Contracts, Intellectual Property, Mining Technology Tagged , ,

IP Clauses for METS Companies

Mining companies have always relied heavily on service contractors and technology providers to keep their operations humming along. Everything from drilling and blasting to leasing equipment. From maintenance services to software, spare parts, and consultants. The list could go on and on.

Today, many of the companies providing these same services have a strong technology component as part of their offering. In many cases, the underlying technology is the only component. The solutions and technology being commercialized today are more complex than they were in the past which means there is a strong need for companies to ensure they are protecting their intellectual property (IP) when entering into contracts with clients. 

In many cases, particularly with large tier miners, contractors are often forced to negotiate template contracts that the miners use with all their suppliers. In most of those contracts, they will have some standard intellectual property clauses which are mainly there to protect the mining company. In some of the agreements we have recently reviewed, there was not even a single clause related to IP. 

Regardless of the situation, it is the contractor’s responsibility to ensure that their intellectual property is protected. Changes to the language and/or wording may be required or additional clauses may need to be added. Check out our list of the most important intellectual property clauses that should be included when contracting with clients.

Just remember that each company, depending on their solution, will need professional help to adapt these clauses for their specific circumstances. 

Customer Data

Most mining companies will want to retain rights over their own data. The issue is that often the contractor needs to use the data to keep improving their solution. To deal with this conflict, a proper clause dealing with the customer data which is acceptable to the client and the contractor needs to be included in the agreement.

Typically, we will include a specific clause that explicitly states that the client will retain rights over their data but also provides the contractor with the non-exclusive right to collect, use, copy, store, transmit, modify, and create derivative works based on the customers data to the extent necessary to provide or to improve the solutions.

Suspending Services

It is important for contractors to have some type of recourse should a client violate their intellectual property rights.  We generally add a clause that gives the contractor the right to suspend access, use, or delete customer data should there be a violation of the IP rights or for non-payment of the licensing fees. Cutting off access to a client is generally a last resort but it is important to have this card up your sleeve in case something does happen where it is needed. This is due mainly because any judicial proceeding may take several months to resolve and by the then the damage could be exponential.

IP Infringement Terms and Wording

Companies will want to ensure they have properly spelled out what would be considered as infringement. We will generally focus on the following specifics, although depending on the solution, they will need to be adapted.

a) not to decompile, copy, disassemble, reverse engineer, or otherwise attempt to derive or use the Source Code from the Product or any part of it; and

b) not to copy or engage any third party for the purposes of copying the functional operation of the Product, including but not limited to the ‘look and feel’ of the user interface, the logical sequence of operations and commands of the Product and it’s on-screen graphic style, colours, and content; and

c) not to sell, rent, lease, license, display, time share or otherwise transfer any part of the Product to, or permit the use of any part of the Product by, any third party; and

d) to preserve the confidential nature of the Confidential Information, including Intellectual Property Rights contained within the Product, and to use reasonable care to prevent the unauthorized use, copying, publication or dissemination of any part of the Product and the Company’s Confidential Information; and

e) not to alter, enhance, adapt, develop, or modify any part of the Product or attempt to do any of those things or procure a third party to do or attempt to do any of those things; and

f) not to knowingly disclose or grant access to the Product or any part of it to any third party who may, or has the capacity to contravene sub-clauses (a) or (b) above; and

g) not to permit or allow any third party to do anything which, if committed by the Client, would be a breach of any one or more of the sub-clauses (a) to (f) above.

Granting Access to Third Parties 

It is important that there are clear limits to what a third party can access or do. There are many reasons behind this. It could be to keep potential competitors from accessing the IP, or just to ensure that a third party is not benefiting from the solution without a license. We typically include a clause that explicitly states that the client will not grant any third-party access to the product, including contractors, consultants, or advisors. This can be modified accordingly depending on the solution at hand.

Transfer of Rights 

Lastly, it is important to ensure that there is no transfer of rights.  We will often include a clause that explicitly states that the agreement does not transfer to the client any right, title, or interest in the product. We also generally include some wording to ensure that any customizations, including modifications, improvements or developments made to the product, regardless of whether at the request of the client, always remains as the property of the contractor. Again, the reasoning is that in the course of providing the service or solution, the contracter may make improvements based on the clients specfic circumstances, feedback, or suggestions. 

Licensing

Finally, and although it seems truism, it is essential to always define, in case of granting intellectual property licenses, to define the type and nature of the licenses, that is, if they are going to be free or not, non-exclusive or exclusive, revocable or irrevocable, sublicensable or not and transferable or non-transferable, and for what period of time will it be granted.

Conclusion

While the immediate focus for many companies is simply securing or being awarded the work, it is important to remember that 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 since many companies do not have patents.

The Ax Legal team has been reviewing contracts from mining companies for technology and service providers for the last 10 years. We understand the typical clauses that are included by all the major miners in Latin America. This allows us to work with our clients to ensure their intellectual property rights are protected when negotiating the agreement without putting the contract at risk or unnecessarily delaying the process.

Ax Legal is an 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