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Taking care with consultants

20 January 2010

In this day and age it is extremely common for businesses to use the services of third party consultants to provide skills, expertise and knowledge that the business may lack. Consultants are engaged across a variety of fields including marketing and advertising, software development and programming, technical support, R&D and product design. These consultants will, in the provision of their services, develop new IP, for example, in the new brands they create, in the marketing and advertising materials they produce and in the software and new innovations they develop. Such IP is a valuable asset to your business and one for which you will have paid a price. It is vital therefore that when dealing with consultants the position on ownership and use of any new IP is properly considered and set out in a formal written contract. If not, you could find yourself in a battle with the consultant and your rights in respect of the IP compromised and restricted: you may be unable to proceed with using the brands, materials or innovations developed for you by the consultant.

Set out below are some key issues to consider when engaging consultants.

Ownership of IP

The consultant

Copyright works, inventions and brands developed for you by a consultant will automatically vest in and belong to the consultant, unless you and the consultant expressly agree otherwise. The law may infer an implied licence for you to use the relevant rights but this would involve a trip to court and the extent of this licence will depend on the nature of the arrangement and what the parties originally intended. If you want to own the IP, you must have the rights assigned to you expressly under contract. Where you commission a consultant to produce designs, you will be the owner of any resulting registered or unregistered design rights, however, it is still sensible to provide for this expressly in a contract so the position is unequivocal.

Third parties

It is important to understand whether the consultant will be using any third party IP which you will need to be able to use to make use of the new IP. Making enquiries and inserting warranties in the contract that the works produced will not include or rely on any third party rights will help to flush out such issues. If third party IP is relevant, then the consultant should be required contractually to procure the requisite user licences for you and to warrant that all such licences have been properly obtained and cover all of the third party IP required to make proper use of the new IP. Finally, you should include a warranty that the IP produced by the consultant is original and your use of it will not infringe any third party rights.

Use of new IP

You should make sure that the contract does not restrict your ability to use or exploit the new IP in any way.

Your contract should also be clear as to whether the consultant will have any user rights in respect of the new IP. The contract will usually include a right for the consultant to use the new IP for the purpose of providing services to you: whether you are willing to grant them anything more will depend on the nature of the consultancy and the IP being developed. If you do not want the consultant to have any additional user rights then you should state this clearly in the contract. If you are prepared to let them use the new IP outside of your relationship with them then you must specify exactly the scope of such use including the purpose, field, territory and how long for.

Access to materials

Something which often gets forgotten when entering into contracts with consultants is access to the physical works, materials, documents etc produced by the consultant. Having ownership of the new IP does not automatically give you ownership of, or access to, the physical materials. You could be left owning the design rights in a product design but without the actual design drawings you need to make the product. You must therefore ensure that under the contract title to the physical materials vests in you and that the consultant will deliver up to you all materials generated by him. It is a good idea to require the consultant to deliver up the materials at regular intervals, for example, on a monthly basis. This means that you will always have fairly up to date versions of the works or materials in the event that something happens with the consultant.

If you are going to invest in the services of consultants then you must have a formal contract in place to govern this arrangement and, in particular, to deal with IP. Without clear terms on the ownership and use of IP you could find yourself with limited rights of use or, worst case, unable to use some IP at all.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

Mark Daniels

Mark Daniels

Partner and Head of Business Services

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