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Intellectual Property and Commercial Agreements

CONFIDENTIALITY AGREEMENTS

Commercial businesses are regularly asked to sign confidentiality agreements and NDAs. Such agreements commonly include references to Intellectual Property (IP), particularly when the commercial relationship or contract under consideration involves any kind of supply of services or collaboration.

Whilst these kinds of contracts are often quite short and innocuous looking, it is important to check their provisions to make sure that you do not inadvertently give away any IP rights.

Agreements with designers, copywriters, website designers and software writers

In accordance with copyright laws, designers, copywriters, website designers and software writers will acquire rights in their work. It is important that the ownership of any work that they produce on your behalf is transferred to you.

You will, as a matter of right, usually obtain an implied licence to use any work that you pay for. However, we would always recommend that when you are paying for services you ask for all of the rights in the work to be transferred to you.

Sometimes the terms of business of such a party will provide that, on receipt of payment, ownership will automatically be transferred. However, this is not always the case and we would always recommend that you check the position.

INTELLECTUAL PROPERTY AND DISTRIBUTION/AGENCY AGREEMENTS

Distribution and agency agreements will generally contain some sort of provision in relation to the ownership of IP. However, because generally speaking no new IP is being generated, the provisions are likely to be more limited, potentially just dealing with the fact that the ownership of the seller’s IP will not pass to the distributor, agent or end customer and that the end customer may require a licence to use the seller’s IP to enable it to utilise the benefit of the goods being sold.

INTELLECTUAL PROPERTY AND TERMS OF BUSINESS

It is vital that in your standard terms of business you protect your proprietary IP and that ownership does not inadvertently pass to your customer during the course of you providing them with goods and/or services.

Depending upon the type of goods or services that you offer, it may be that you are happy that the ownership of some or all of any new IP generated by you on behalf of a customer passes to them. However, you may wish to provide them only with a licence only to use such IP rights, so that they can enjoy the benefit of the goods and/or services that you have provided to them.

However, even if the ownership of any new IP is to pass to your customer, you may nevertheless wish to reserve yourself the right to use some all of the new IP for future goods or services provided to other customers.

You may also need to provide your customer with a licence to use your proprietary IP for the purpose of utilising the goods and/or services that you have provided to them. The general approach is to ensure that such licences are as limited as possible.

It’s also possible that you will need a licence to use your customer’s IP for the purpose of providing them with goods and/or services.

In summary, it’s important that your and your customer’s rights in relation to IP are clearly set out in your terms of business to avoid time consuming and expensive legal difficulties further down the line.

INTELLECTUAL PROPERTY AND SERVICE LEVEL AGREEMENTS

Service level agreements (SLAs) will almost always contain provisions relating to IP ownership. As with other commercial agreements, it is important that the position is clear in relation to the ownership of the parties’ proprietorship IP and also any IP generated as a result of the work that is being undertaken pursuant to the SLA.

The default position is usually that the parties to an SLA will retain ownership of their existing IP. However, the customer will generally expect that ownership of all IP generated as a result of the work undertaken pursuant to the SLA will transfer to it, as it is paying for the work. However, as with other commercial agreements, the following IP related issues will also be relevant:

  • The customer may require a licence to use any of the service provider’s existing IP to enable them to utilise the services being provided? If so, what are the terms of that licence? From the service provider’s perspective, it will usually want the terms of the licence to be as narrow as possible. However, the customer will usually want the terms of the licence to be as wide as possible
  • The service provider may wish to reserve the right to re-use the IP (or at least the know-how) gained as a result of providing services pursuant to the SLA? This can be a tricky negotiation point as the customer will wish to ensure confidentiality around its own IP and also the IP that is generated by the service provider pursuant to the SLA
  • The service provider may need a licence to use its customer’s IP to enable it to provide the services pursuant to the SLA

INTELLECTUAL PROPERTY AND COLLABORATION/JOINT VENTURE AGREEMENTS

Owing to the fundamental nature of collaboration and joint venture agreements, it is vitally important that the ownership of existing and future IP rights is clearly set out in the agreement.

The default position is usually that the parties will retain ownership of their existing IP. However, the parties will need to agree and set out in the agreement the position in relation to any new IP generated. The basis for such agreements is often the generation of IP so it will be a commercial decision as to what rights each party has in relation to any new rights generated.

The agreement will need to clearly define what rights each party has in relation to any new IP so as to avoid a dispute arising between them at a later date.

INTELLECTUAL PROPERTY AND EMPLOYMENT CONTRACTS

Employment contracts will generally contain a IP clause which specifies that the ownership of any IP created by the employee on behalf of their employer will vest in the employer and that the employee will relinquish any rights in relation to it. Employers will often also have an IP policy in relation to employees.

INTELLECTUAL PROPERTY AND CONSULTANCY AGREEMENTS

With a consultancy agreement the same principles apply but the position may be different depending on the terms agreed.

If you need any advice on your intellectual property or commercial agreements, please contact a member of our corporate and commercial team in confidence here or on 02920 829 100 for a free initial call to see how they can help.


To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.

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