Intellectual property rights for IT
consultants: what you really need
to know
15 May 2007
Scott Singer
Partner
TMT Department
Denton Wilde Sapte
scott.singer@dentonwildesapte.com
T: 020 7320 6599
www.dentonwildesapte.com
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Overview
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What is IPR?
Different types of IPR
IPR protection of software
IPR protection of websites
How is IPR exploited: assignments and licence.
Carving up IPRs – how to split up deliverables
How do I deal with IPRs in agreements?
Technology design - how much would I have to
change something to make it mine?
• If I have a good method that works for me and I have it
written down how do I protect it using IPR?
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What are IPRs?
• A set of property rights
• which protect creations of the mind
• They give the owner the exclusive right to
exploit the intellectual property which is
protected and to authorise others to do so
• a “property right”:
• the right to prevent others from enjoying the property
• the right to exploit the property
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What is intellectual property?
Nature of IP rights
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National rights
Intangible assets
Can be registered or unregistered
Can be exploited in two different ways:
• Owned
• Licensed
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What types of things are protected by
IPRs in IT space?
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Software
Data
Databases
Documentation
• Specifications
• User and technical manuals and documentation
• Know how / knowledge transfer repositories
Preparatory designs
The outsourcing agreement itself
Domain names
IP addresses?
Know how
Branding / Trademarks
Others – deal specific
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What are the common IPR?
• Registered IPR
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Patent
Trade mark
Registered design
Domain names
• Unregistered IPR
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Copyright
Database rights
Unregistered design
Goodwill
Confidential information
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Protection of software
Copyright
• A literary, dramatic, musical or artistic work, a film or a
broadcast
• Work must be recorded in some permanent form
• Automatically exists on creation – no need to register
• Work must be ‘original’
• Protects against copying of the expression of ideas
and concepts – not ideas and concepts themselves
• No protection against independent creation of same or
similar works (provided no copying involved)
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Protection of software
Copyright
• Ownership of copyright
• Author of a work is the first owner of copyright
• Unless author is an employee acting in course of employment
• Duration
• Normally 70 years from end of year in which author dies
• Some exceptions: computer-generated works attract 50 years
protection from end of year in which created
• ‘Foreign’ works
• Usually protected by copyright in the UK
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Protection of software
Copyright
• Object code / source code
• Non-literal copying an infringement?
• Look and feel
• Structure and architecture
• Preparatory materials
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Protection of software
Patents
General requirements for patentability:
• New
• Not disclosed before filing date
• Inventive step
• Not obvious to a skilled person in the art at the filing date
• Capable of industrial application
• Not excluded
• Mathematical methods, scientific theories, discoveries
• Methods of doing business
• Computer programs
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Patents for software
• The US position
• Software and business process patents are patentable
• The UK position
• Computer programs not patentable “as such” but patents can be
obtained where their application gives rise to an “technical
effect”
• Macrossan's Patent Application and Aerotel v Telco (2006) CA:
• Properly construe the claim;
• Identify the actual contribution;
• Ask whether it falls solely within the excluded subject matter;
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• Check whether the actual or alleged contribution is actually
technical in nature
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Software (cont.)
• Confidential information
• e.g. Source code
• e.g. Algorithms
• Database rights
• A look-up table within program
• Whole program itself
• Program may create a database
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Protection of Software
Database right
• Database right – a new special right.
• Protects collection of data in database if arranged in
systematic and methodical way and accessible by
electronic or other means
• Against extraction or re-use of all or a substantial part
• The person who takes the initiative in obtaining,
verifying or presenting the contents of a database and
assumes the risk of investing in that obtaining,
verification or presentation is the maker of the
database
• The maker of a database is automatically first owner of
database right
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Protection of Software
Database right
• No registration required
• Database must be original (own intellectual
creation) – No protection against independent
creation
• Protection for 15 years from end of year in
which completed or when made available to
public
• New case law: William Hill vs BHB
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Websites
• What IP rights can subsist?
• Copyright
• What type of work?
• Database rights
• Patent
• Trade mark
• Meta-tags
• Goodwill
• Registered / unregistered design
• Domain names
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Internet domain names
• Quasi intellectual property right
• Consider defining as an intellectual property right in
any event
• Due diligence
• Check ‘Who-is’ database
• Easy for global top level domains, such as “.com”, “.net”, “.org”
• May not be as easy for country code domains, depending on
domain name registry
• Consider using searchers to search against name of owner
for other domains
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Internet domain names - scams
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Cybersquatting
Typosquatting
“Helpful” warning calls
Phishing
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Summary: What intellectual property rights are
we likely to care about in a technology deal?
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copyright
database rights
patents
trademarks
design rights and registered designs
confidential information
domain names
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Different ways of exploiting IPR
• Absolute ownership
• Can be in whole or in part e.g. own copyright in one territory
only
• By its nature an “exclusive right”
• Can be transferred by assignment or licensed
• Licensed rights
• Can be “exclusive”, “sole” or “non-exclusive”
• Can be transferred by assignment or sub-licensed, but often
will be restrictions in head licence prohibiting this
• Licences of registered rights should be recorded on register
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Joint Ownership … A third way?
• Nightmare
• The “Siamese twins” scenario
• To licence consent of co-owner needed
• Litigation – need to join in co-owner
• Treatment of enhancements?
• A better way:
• One party owns, the other party gets a wide licence
• Another way:
• Each party owns its own IP and grants a cross
licence to the other
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Why is the IPR position important?
• It determines who owns what
• Important implications for future exploitation
• Important for control of the IP / competitors using it
• It will impact on who pays for what – and how
much
• It provides a starting point to answer the
question of who takes the risk for third party
IPR claims
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How do we deal with these in an
agreement?
Three key questions:
• Who is the initial owner of the IP?
• Who needs to use it and how?
• Who will be the ultimate owner of the IP?
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How do we split these up generically?
• Customer IPR
• IPR owned and supplied by the Customer to the Supplier
• Bespoke IPR
• IPR specifically created for the Customer by the Supplier which
will be owned by the Customer
• Supplier IPR
• IPR owned and supplied by the Supplier to the Customer
• Third Party IPR
• IPR owned by third parties
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The supplier’s software
Proprietary core
library routines
Software
Application
Operating
system
Bespoke
customisations
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Relationship with Customer’s systems
Supplier’s software
Customer’s systems
MS
desktop
bespoke
systems
core
database
interface
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EDI
systems
email
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What are the consequences of the
carve up?
• Assignments needed to transfer ownership
(usually from supplier to customer)
• Licences need to use non-owned IP
• From customer to suppler
• From supplier to customer
• From third parties to both customer and supplier
• Possibility of non-compete clauses
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Assignments
• Must be in writing and signed
• Should be with full title guarantee
• Use clear form of words – eg avoid:
• ‘We agree that X will own the rights …’
• ‘X will be deemed to be owner …’
• Cover present and future rights
• and Legal and beneficial rights
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Software licensing
General Features of a Licence
• exclusivity:
• non-exclusive
• exclusive
• sole
• term
• perpetual
• specific term
• transferability
• transferable
• non-transferable/personal
• sub-licences
• may or may not carry the right
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Software licensing
General Features of a Licence
• revocability
• may or may not be irrevocable
• territory
• limited territory (eg UK)
• worldwide
• royalties
• Licence fee/royalty payable
• royalty free
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Software licensing
Specific features of a licence:
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number of users
user specific?
number of processors
number of mips
machine specific?
own internal business purposes only?
FM/bureau services?
specific location?
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Software licensing
Specific features of a licence:
• Right to suspend?
• Right to terminate?
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non payment of licence fees
material breach
bankruptcy
change of ownership/control of business
end of term
at will?!
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software licences check list
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exclusive/non-exclusive/sole
any bespoke code to be owned outright?
perpetual/term
transferability/right to grant sub-licences
revocability/termination rights
scope/territory
licence fees payable/royalty free
purposes
other issues
• acceptance tests
• source code escrow
• maintenance and support
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Technology design - how much would I
have to change something to make it
mine?
• Depends on the IPRs in question:
• Copyright
• Whole or a substantial part
• Independent creation
• Patent
• A monopoly right
• Confidential information
• Potentially any disclosure – but not once information has
reached public domain
• Database rights
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• Extraction or re-utilisation or whole or a substantial part
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If I have a good method that works for
me and I have it written down how do I
protect it using IPR?
• Confidential information
• Patent
• Copyright
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Conclusion
• Work out
• what IP you are dealing with
• Who is the start owner and who will be the end
owner
• What the parties will need do with it
• Incorporate appropriate assignments
• Make sure any licences are drafted widely
enough to cover future requirements
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