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Intellectually protecting project intelligence property
By Derek Hoffman and Hasith Andrahennadi
intellectual property is a significant asset providing value on mining projects while enhancing opportunities for project owners and contractors (or subcontractors). When executing contracts associated with mining projects, the intellectual property considerations of both parties, including protection of intellectual property and the license or assignment of intellectual property, are key factors to be determined between project owners and contractors. Contractors who use their intellectual property to provide goods and services to project owners should take necessary precautions to ensure they are not inadvertently weakening their intellectual property rights. Project owners who rely on a contractor’s intellectual property should also take necessary precautions to ensure they are entitled to use and benefit from a contractor’s intellectual property during and following the completion of the contractor’s performance of work on a project. Although the intellectual property rights and interests of project owners and contractors are sometimes well-defined and understood by all parties, occasionally circumstances arise where the parties’ intellectual property interests are not completely aligned and require negotiation to achieve a compromise that is acceptable to all parties.
Generally, if a contractor’s intellectual property existed prior to a contract between a project owner and the contractor, commonly referred to as contractor background intellectual property, then the intellectual property belongs to the contractor because it was developed independently of the project. The project owner and contractor can agree on the terms and conditions for the project owner’s ability to use and benefit from the contractor background intellectual property for the project; however, the project owner is generally not granted rights in the contractor background intellectual property.
However, if intellectual property was developed by a contractor during their performance of work under their contract in connection with the project – commonly referred to as project intellectual property – then such project intellectual property rights, or a portion of them related to the contract and project, may belong to the project owner because the project intellectual property was developed in association with project work.
A further complicating factor can arise when a contractor must use a project owner’s intellectual property, commonly referred to as owner background intellectual property, because it is required to complete the contractor’s performance of work under their contract.
Regardless of which intellectual property circumstances apply, contractors and project owners should be diligent and careful to clarify the ownership and treatment of both background and project intellectual property rights in the terms and conditions of their project contract. When negotiating project contracts, the determination of appropriate intellectual property terms and conditions, as well as the allocation of intellectual property rights such as copyright, patent, and industrial design interests, can depend on several factors, including:
• The subject matter of the contract between the owner and contractor – e.g. is the intellectual property the primary subject matter of the contract, or is it supplementary to the primary goods or services under the contract;
• The date of the contract between the project owner and contractor – e.g. did the intellectual property exist prior to the contract; and
• The date of any intellectual property protection applications and registrations, or the date of first use of such intellectual property – e.g. was the intellectual property developed independently of the contract.
Although there are several ways intellectual property rights can be managed by a project contract, generally, a contractor who wishes to protect their intellectual property rights will seek to include contract terms and conditions that specify the contractor background intellectual property and project intellectual property belongs solely to the contractor so actual ownership of such rights are not assigned to the project owner.
On the other hand, generally, project owners will seek to include contract terms, which ensure the project owner
is entitled to at least use and benefit from any contractor background intellectual property if such intellectual property is required for project operation, or to the extent it is included as part of project intellectual property required for project operation, following completion of the contractor’s performance of work. Project owners may also wish to specifically retain rights in any project intellectual property to ensure that such intellectual property can continue to be used during the project’s operating lifetime, as well as on other projects of the project owner.
As mentioned above, the appropriate contract terms and conditions regarding both contractor background intellectual property and project intellectual property will vary depending on the circumstances. Primarily, the treatment of such intellectual property rights and interests is addressed by the license or assignment of intellectual property rights. Protection of contractor background intellectual property rights may take the form of a non-exclusive license of such intellectual property rights, which provides the project owner with the right to use such intellectual property for a specific purpose, but does not otherwise grant the project owner any ownership rights to use the intellectual property so that it could be used outside of such specified purpose. Conversely, project owners may seek to include contract terms which assign use or grant ownership of any project intellectual property rights to the project owner to ensure that the project owner’s project operations are not inhibited in any manner following completion of the contractor’s performance of work and that the project intellectual property can be used by the project owner on other projects.
The foregoing is only a brief summary of certain concepts regarding the treatment of intellectual property under project contracts. Management of intellectual property rights and interests related to mining projects is not a one-size-fits-all situation. Each project contract involving intellectual property rights and interests should be evaluated based on the specific underlying circumstances to ensure that the executed contract terms and conditions regarding intellectual property are appropriate and relevant for the situation. Intellectual property rights and interests are an area of project contracts where contractors and project owners can have significant conflicts and misunderstandings, which in some circumstances prevent the parties from reaching an agreement that results in lost revenues and project delays. Information about each party’s circumstances and understanding each party’s intellectual property rights and interests, combined with professional assistance to help navigate intellectual property issues, can help owners, contractors, and subcontractors achieve mutually beneficial outcomes with respect to the ownership and use of intellectual property in projects.
For more information, contact Derek Hoffman at derek@hoffmangroup.ca, or Hasith Andrahennadi at hasith@hoffmangroup.ca. l
innovative. practical. collaborative.
DEREK HOFFMAN derek@hoffmangroup.ca 306-713-3700
Innovative and collaborative people providing practical legal advice and solutions.
HASITH ANDRAHENNADI hasith@hoffmangroup.ca 306-262-6257
