Intellectual Property Clause
Intellectual Property Clause
Intellectual Property, or IP, is a broad term defining the intangible assets of a company. These assets may include special skills or talents, inventions, technologies such as software, relationships with customers or vendors, and brand identity. These examples of IP, and many more, are often among a company’s most valuable resources, and there are specific laws designed to protect them. Trade secrets, patents, trademarks, and copyrights define and control ownership rights to IP, and businesses further protect those rights by drafting IP clauses when they enter into ...view middle of the document...
At the conclusion of this Agreement, or in the case of a breach of this Agreement, Developer shall retain all rights to ownership of the IP, and Company shall relinquish all such rights (Connock, 1994).
Application of an Intellectual Property Clause
The above example of an IP clause would apply to a contract between a software developer and a company using the software. An automotive dealership, for example, uses sophisticated software to store and manage customer information, communicate with lenders, store and print legal documentation, and keep track of inventory, sales, and profits. This software is owned by an outside company, and the dealership’s use of it is regulated by an IP clause in the contract between the dealership and the developer. The dealership may use the software for its own business purposes as agreed, but may not share information with the developer’s competition or gain from reproducing, modifying, or reselling the software. The contract between a dealership and developer is renewed yearly, but when the agreement is no longer valid, the developer will retain all rights to ownership to the software, and the dealership will relinquish all such rights. As stated by the clause, any unauthorized use of the software will be considered a breach of contract, and will therefore be subject to the agreed upon method of dispute resolution.
Remedies for Breach of Contract
The first line of defense for a breach of contract is well-drafted clauses, and this rings especially true in regard to IP. In a situation of contractual breach, there are several remedies available to the parties affected, among them being negotiated settlement and arbitration (Reed, et al., 2013). Most breaches of contract are resolved through negotiated settlements, where parties work together to find a satisfactory solution, without the legal help of a third party. In cases where a settlement is not possible, most companies which rely on contracts to conduct business have an arbitration agreement clause built into their standard contracts. If a case goes to arbitration, the arbitrator will apply and be bound by the law, and will reference the contract and its provisions to make a decision, thus the importance of having a well-drafted IP clause (Cantafio, 2013).
Legal Issues Regarding Intellectual Property
Even with specific laws and built-in provisions in contracts, it is not always possible to legally protect every aspect of IP, which is especially true with trade secrets and patents....