Who Owns Intellectual Property Created for a Business?

 Posted on September 17, 2026 in Corporate Law

A company generally owns what its employees create as part of their regular job duties. But work created by freelancers, contractors, or outside agencies usually belongs to the person who made it, unless something in writing says otherwise. Plenty of careful owners find this out at the worst possible moment.

If you are trying to understand who owns your logo, website, code, or product designs in 2026, our Naperville, IL corporate law attorneys can help you understand where your company actually stands.

Does a Business Automatically Own Work Created by Its Employees?

Under 17 U.S.C. § 101, work created by an employee within the scope of employment is a "work made for hire," and 17 U.S.C. § 201(b) treats the employer as the author and owner from the moment the work exists. No transfer paperwork is needed.

The catch is the phrase, "scope of employment." If a designer on your payroll creates a product label during work hours, the company owns it. If that same employee works on a similar personal project at home, outside of work hours, the company might not own it. 

What matters is the real working relationship, including who directs the work, who supplies the tools, and how the person is paid and taxed. The job title on a contract alone can’t answer the question of ownership. 

Who Owns Work Created by a Freelancer or Independent Contractor?

A contractor isn't an employee, so the work-made-for-hire rule usually doesn't reach their work. The contractor owns the copyright, and a business typically has permission to use the finished product for its intended purpose, depending on the scope of any express or implied licensing agreements between the contractor and the business. The business may not be free to modify it, license it, or sell it along with the company.

The Copyright Act allows commissioned work to qualify as work made for hire, but only within nine narrow categories and only with a signed written agreement. Logos, websites, and software generally don't fit. The dependable solution is a written assignment of rights signed by the contractor, covering:

• All rights in the finished work plus drafts, sketches, and source files

• A clear description of which project and materials are included

• Any templates or tools the contractor reuses from earlier jobs

• Confirmation that no third-party images, fonts, or code create a conflict

• A written assignment signed by the contractor or other copyright owner transferring the rights

Handling this before a project starts costs much less than negotiating for it afterward, when the other side knows you need it.

Who Owns an Invention an Employee Creates in Illinois?

Illinois limits how far an employer's invention clause can reach. Under 765 ILCS 1060/2, an agreement requiring an employee to assign inventions does not apply to something the employee developed entirely on their own time, without the employer's equipment, supplies, facilities, or trade secret information.

Two exceptions pull the invention back to the employer. The first is when the invention relates to the employer's business or its actual or anticipated research and development. The second is when the invention resulted from work the employee performed for the employer.

Anything broader is void, and an employer can't require it as a condition of employment. Employers using these clauses must give written notice of that carve-out. The employee carries the burden of proving an invention qualifies.

Does a Business Own Its Trade Secrets and Customer Lists in Illinois?

The Illinois Trade Secrets Act, 765 ILCS 1065, covers information such as formulas, methods, financial data, and lists of actual or potential customers and suppliers. Protection applies only when two things are true. The information has to be secret enough to give your business real economic value, and you have to make reasonable efforts to keep it confidential.

That second requirement is where businesses often stumble. If a customer list sits in a shared folder open to every vendor and departed employee, a court may decide it was never treated as a secret at all. Confidentiality agreements, limited access, and consistent exit procedures are what turn useful information into protected property.

Contact Our DuPage County, IL Business Law Attorneys Today

At Lindell & Tessitore, P.C., Attorney Dennis Lindell works behind the scenes, focusing on ensuring that transactions close smoothly while reducing legal and financial risks. He handles due diligence and helps individuals and businesses comply with applicable regulations. That same attention carries into intellectual property, including reviewing contractor and employment agreements, drafting assignment language, and finding gaps in what your company owns before they become disputes.

Contact our Naperville, IL corporate lawyers or call 630-778-3818 to discuss your legal needs.