Intellectual Property Rights and Unpaid Interns: Do Interns Own What They Create?

Unpaid internships are a staple in many industries, offering students and recent graduates a path into professional environments. But what happens when an unpaid intern generates valuable intellectual property?  What if the intern creates, or contributes to, a software tool, product design, or marketing strategy — who owns that work? And does the company compensate the intern in order to use the intellectual property?

Can a Company Own an Intern’s IP Without Paying for It?

Yes, under the right conditions, a company can legally obtain ownership of IP created by an unpaid intern without providing additional compensation—but only if proper legal safeguards are in place.

First, the internship must be legally unpaid. Federally, unpaid internships must satisfy the criteria set out by the Department of Labor’s Primary Beneficiary Test. If the intern is the primary beneficiary, the intern has been clearly informed that the position is unpaid, and the intern is not displacing a paid employee, the arrangement can be unpaid, without triggering wage or compensation claims. Keep in mind that certain states may have additional requirements for an unpaid internship to be legal.

Second, there should be a valid IP Assignment Agreement in existence. It is very important that a written agreement assigning IP rights is executed at or before the start of the internship. This agreement should contain a clear IP assignment clause that transfers to the company all rights, title, and interest in any intellectual property created by the intern during the internship.

Third, the IP in question must qualify as “work for hire.”  The IP in question should be directly related to the intern’s role or created using company time, resources, or confidential information. This helps ensure the work product qualifies as "work for hire" under applicable statutes or common law principles.

Companies offering unpaid, or even paid, internships should have a comprehensive internship agreement in place with explicit IP terms, including provisions to ensure ongoing cooperation (e.g., patent assignment), ensure that the internship structure complies with federal and state labor laws, and the intern’s contributions are well documented.

Internships benefit both the intern and the company. However, without the proper safeguards in place, both parties are opening themselves to potential legal concerns.  

If you have any questions about internships and intellectual property rights, do not hesitate to reach out to us. Go to https://www.long.law/intake to book a free consultation.