A business’s intellectual property embodies its intangible assets, information, and knowledge. Once developed and worked on, it is one of the main contributors to the company’s success and revenue. We should not disregard things that can’t be touched or valued in money. Safeguarding them from infringement is vital to preventing future disputes and losing control over company assets, which would hinder smooth operations. One of the best ways to achieve this is through contractual clauses.
Purposes of IP clauses in contracts
- Clarifies ownership and prevents legal confusion, ultimately saving the company from costly conflicts and proceedings over intellectual property
- Offers solutions for potential infringement issues and sets definite usage limits
- Protects company assets from misuse or unauthorised disclosure
Examples of IP clauses and provisions
Licence grants are a typical feature of commercial agreements. Main considerations include:
- Whether the licence is exclusive – can other parties can hold the licence as well
- Scope of the licence – is it confined to the other contracting party’s internal use or transferable to others via a sub-licence?
- Whether the licence remains valid once the agreement has terminated or expired
Another clause is assignment of intellectual property. This is when a company fully transfers the IP to another party. Using language such as “assigns, all rights, title, and interest in and to the Intellectual Property” and “without limitation” suggests the company intends to completely surrender its IP rights.
Restrictions on use clauses are crucial in preventing undesirable and potentially legally grey situations where the other contracting party oversteps the intended boundaries of use or makes derivative creations of the IP.
Things to consider when drafting an IP contract
- Consider the jurisdiction(s) covered by the contract. Terms should be tailored to align with the respective jurisdictions’ IP laws and regulations to maximise protection
- Determine whether the other party is a freelancer, a company, or another entity, and the possible methods and purpose of using the IP
- Your legal rights over the IP, and correspondingly, the rights that you can delegate through contracts
If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.