
When we invent a patentable design approach or feature while developing your product, we fully support your efforts to pursue a patent should you decide to go that route. We typically will work with your engineer as a co-inventor, cooperate with your patent attorney, and provide all the needed documentation. Once the patent is awarded we freely assign ownership of it to your company.
Understanding IP Ownership
Potential new customers often seem a little surprised to learn about our approach to IP ownership, so it may be that it’s not the usual approach in the design services business. But it only makes sense when you understand that our business philosophy is all about making YOU successful.