Intellectual property in outsourcing
Produced in partnership with Toby Crick and Adrian Sim of Bristows LLP
Intellectual property in outsourcing

The following TMT guidance note Produced in partnership with Toby Crick and Adrian Sim of Bristows LLP provides comprehensive and up to date legal information covering:

  • Intellectual property in outsourcing
  • Is intellectual property core to the deal?
  • Types of intellectual property rights in outsourcing
  • Background intellectual property rights
  • Foreground intellectual property rights
  • Open source software
  • Warranties and indemnities
  • Treatment of intellectual property on exit

Intellectual property rights (IPR) can often become points of contention during outsourcing contract negotiations. Issues arise in relation to the ownership and licensing of rights and also in relation to the warranties and indemnities the parties seek from one another in relation to their rights to provide IPR (or access to IPR) to one another.

This Practice Note covers the following:

  1. Is intellectual property core to the deal?

  2. Types of intellectual property in outsourcing arrangements

  3. Background intellectual property rights

  4. Foreground intellectual property rights

  5. Open source software

  6. Warranties and indemnities

  7. Treatment of intellectual property on exit

For examples of clauses dealing with IPR in outsourcing, see clause 29 of Precedent: Outsourcing agreement—long form. For a template IPR indemnity clause, see Precedents: Third party intellectual property rights indemnity clause—pro-supplier and Third party intellectual property rights indemnity clause—pro-customer.

Is intellectual property core to the deal?

For some outsourcing projects, the creation and ownership of IPR is the crucial point of the transaction. For example, in an application development deal, the customer will be engaging the supplier to create software applications on its behalf and the IPR in those applications (and the related documentation) will be crucial to the deal.

However, even where IPR is not the crucial output of the services, the supplier will invariably be using pre-existing (or even newly created) materials to assist in