Intellectual Property (Pro-Customer)

Explaining Intellectual Property

If a service provider develops intellectual property during the course of providing services to you, the customer, you want to ensure that you are ultimately the owner of that property. This clause:

  • Provides for assignment to the customer of the rights to that creation.
  • Requires the service provider’s execution of all pertinent documents conferring title.
  • Grants the customer a one-year “tail” period during which the service provider must assign to the customer, any patent application relating to:
  • the customer’s trade secrets;
  • its issued statement of work; or
  • tasks assigned to the service provider by the customer.
  • Grants power of attorney to the customer to sign, on the service provider’s behalf, assignment documents required to transfer intellectual property ownership from the service provider to the customer if the service provider’s signature is unavailable.
  • Allows the service provider to set out all of its currently owned intellectual property so that these inventions are not inadvertently included in the transfer requirements of this clause while, at the same time, reducing the customer’s risk that the service provider may later claim prior ownership of intellectual property that should rightfully belong to the customer.

Note that a service provider with bargaining power is likely to object to:

  • Assigning to the customer ownership of all intellectual property arising from its work for the customer.
  • Having to identify its existing intellectual property, which might include unpublished patent applications or trade secrets on the Exhibit.

In response, you as the customer can argue that you should own the intellectual property because assignment is required only for creations that relate to, are suggested by, or result from matters set out in an active statement of work and depend on either:

  • The customer’s confidential information.
  • The use of the customer’s equipment, supplies, facilities, information or materials.

Sample Clause

Intellectual Property.

Service Provider assigns to the Customer, Service Provider’s entire right, title, and interest in any invention, technique, process, device, discovery, improvement, or know-how, whether patentable or not, hereafter made or conceived solely or jointly by Service Provider while working for or on behalf of the Customer, which relate to, is suggested by, or results from matters set out in any active Statement of Work and depends on either:

(a)  Service Provider’s knowledge of Confidential Information it obtains from the Customer. 

(b)  The use of Customer equipment, supplies, facilities, information, or materials.

Service Provider shall disclose any such invention, technique, process, device, discovery, improvement, or know-how promptly to the Customer Contract Manager. Service Provider shall, upon request of the Customer, promptly execute a specific assignment of title to the Customer and do anything else reasonably necessary to enable the Customer to secure for itself, patent, trade secret, or any other proprietary rights in the United States or other countries. It shall be conclusively presumed that any patent applications relating to a Statement of Work, related to trade secrets of the Customer, or which relate to tasks assigned to Service Provider by the Customer, which Service Provider may file within one year after termination of this Agreement, shall belong to the Customer, and Service Provider hereby assigns same to the Customer, as having been conceived or reduced to practice during the term of this Agreement.

All writings or works of authorship, including, without limitation, program codes or documentation, produced or authored by Service Provider in the course of performing services for the Customer, together with any associated copyrights, are works made for hire and the exclusive property of the Customer. To the extent that any writings or works of authorship may not, by operation of law, be works made for hire, this Agreement shall constitute an irrevocable assignment by Service Provider to the Customer of the ownership of and all rights of copyright in, such items, and the Customer shall have the right to obtain and hold in its own name, rights of copyright, copyright registrations, and similar protections which may be available in the works. Service Provider shall give the Customer or its designees all assistance reasonably required to perfect such rights.

If for any reason, including incapacity, the Customer is unable to secure Service Provider’s signature on any document needed to apply for, perfect, or otherwise acquire title to the intellectual property rights granted to it under this Section, or to enforce such rights, Service Provider hereby designates the Customer as Service Provider’s attorney-in-fact and agent, solely and exclusively to act for and on Service Provider’s behalf to execute and file such documents with the same legal force and effect as if executed by Service Provider and for no other purpose.

Service Provider owns the discoveries, improvements, inventions, or intellectual property identified by title and number or date on Exhibit __, attached. Such discoveries, improvements, inventions, and intellectual property, made or conceived by Service Provider before the effective date of this Agreement, are expressly reserved and excepted from the provisions of this Agreement. IF THERE ARE NO SUCH DISCOVERIES, IMPROVEMENTS OR INVENTIONS TO BE EXCLUDED, SERVICE PROVIDER SHOULD INITIAL HERE __________.