Mining Suppliers – Critical IP Clauses for Contracts

Mining companies rely on suppliers for almost every facet of their operations, from the extraction phase to the final stages of processing. Suppliers provide equipment, machinery, chemicals, technology, and services that keep mines operating efficiently and safely. At the same time, mining operations are a huge market for suppliers, making the relationship very symbiotic.

The industry is in the middle of a digital transformation. Almost everything provided inside a mine these days by suppliers has a strong technological component as part of the offering. In many cases, the underlying technology is the only component.  This symbiotic relationship becomes even more complicated when you take into account that the technology solutions being offered today often require data from mining operations so that it can continuously improve itself. Operational data that is owned by the mining companies but is needed by suppliers to improve their solutions. 

For this reason, it is important that suppliers who develop these solutions take the proper steps to manage the intellectual property (IP) when entering into contracts. In many cases, suppliers are often forced to negotiate boilerplate contracts provided by the mining companies themselves, which are generally not drafted for the specific services or solution being offered. The result is contracts that do not take into account the changing technology landscape and/or favor the mining companies interests. 

Check out our list of the most important intellectual property clauses that should be included when contracting with mining clients.

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 since judicial proceeding may take several months to resolve and by the then the damage could be exponential to the supplier.

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.

1. 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
2. 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 its on-screen graphic style, colors, and content; and
3. 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
4. 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
5. 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
6. 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
7. 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 being offered.

Transfer of Rights 

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 remain the property of the contractor. Again, the reasoning is that in the course of providing the service or solution, the contractor may make improvements based on the client’s specific circumstances, feedback, or suggestions. 

Licensing

Finally, in the case of granting intellectual property licenses, it is important to define the type and nature of the licenses.  That is, is the license 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 in an industry where many solutions are not patented.

The Ax Legal team has been reviewing contracts for technology and service providers for over a decade. 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