Intellectual Property in Global Capability Centres: Navigating Ownership, Protection and Cross-Border Transfers

Global Capability Centres (GCCs) now carry out substantial research, development and innovation work for multinational groups, which raises a threshold question for every GCC structure: who owns the intellectual property (IP) that results, and how is it protected, transferred and commercially exploited?

There is no single contractual fix. Copyright, patents and other IP rights sit under different legal regimes, especially where employee-created works, inventions, assignments and cross-border transfers are concerned, and the right structure also has to reflect the group’s operating model, tax position and regulatory exposure. This article looks at the main considerations under Indian law, with a focus on copyright and patents.

Setting the Ownership Structure

A multinational group needs to decide early whether IP created by its GCC will sit with the GCC itself, vest in the parent company from inception where that is legally possible, or be created by the GCC and then assigned to the parent. Which route works depends on the type of IP involved and the statutory requirements that attach to it.

Copyright. Under Section 17(c) of the Copyright Act, 1957, an employer is generally the first owner of copyright in works an employee creates in the course of employment under a contract of service, unless the parties agree otherwise. That default does not extend to independent consultants, contractors or vendors. Where copyright is to move to the parent company, the assignment must satisfy Section 19: it needs to identify the work and set out the rights assigned, the duration, the territory and the consideration. Leaving duration or territory unspecified can limit the assignment to five years and to India respectively, and an assigned right that goes unexercised for a year risks lapsing unless the assignment says otherwise. Authors also keep certain moral rights under Section 57, including the right to be identified as author and to object to prejudicial distortion of the work, so a general waiver is not enough on its own; specific contractual consents and safeguards are needed.

Patents. Indian patent law does not automatically give an employer ownership of an employee’s invention simply because it was made during employment. Entitlement to apply for a patent, and the validity of any assignment, has to be established under Sections 6 and 68 of the Patents Act, 1970, and an assignment must be in writing, properly executed and set out its terms. A GCC therefore needs a documented invention-management process — disclosure, inventor identification, execution of assignment documents and filing — and where the parent is meant to own the invention, its entitlement should be secured before any application is filed. Section 69 also allows assignments to be registered with the Controller of Patents; an unregistered assignment can face restrictions on its use as evidence of title, so recording the transaction matters.

Securing Rights from Employees and Third Parties

An ownership structure is only as strong as the rights actually obtained from the people who create the IP. Employment agreements for R&D staff should cover invention disclosure, assignment of future inventions, and cooperation with patent filing and enforcement. Consultancy and vendor agreements need particular attention, since the Section 17(c) employer-ownership rule does not generally apply to independent contractors — express written assignments covering current and future deliverables should be obtained instead.

Owning the invention or the copyright does not, by itself, protect the technical know-how behind it. Confidentiality obligations, restricted access and basic information-security controls are needed to protect that knowledge. Indian law also generally restricts post-employment non-compete clauses under Section 27 of the Indian Contract Act, 1872, which makes well-drafted confidentiality and non-solicitation provisions more important than relying on a non-compete.

Foreign filing restrictions. Section 39 of the Patents Act separately restricts a person resident in India from filing, or causing to be filed, a patent application outside India without prior permission from the Controller — unless the same invention was first filed in India at least six weeks earlier and no secrecy direction applies. The restriction turns on the inventor’s residence, not on who the applicant is, so naming a foreign parent as applicant does not remove it. GCCs doing cross-border research should build a filing protocol that checks for this before any overseas application is filed.

Transfer Pricing and Cross-Border Transfers

How IP is allocated and transferred between a GCC and its overseas parent also has Indian tax consequences. From 1 April 2026, the Income-tax Act, 2025 governs transfer pricing, replacing the Income-tax Act, 1961; the arm’s-length framework now sits in Sections 161 to 173. The right tax treatment depends on the functions performed, assets used and risks carried by the GCC relative to the wider group.

Where a GCC acts as a limited-risk contract R&D service provider, the contracts and the actual conduct of the business need to support that characterisation. CBDT Circular No. 6/2013 remains a relevant reference point for identifying development centres that carry out contract R&D with insignificant risk, subject to its continued application under Section 536(2)(j) of the new Act. Any transfer of existing IP to a non-resident associated enterprise needs proper pricing and supporting valuation and transfer pricing documentation, and where consideration is payable to the Indian entity, foreign-exchange requirements — including receipt and repatriation through authorised banking channels within the prescribed period — should be checked at the same time as the legal assignment, not afterwards.

Protecting IP Through the GCC Lifecycle

IP protection is a continuing discipline rather than a set of agreements signed once. A reasonably complete framework includes:

• Role-specific agreements — employment, consultancy and vendor contracts tailored to the IP each role is likely to generate.
• Invention disclosure procedures — prompt reporting and properly executed assignment documents.
• Patent filing controls — a Section 39 check before any overseas filing involving an India-resident inventor.
• IP registers — records of each creation, its contributors, ownership status and supporting agreements.
• Confidentiality controls — restricted access to trade secrets and know-how, backed by confidentiality undertakings.
• Exit procedures — revoking access and recovering or confirming deletion of confidential materials when a relationship ends.
• Periodic review — updating agreements and procedures as the GCC’s functions and responsibilities evolve.

Where technology falls within India’s SCOMET export-control framework, any proposed transfer — including an intangible transfer of controlled technology — should also be checked for export authorisation requirements.

A sound GCC IP strategy is more than a decision about which group entity should hold title. It needs an enforceable chain of title, the right agreements with employees and third parties, compliant filing procedures, and transfer pricing arrangements that genuinely reflect how functions, assets and risks are allocated across the group. Addressing these points from the outset, and revisiting them as the GCC grows, helps multinational groups avoid ownership disputes, protect valuable innovation, and build a durable framework for managing IP across their international operations.

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