16 December 2024
3 min read
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As we approach the end of the calendar year and the (traditionally) quieter period, agencies might be considering conducting reviews of their template commercial contracts.
Intellectual property is regularly an issue for negotiation in commercial contracts, and template IP positions should be assessed as part of any commercial contract template review. Having a solid template IP clause can help to reduce negotiation time, and the occurrence of disputes or issues down the track.
In that context, set out below are some key considerations when reviewing your organisation’s IP clause.
Often, parties to an agreement do not intend for all material provided, used or created during the course of an engagement to be dealt with in the same way under the contract. Material that pre-exists the engagement (for example, the agency’s briefing documents, or a contractor’s trade mark) is often intended to remain the IP of the providing party. Typically, agencies do not require broad-reaching rights to a contractor’s trademark or other pre-existing IP material. A more limited licence to use that material is usually appropriate.
On the other hand, it could be important that an agency obtain the IP rights to material created under a contract. There is often a commercial logic to obtaining the rights (or a very broad licence) to the IP in new material – where for example, a customer agency has paid for the material being created and needs to be able to use that material to pursue its lawful purposes. Ultimately, agencies would need to consider the best IP ownership option for maximising benefits to Queensland, in accordance with the Queensland Public Sector Intellectual Property Principles.
A further category of IP material that could be used as part of the engagement is third party material and moral rights. There is an ever-present risk when engaging contractors to perform services or provide goods that they will do so using or incorporating third party IP without the appropriate licenses and consents. A strong template IP clause will deal with third party IP and moral rights, and ensure that the risk of a contractor infringing third party IP or moral rights is allocated to the contractor (typically via a warranty).
If a contractor breaches your agency’s IP rights, or provides third party IP or moral rights without appropriate permissions in place, this could have significant and costly consequences for your agency. Where template commercial contracts include liability caps, we suggest considering whether infringements of IP or moral rights should be excluded from that cap.
AI poses a unique set of IP risks for customer agencies. Given the diversity in AI products, services and supply chains, and ambiguities in the application of intellectual property laws to specific AI processes, it may be difficult to develop template IP clauses that deal with all AI-related IP risks. However, there are steps that organisations can consider taking to reduce some of the risk. For example, it may be beneficial for an agency to require a warranty from contractors that any materials forming part of a deliverable provided to the organisation have a human author, and to require specific indemnities from contractors regarding AI outputs used in performing the agreement.
If you have any questions or would like to learn more about how your agency can strengthen its IP clauses, please get in touch with our IP and data lawyers in our Queensland Government team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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