Onchain Cooperatives: Intellectual Property (IP)

Part III: Intellectual Property

This is the third part in a series about Onchain Work. In our last post, we detailed the power of a shared brand.

What exactly is Intellectual Property (or “IP” for short)? ChatGPT describes intellectual property as something that “refers to creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce”.

For us at Indie, IP usually consists of software architecture, design languages or systems, illustrations, and libraries of code. For a community like Cabin, IP might consist of specific land designs or community inventions that improve the effectiveness of their mission. IP can also be a group’s brand or identity itself.

How does IP work?

Under most circumstances (within Copyright Law), the one who creates IP is, by default, the owner of the work. That person can transfer the ownership rights to another entity, or they can license the use of it, under specific conditions. When creating or designing something, it’s very important to be intentional about who will own the work afterwards, especially in digital ecosystems.

• “Work for Hire” is a term given to work performed in return for compensation from a third party. If you are hired to create something, a contract will likely state that your creation is a work made for hire, meaning that ownership will belong to the person compensating you, instead of the person creating. This is the default precedent in many places.

• “Licensing” refers to an agreement between the owner of IP and another entity, that states specific conditions that the entity may use the IP. This is oftentimes offered in return for a recurring payment from the other entity.

Corporate IP

Most corporations force employees to transfer any IP they create during their employment to the company. This feels wrong to many employees, and we believe cooperatives have an opportunity to change this paradigm to better serve all participants. What if you’re working on a side project, or want to leverage a shared resource to create something new that you’re passionate about? Cooperatives should encourage positive-sum outcomes, and not take away from any individual participant in a zero-sum way.

In many areas, even if an employment contract assigns creations to the corporation, there is legal precedent that protects individuals when creating IP without directly utilizing the corporation’s resources. If something isn’t even enforceable in law, why add it to contracts? Corporations defend the entity’s value for shareholders. Cooperatives defend the entity’s value for members. This paradigm shift is essential in regards to IP.

Cooperative IP

Cooperative IP should yield a positive sum outcome for all participants. Creating and sharing resources in a cooperative way is the entire point. Here are some tips and examples to consider when designing IP agreements for your cooperative.

Know your IP 🧠

Cooperatives should identify exactly what their IP consists of, and define it clearly for its members. Does your cooperative have architecture designs, documented strategies, brand assets, code, etc.? Maintain a document that lists each type of IP and who the key stakeholders in your cooperatives are. Make sure to document any licensing rights associated with each item, and who has an active license to use the IP.

Assign your IP 📝

Don’t let your IP slide into the default ownership paradigm of your jurisdiction. Consult your legal team on the best way to protect and utilize your creations, and create a workflow for new creations that properly assigns default ownership and licensing rights.

Tip: Consider allowing members to retain certain IP ownership of things they create, even if they utilize shared resources of the cooperative. This encourages creativity instead of squashing it, and most members are likely to share with the cooperative.

Example: Indie builds IP such as design, illustrations, and code through rewarding members $INDIE tokens for contributions to the cooperative’s IP, and also allows members to share resources to create their own IP during their membership period.

Optimize your IP 💾

Define areas of IP that are most beneficial to be shared, and be intentional about separating those from specific industry secrets or strategies. Every project does not need to be considered a single piece of IP, it can be broken down into separate parts, each with its own ownership and licensing agreement. Your legal team can help write agreement templates that can be used to assign certain parts of a creation to various entities or members.

Tip: When a creation can help elevate many cooperative initiatives, spend time as a community to negotiate a mutually beneficial licensing agreement between the creator and the cooperative so that everyone can use the technology.

Example: Tesla proved that open sourcing some of their patents could actually accelerate adoption of the entire EV market, providing positive sum gains for all humans.

Working for Clients 🤝

If your cooperative provides a product or service to clients, it’s extremely important to figure out IP assignment up front. A work for hire agreement is always a good starting point, but you might benefit from outlining certain parts that you specialize in as core IP that should belong to the cooperative in order to grow, improve efficiency, and lower costs. It’s better to spend on legal up front to define these flows, rather than spend on legal to defend or sort out a mess later on.

Tip: Start with work for hire style agreements (and ALWAYS have an agreement in place when working for or with a client or partner entity), then identify parts of your projects that would benefit multiple future projects, and invest in building that separately. Make sure to design incentives or a 🔗compensation structure that serves all participants fairly.

Example: Indie design & development projects are typically a work made for hire, so the client is assigned project IP after the engagement. We work as a team to identify core infrastructure that would speed up client projects or make them stronger, and invest in those efforts using $INDIE as a reward mechanism. This allows clients to benefit from continuously improved technology, the cooperative to benefit from core IP, and members to benefit from the upside created by offering competitive services.

Legal

Intellectual property rights are a nuanced, location dependent, and legally technical subject. This post is not legal advice and you should consult with your legal team to draft and execute agreements. That being said, you can design how you want your IP to function, and legal will help you implement your design.

Cooperatives don’t need to copy-paste the corporate model for IP. We can design ownership flows that create positive sum outcomes, and still protect the rights of creators, clients, and members.

Let us know if you’ve had any good or bad experiences with IP, and stay tuned for our next post on Cooperatives: Community.