Three takeaways for suppliers to understand their intellectual property rights


Contracts are a pain in the proverbial at any time, but when it comes to protecting what might be a key asset of the business, there is more at stake than just your time and patience.

Intellectual property has immense value and comes in many guises: software code; product designs; graphic designs; website designs; photos; logos; trademarks; music; books; even telephone directories (remember the paper ones!)

Brands are built and valued on a mesh of intellectual property rights. Legally there is no definition of “intellectual property rights”, it’s what you say it is in the contract. There are many different types of “intellectual property rights” which do have legal recognition such as trademarks; copyright; design rights; database rights. A clause in a contract would define intellectual property rights as rights in all these plus more!

Unfortunately, there is no one size fits all when it comes to protecting intellectual property in contracts. I shudder as I use a classic lawyer line of – “it depends on what is happening” but it really does! If we draft terms and conditions for a supplier where intellectual property is important, we will investigate intellectual property with the supplier to ensure the legal position is clearly stated and reflects the commercial intention of the supplier.

Here are 3 top things we would discuss with the supplier:


1. Identify the intellectual property the supplier owns that needs protecting

We have many IT clients where source code is their key asset which must be protected at all costs. We have some clients who are happy to grant source code licences and understand what that means and are comfortable with the risks that go with it. We have some creative clients who are happy to transfer ownership of intellectual property to their clients for bespoke campaign designs.

Note: for suppliers that engage freelancers to work on a project, who might create intellectual property, you might not own what you think you do – see I own what I pay for … don’t I?


2. Identify the scope of any licences the supplier is granting

It is customary for clients of suppliers to ask for very wide licences. If the supplier is going to grant these, it should be an informed decision, not least because a wider licence might sometimes come at a higher price.


3. Identify what third party licences the supplier relies on to deliver its product and whether its client needs them moving forward and who will licence them

This becomes very important when a supplier’s client makes changes to the contracts! They may be asking for assurances that suppliers are not able to give. For example for software developers who use open source software, this cannot be licenced other than on the terms of the open source software licence itself.

We’ll discuss all of this and explain more in our Bloody Contracts – intellectual property webinar on Wednesday 15th December. Sign up for free here.