Intellectual Property Ownership
Commercial Contract
Table of Contents:
Coverage and Limits
Reasonable and Customary Limits
Waiver of Right of Subrogation
Additional Insured and Loss Payees
Remedies for Breach
Intellectual Property Ownership
In arrangements where a contractor is hired to create new technology for a client, and does so by leveraging the contractor’s pre-existing technology, the parties should clarify ownership rights regarding such pre-existing and new technologies.
Definitions
Certain basic terms are commonly used in clauses designed to assign ownership rights between the parties regarding pre-existing and developed technologies. Among these are “intellectual property” and “IP” or “know how” (used to describe the technology), “background IP” or “pre-existing IP” (used to describe IP owned by the contractor), and “foregoing IP” or “works made for hire” (used to describe the IP to be owned by the client). These key terms should be clearly defined to avoid later disputes between the contractor and client:
Intellectual Property
Exemplar C44-1
“Intellectual Property” includes any and all tangible and intangible: (i) rights associated with works of authorship throughout the world, including but not limited to copyrights, neighboring rights, Moral Rights, and mask works, and all derivative works thereof (ii) trademark and trade name rights and similar rights throughout the world, (iii) trade secret rights throughout the world, (iv) patents, designs, inventions, algorithms and other industrial property rights throughout the world, (v) all other intellectual and industrial property rights (of every kind and nature throughout the world and however designated) whether arising by operation of law, contract, license, or otherwise, and (vi) all registrations, initial applications, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force (including any rights in any of the foregoing).
Exemplar C44-2
“Intellectual Property” or “IP” means any and all intellectual property rights whether registered or unregistered including, without limitation: patents, patent applications, inventions (whether or not patentable and whether or not reduced to practice), utility models, industrial models, statutory invention registrations, patent disclosures, designs, design models, know-how, copyrights, copyrightable works, copyright registrations, applications for copyright registration, mask works, mask work registrations, applications for mask work registration, trade secrets, Confidential Information, moral rights, computer software, and any other intellectual property or proprietary rights eligible for protection under the laws of any country, state, or jurisdiction including registrations, applications, certificates of invention, divisions, continuations, continuations-in-part, patents of addition, provisional applications, reissues, renewals, extensions, certificates of reexamination, foreign counterparts, and extensions of such rights, but exclusive of any Mark/Name Rights as defined hereunder.
Know How
Exemplar C44-3
“Know-How” means any ideas, methods, techniques, processes, specifications, recipes, formulae, materials, designs, plans, drawings, data, or other technical information that the disclosing Party believes to be non-public at the time of disclosure. Know-how is not in the public domain nor in the prior possession of the receiving Party if it is merely embraced by or contained in more general information in the public domain.
Background or Pre-Existing IP
Exemplar C44-4
“Background Intellectual Property” or “BIP” means any Intellectual Property owned by a Party prior to the Effective Date; or that is owned, acquired or developed by a Party outside of the scope of the work performed under the Agreement on or after the Effective Date and without use of the other Party’s Confidential Information.
Exemplar C44-5
“Pre-Existing Materials” shall mean all Supplier technology, products, systems, processes, materials and/or solutions existing before the Effective Date of this Agreement or developed by or for Supplier independently of this Agreement, including but not limited to any documents, notes, specifications, designs, schematics, diagrams, layouts, software/programs (including object code and source code, firmware, and microcode), hardware (including chips, boards, and peripheral devices), data, drawings, and know-how relating to the Work.
Foreground IP
Exemplar C44-6
“Foreground Intellectual Property ” or “FIP” means any Intellectual Property resulting from activities performed by employees of one or both Parties in furtherance of this Agreement or any of the agreed SOWs on or after the Effective Date but does not include BIP.
Works Made for Hire
Exemplar C44-7
All rights in any deliverable items or other materials developed by Contractor and provided to Customer in the course of performance under this Agreement (“Developments”), which have specific applicability to Customer’s business, shall be the sole and exclusive property of Customer, it being intended by the parties that such deliverable items constitute “works made for hire” of which Customer shall be deemed the author. Contractor will execute and deliver to Customer any assignment and documents that Customer requests for the purpose of establishing, evidencing, and enforcing or defending Customer’s exclusive ownership of all rights, titles, and interests in and to the Developments.
Exemplar C44-8
Unless otherwise provided in an SOW, any discoveries, inventions, concepts or ideas, and modifications thereof, made or conceived pursuant to this Agreement is a “work made for hire” and Client exclusively retains all right, title and interest in and to any and all such “work made for hire.” Contractor retains all right, title and interest in and to any and all business processes, methodologies, analysis frameworks, systems, patents, trademarks, service marks, business names, copyright, trade secrets, inventions, discoveries, concepts, ideas, works of authorship, software, computer programs, modules, data, documentation, manuals, guidelines, database rights, designs, drawings, test results, tools, confidential information and skills, and all modifications thereof, owned, developed by or licensed to Contractor prior to or independent of this Agreement (the “Background Materials”). Client retains all right, title and interest in and to any and all business processes, methodologies, analysis frameworks, systems, patents, trademarks, service marks, business names, copyright, trade secrets, inventions, discoveries, concepts, ideas, works of authorship, software, computer programs, modules, data, documentation, manuals, guidelines, database rights, designs, drawings, test results, tools and confidential information, and all modifications thereof, owned, developed by or licensed to Client (the “Client Materials”). Except for the Background Materials, Contractor hereby assigns all of its rights, title, and interest in and to any “Deliverables” (as such term may be defined in an SOW) to Client, and Client retains all right, title and interest in such Deliverables.
Ownership
The following exemplars distinguish between pre-existing (aka “background”) intellectual property and new intellectual property (aka “foreground,” “deliverables,” “works made for hire” or “developments”) for purposes of assigning ownership thereof between the parties. Generally, the party that brings its pre-existing IP to the relationship will want to retain ownership thereof, and the party who pays for the development of new technology (which may be derived from such pre-existing IP) will want to have exclusive ownership over it:
Pre-Existing or Background IP
Exemplar C44-9
Any commercial off-the-shelf products or materials of Contractor or a third party (“Commercial Product”) that is provided pursuant to this Agreement shall be licensed to Customer according to the terms of the end-user license agreement packaged with such product. All rights in any pre-existing products or materials developed by or for Contractor or Customer independently of this Agreement that are provided pursuant to this Agreement (“Pre-Existing Work”) shall remain the sole property of the party providing the Pre-Existing Work.
Exemplar C44-10
The Parties acknowledge that both Parties possess Background Intellectual Property (“BIP”) developed prior to or outside the scope of this Agreement. No right or title is granted in any BIP except as specifically provided herein. Unless otherwise agreed in writing, preparation, prosecution, maintenance, and enforcement of a Party’s BIP is at the sole discretion and expense of that Party.
(1) Title: Title to CLIENT Background Intellectual Property shall remain exclusively the property of CLIENT. Title to CONTRACTOR Background Intellectual Property shall remain exclusively the property of CONTRACTOR. Except as expressly set forth in the Agreement, no license to any CLIENT Background Intellectual Property or any CONTRACTOR Background Intellectual Property is intended or granted, and no license shall be implied by the terms of the Agreement or any SOW, design and development activity, research activity, innovation activity, and/or other activity hereunder.
(2) Background Intellectual Property License Grant to CLIENT: CONTRACTOR hereby grants CLIENT a fully paid-up, non-exclusive, non-transferable, royalty-free, worldwide, revocable, and non-sublicensable, with the exception that CLIENT may sublicense to its Affiliates as needed under the Agreement, right and license to any relevant CONTRACTOR Background Intellectual Property to the extent necessary for CLIENT to perform its obligations under this Agreement. Such right and license shall terminate upon the termination of this Agreement.
(3) Background Intellectual Property License Grant to CONTRACTOR: CLIENT hereby grants CONTRACTOR a fully paid-up, non-exclusive, non-transferable, royalty-free, worldwide, revocable, and non-sublicensable, with the exception that CONTRACTOR may sublicense to its Affiliates as needed under the Agreement, right and license to any relevant CLIENT Background Intellectual Property to the extent necessary for CONTRACTOR to perform its obligations under this Agreement. Such right and license shall terminate upon the termination of this Agreement.
Exemplar C44-11
For purposes of this Agreement, the Parties agree and acknowledge that (i) all of Evaluator’s pre-existing intellectual property rights and/or intellectual property rights developed, created, or acquired by or for Evaluator independent of and without reference to the Owner Products is and shall continue to be owned by Evaluator; (ii) as between the Parties, Owner owns all intellectual property rights to Owner Products and Evaluator agrees that it shall not use Owner Products for its profit-making or commercial purposes without the written consent of Owner, and shall not file, or cause to be filed, any patent application directed to Owner Products or methods or compositions incorporating Owner Products delivered to Evaluator; (iii) Evaluator shall not file, or cause to be filed, any patent application directed to Owner Products, Data, or any method of using or chemically or physically modifying Owner Products; and (iv) each Party agrees not to disclose the Data or Summary to third parties unless required to do so by law or legal process, however either Party may disclose the Summary to consultants or contractors retained by such Party who have a need to know such Summary who are under an obligation of confidentiality at least as stringent as the Parties' reciprocal obligations of confidentiality under the NDA. Evaluator agrees that in the event it breaches (ii) or (iii) above, it shall assign all rights, title and interest in and to such patent applications to Owner as Owner’s exclusive remedy for such breaches.
Foreground IP, Deliverables, or Developments
Exemplar C44-12
Contractor shall disclose promptly and exclusively to Customer any invention or idea conceived or made in connection with Contractor’ performance under this Agreement that have specific applicability to Customer’s business. Contractor hereby assigns to Customer any such invention or disclosure and will cooperate with Customer and sign all documents deemed necessary by Customer to enable Customer to obtain, maintain, protect, and defend patents and any other intellectual property rights covering such inventions and ideas, and to confirm Customer’s exclusive ownership of all rights to and in such inventions and ideas. Nothing in this Agreement shall be construed as granting Contractor, expressly or impliedly, any license or conveying any intellectual property of Customer (either existing before or developed under this Agreement), or other rights in Customer’s products, including but not limited to, any patent, copyright, or trademark rights.
Exemplar C44-13
The Parties agree that Foreground Intellectual Property shall be managed as follows:
(1) CONTRACTOR Foreground Intellectual Property: CONTRACTOR shall own all right and title to any Foreground Intellectual Property related to CONTRACTOR Technology. CLIENT shall assign and hereby assigns all rights, title and interest in and to such Foregoing Intellectual Property related to CONTRACTOR Technology to CONTRACTOR.
(2) CONTRACTOR agrees to license CONTRACTOR Technology and Foreground Intellectual Property related to CONTRACTOR Technology to CLIENT as set forth in an applicable SOW.
(3) CLIENT Foregoing Intellectual Property: CLIENT shall own all right and title to any Foreground Intellectual Property related to CLIENT Technology. CONTRACTOR shall assign and hereby assigns all rights, title, and interest in and to such Foregoing Intellectual Property related to CLIENT Technology to CLIENT.
(4) CLIENT agrees to license CLIENT Technology and Foreground Intellectual Property to related to CLIENT Technology to CONTRACTOR as set forth in an applicable SOW.