Protecting your Intellectual Property when entering into a Contract with a Mining Company

The mining industry is currently in the midst of a digital transformation. Mining technology and service companies are driving this change by introducing new technologies and solutions that are helping mining companies to become more efficient in their operations, provide safer work environments, and target difficult to reach deposits. Examples include everything from sensors, data analytics, automation, robotics, process re-engineering, software, modular and mobile equipment/infrastructure.

METS companies are investing large amounts of capital into new technologies so protecting these investments is critical. Particularly when entering into commercial contracts with mining companies where the typical focus has mainly been on the goods or services being provided,  pricing, and the commercial schedules. Intellectual property often takes a back seat to the commercial terms even though it should be an essential part of the contract review process.  

What exactly is included as Intellectual property in terms of mining contracts? 

Intellectual property can include anything related to designs, patents, innovation patents, copyright, and trademarks. This definition commonly expands to include matters such as confidential information, trade secrets, know-how, business names, and domain names. 

When specifically speaking about the mining industry, intellectual property should include anything related to data, software, inventions, reports, guidelines, procedures, business methods, computer software, business methods, and operational methods, specialized know-how, geological information, proprietary tools.  

Why is protecting your intellectual property important in Latin America? 

• What happens when a distributer or partner copies your technology and offers their own “in house” made solution?
• What happens when a mining company shares the information you generated from your solution with a competitor? 
• What happens when an unforeseen new solution happens to be created during a project you are working on with a client?

In Latin America, common-law rights do not apply like they would in Australia or Canada. Due to this, companies need to understand the proper methods that can be used to protect their IP rights in the region which is generally contractual. 

What happens when an IP clause is not well-drafted? 

From a suppliers perspective, an IP clause that is not well drafted may result in considerable financial loss if the IP is a key part of their business. The supplier may also be exposed to litigation if IP belonging to a third party is inadvertently or deliberately allowed to be used without the permission of the true owner. The same could be said if the client’s background or project intellectual property is taken by a supplier and shared or used in future projects.

In most cases, a company will need to rely on civil legal action in order to compensate for some or all of the loss suffered as a result of IP infringements. The downside is that it is time-consuming and not cost effective. 

What happens when an IP clause is well/drafted? 

1. Make compliance and interpretation simpler for both parties.
2. Reduce the likelihood of misunderstandings arising between the parties. 
3. Clarify and determine exactly which IP rights pertain to who.
   
4. Discourages parties from misusing or abusing the IP.
5. Improves the chances of legal action succeeding should it be needed.
      
   

Well drafted IP clauses clearly define the IP and the limits of how the parties may use and handle it.  In addition, IP clauses should be drafted in a way that protects IP when the contract ends. These clauses should include restrictions on use, and destruction or return of IP to the proper owner. 

What are the types of IP that should be identified in contracts with mining companies? 

There are three main types of intellectual property: 

1. Background IP – is intellectual property that is owned by one of the parties to the contract and that already exists prior to the contract, or comes into existence during or after the contract’s term, but is developed independently of the contract. 
2. Third Party IP – intellectual property that may be provided by one of the parties to a contract and/or is owned by another person/company who is not a party to the contract. 
3. Project IP – intellectual property that is developed during the contract by one or more parties to the contract. 
   

How to properly protect your intellectual property when entering into contracts with a mining company? 

Companies need to use a variety of tools to properly protect themselves. The first and foremost is proceeding to register any IP, then contractual mechanisms,, and lastly, legal action.  Many times intellectual property cannot be registered so most companies will need to rely on contractual mechanisms. 

The IP may be the main subject of the contract, in which case it is of great importance that it be clearly and specifically regulated or one that can be included as an ancillary to the contract – in both cases, the contract’s IP clause should be carefully considered since this will often be the main line of defense. 

Lastly, companies need to take the time to create systems and process for ensuring they are adhering to best practices. 

Conclusion: 

Mining technology and service providers are bringing valuable Intellectual property to Latin America. This intellectual property is often the reason why these companies were successful in their home countries and the reason why they have opportunities in Latin America. 

While the immediate focus for many companies is simply securing or being awarded the work, Intellectual property is business-critical and should be treated as such. Companies need to ensure they have well drafted IP clauses because it is often their only line of defense. The Ax Legal team have been reviewing contracts from mining companies for the last 10 years. We understand the typical clauses that are included as part of the standard contracts and we work with our clients to ensure their intellectual property rights are protected when negotiating the contract. 

Ax Legal is a legal and business advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal