WHO OWNS THE IP? A CRITICAL QUESTION FOR SOUTH AFRICAN BUSINESSES

Intellectual property is often one of a business’s most valuable assets, yet questions around ownership are frequently overlooked. In South Africa, this can be a costly mistake. As innovation increasingly happens in digital, creative, and knowledge-based environments, it is essential for employers to understand who owns intellectual property created in the workplace - and under what circumstances.

Many businesses assume that if IP is created by someone working for them, it automatically belongs to the company. South African law, however, is more nuanced.

IP Ownership Under South African Law

The ownership of intellectual property in South Africa depends on the type of IP involved and the nature of the working relationship.

In the case of copyright, where work is created by an employee in the course and scope of their employment, the employer will generally be the owner of that copyright. While this offers some protection to employers, disputes often arise over whether the work was indeed created “in the course and scope” of employment - particularly where roles are loosely defined, work is done remotely, or creative output goes beyond an employee’s core duties.

The position is markedly different when it comes to independent contractors and consultants. Unless there is a written agreement assigning IP to the business, copyright will typically remain with the contractor, even if the business paid for the work. This is a common and often misunderstood risk area for South African companies that rely on freelancers, developers, designers, or external advisors.

For patents, designs, and trade marks, ownership is not automatically determined by employment status alone. Inventions created by employees may belong to the employer in certain circumstances, but this is not guaranteed and is often influenced by the terms of the employment contract. Without clear contractual provisions, ownership can quickly become contested.

Why IP Uncertainty Creates Real Business Risk

Unclear IP ownership can have far-reaching consequences. Businesses may face challenges when attempting to commercialise products, license technology, or protect their competitive advantage. Ownership issues frequently surface during funding rounds, mergers and acquisitions, or due diligence exercises - often at a point where resolving them is complex, time-consuming, and expensive.

Disputes with former employees or contractors over ownership or usage rights are also increasingly common, particularly in industries where innovation and content creation are central to value.

The Importance of Clear, Enforceable Agreements

In practice, the most effective way to protect IP is through well-drafted contractual arrangements. Employment agreements should clearly address IP ownership, including inventions, works, and improvements created during the employment relationship. Contractor and consultancy agreements should include express IP assignment provisions, rather than relying on assumptions or informal understandings.

Importantly, these provisions should be tailored to the realities of the business and reviewed regularly to ensure they remain aligned with evolving working arrangements and legal developments.

A Strategic, Not Merely Legal, Consideration

For South African businesses, IP ownership is not simply a technical legal issue - it is a strategic consideration that underpins long-term value. Taking a proactive approach to IP governance can prevent disputes, strengthen commercial opportunities, and provide confidence to investors and partners alike.

Ensuring clarity around who owns IP, and on what basis, is an essential step in protecting innovation and future-proofing the business.