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Just like your business owns and protects its physical assets, you can own and protect your intangible intellectual property assets as well. These can be your business’ ideas and processes crucial to your brand and functioning, such as your business’ name or the content you create. Whenever entering into a contract with another business, intellectual property can be a factor in your relationship. This fact is especially true for service agreements, where you may be contracting another business to fulfil a service for you or vice versa. If such a service involves creating new intellectual property or using already existing items, then an intellectual property service agreement is crucial. Alternatively, you might add a similar clause in your overall service contract. This article will go through four reasons to use an intellectual property service agreement in New Zealand.

Protecting Existing Intellectual Property

Your business will likely own intellectual property (IP), which may be categories like:

  • trade marks;
  • designs;
  • patents;
  • plant variety rights; or
  • copyright.

The exact content of these IP rights will vary according to your business and its industry. They can cover things like:

  • your business name;
  • your logo;
  • website content;
  • reports;
  • customer databases;
  • recipes;
  • blueprints; or
  • creative content.

When you enter a service relationship with another business, the IP you already own will be ‘background intellectual property’. This includes any IP that was in existence before the relationship. Therefore, it is important that you identify what background intellectual property you already own to maintain its ownership throughout the service contract. 

In your intellectual property service agreement, you can lay out the exact nature of your IP, as well as your powers when dealing with such property. The other party should then agree that they recognise this ownership and will abide by the usage requirements you set. 

For example, suppose the other party wants to reference your business name in their advertising or customer testimonials. In that case, they know that they will need your permission to do so because you identified it as background intellectual property.

Furthermore, setting these issues out in your intellectual property service agreement (or similar contract) becomes particularly important if the other party is going to change or amend your background intellectual property at all.

Clarifying Ownership of New Intellectual Property

An intellectual property service agreement is useful when the service provider creates new IP for the client. Ensure your contract sets out:

  • the nature of the service they are providing;
  • what existing IP they can use in their service;
  • any ongoing IP rights;
  • the necessary licence permissions; and
  • ownership of new IP;

Ownership of any new IP that the service provider develops can become murky when both parties contribute to its creation.

For example, you may run a company that develops websites for small businesses. You may reuse code from other websites that you have developed to create the site that you own. Though, your business client will likely own the content of the website itself. As a result, you both own different intellectual property aspects of the website, creating issues when determining ownership of the end product.

In your intellectual property service agreement, you can specify the exact break up of what each party owns at the end of the service relationship, regarding the created IP. If the service provider is transferring all created intellectual property to the client, it is crucial that they also set out what payment they receive in return.

For copyright, the default legal position is that if someone pays you to create intellectual property for them, that person owns the intellectual property. However, you can always make amendments to your contract. If you wish to maintain some ownership rights, ensure that you negotiate with the other party.

Setting Your Licence Terms

Importantly, ownership becomes a crucial issue in any service agreement that involves IP. Consequently, owners can let the other party use their IP with a licence to avoid relinquishing their ownership rights. In your intellectual property service agreement, you can set out your licence terms, such as:

  • exclusivity;
  • duration;
  • prohibited/permitted conduct;
  • performance requirements;
  • research permissions;
  • development requirements; 
  • confidentiality requirements;
  • geographical usage; and
  • delegation rights, if you allow it and to whom.

Protecting Yourself in IP Disputes

Most legal disputes benefit from having paper evidence, and IP disputes are no different. Setting out the terms of your service relationship in an accessible document is particularly useful. Notably, your intellectual property service agreement can help clarify ownership issues and other problems. Ultimately, a clear service agreement can reduce time and cost in any future disputes.

Key Takeaways

Your business may provide services to others, or you may contract the services of another business. Whenever this is the case, you should always cover intellectual property in your documentation for clarity and ease of mind. If you would like more information or help with your intellectual property service agreement, contact LegalVision’s IP lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is intellectual property?

Intellectual property is a legal concept that refers to your ideas and processes that bring value to your business. You can own intellectual property like other business assets, and they can generate income for you.

What is a service agreement?

A service agreement sets out the terms and conditions of a service provider giving you their services. You should cover intellectual property in this agreement, especially where their service includes creating intellectual property.

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