As many people will be aware, it is good practice for a contract to be in place for any commercial relationship. These can set out a variety of details and some will be more in depth than others.
There are numerous key points to consider in relation to commercial contracts, which would be impossible to cover in one article. However, one point which you will want to give some thought to, is in relation to intellectual property – who will own any intellectual property which is created, does any intellectual property require to be shared with the other party and, if so, what permissions are needed for that to be used.
Ownership of intellectual property
In determining where ownership lies, it is worth considering what the purpose of the contract is, whether any deliverables will be created and, if so, what requires to be done with those deliverables. If one party creates intellectual property that requires to be owned by the other party, in Scotland, this must be recorded in writing by way of an assignation. This can be done in one simple clause, or can be much more detailed, depending on the intellectual property being transferred.
Licences/permissions to use intellectual property
If you are using intellectual property which belongs to you/your organisation in performing a contract for someone else but you do not wish to/there is no requirement to transfer ownership of such intellectual property, you will require to give that other person/organisation permission to use your intellectual property in a certain way. This can be as restrictive or as wide as you wish, however, some things to consider are:
- should the other party be able to transfer/sub-license your intellectual property to a third party;
- should you be able to continue to license your intellectual property to other parties or will the licence granted be exclusive to them;
- is a royalty payable for such a licence;
- can it be used for a specific purpose or fairly widely etc.
Technically speaking, a licence does not require to be in writing/in a contract and can simply be implied. However, it is always best to have this in writing so that it is clear what the intellectual property can be used for. If you are receiving a licence, you should ensure that it is wide enough to allow you to be able to do what you need to with that intellectual property.
Warranties
You may also want to consider whether the individual/organisation providing/transferring the intellectual property will provide you with any guarantees or warranties in relation to that intellectual property, i.e. that it does not infringe the rights of any third party. Whether or not this will be appropriate will depend on the agreement being entered into.
Intellectual property is one of the most valuable assets to your company. As such, it is important to ensure that due consideration is given in relation to how it is treated. It is also vital to remember that if you have received a commercial contract for signature, or if you require a commercial contract, particularly if it is one which is fundamental or of significant importance to your business, it is always worth getting some independent legal advice in relation to this, in particular where you have any concerns/questions.
