Essential IP Clauses for Mining Supplier Contracts

Mining companies depend heavily on suppliers for nearly every aspect of their operations, from extraction to final processing. Suppliers provide essential equipment, machinery, chemicals, technology, and services that ensure mines operate efficiently, safely, and sustainably. In turn, mining operations represent a significant market for suppliers, creating a deeply interdependent relationship.

The mining industry is undergoing a profound digital transformation. Nearly all products and services provided by suppliers now incorporate advanced technology, and in many cases, technology itself is the core offering. This symbiotic relationship becomes increasingly complex when considering the role of data. Many modern solutions rely on continuous access to operational data from mining companies to improve and optimize performance. While mining companies own this data, suppliers need it to refine their technologies, creating a delicate balance of interests.

Given this dynamic, it’s critical for suppliers developing technological solutions to carefully manage intellectual property (IP) when entering contracts with mining companies. Often, suppliers are required to negotiate contracts provided by mining companies, which are typically generic and not tailored to the specific technology or service being offered. These boilerplate contracts often fail to address the complexities of evolving technology and may disproportionately favor the mining company’s interests.

To navigate this landscape effectively, suppliers must prioritize IP management and ensure contracts address the unique challenges of providing technology-driven solutions.

Check out our guide to the essential intellectual property clauses every supplier should include when contracting with mining clients.

Customer Data

Most mining companies prioritize retaining ownership of their data, which is understandable given its critical importance to their operations. However, contractors often need to use this data to enhance and optimize their solutions, creating a potential conflict. To address this, it’s essential to include a well-drafted clause in the agreement that strikes a balance acceptable to both parties.

Typically, we include a specific clause that ensures the client retains full ownership of their data while granting the contractor a non-exclusive right to use it. This clause allows the contractor to collect, use, copy, store, transmit, modify, and create derivative works based on the client’s data solely for purposes of providing or improving the contracted solution. Such language helps protect the client’s data rights while enabling contractors to refine their technology and deliver ongoing value.

Suspending Services

Contractors need safeguards in place to protect themselves in cases where a client violates intellectual property (IP) rights or fails to meet their contractual obligations, such as non-payment of licensing fees. To mitigate these risks, we often include a clause granting the contractor the right to suspend services or restrict access to customer data in specific circumstances, such as IP violations or unpaid fees.

While suspending a client’s access is always a last resort, having this option is a critical safeguard. It provides leverage in situations where judicial proceedings could take months to resolve, potentially causing significant financial or operational harm to the contractor. Including such a clause ensures that contractors have a necessary tool to protect their rights and minimize losses during disputes.

IP Infringement – Key Clauses to Address

To protect intellectual property, it’s crucial to clearly define what constitutes infringement. This helps avoid ambiguity and ensures enforceability. Below are key areas we typically focus on, tailored to the specific solution:

1. Source Code Protection: Prohibit decompiling, copying, disassembling, reverse engineering, or attempting to derive or use the source code or any part of the product.
2. Functional and Design Integrity: Forbid copying or replicating the functional operation of the product, including the ‘look and feel’ of the user interface, the logical sequence of operations, commands, graphic style, colors, and content.
3. Restrictions on Transfer: Prohibit selling, renting, leasing, licensing, displaying, or sharing the product with third parties without explicit authorization.
4. Confidentiality: Require the client to protect the confidential nature of the intellectual property and to prevent unauthorized use, copying, or dissemination of any part of the product.
5. Prohibition of Modifications: Prevent alterations, enhancements, adaptations, or modifications of the product, including attempts by the client or third parties to do so.
6. Access Limitations: Prohibit knowingly disclosing or granting access to the product to any third party that may breach these restrictions.
7. Third-Party Conduct: Ensure that clients do not permit or allow third parties to engage in activities that would breach any of these clauses.

Third-Party Access

Clear limits on third-party access are essential to protect IP. This ensures potential competitors are not given access to sensitive technology and prevents unauthorized use of the solution. We typically include a clause explicitly stating that clients cannot grant access to the product to third parties, such as contractors, consultants, or advisors, without prior written approval. This clause can be tailored to the specific needs of the solution.

Transfer of Rights

To safeguard ownership, agreements must explicitly state that no rights, title, or interest in the product are transferred to the client. A common clause specifies that all customizations, modifications, improvements, or developments made to the product—whether initiated by the contractor or at the client’s request—remain the sole property of the contractor. This ensures that contractors retain ownership of any enhancements made during the course of the project, even if inspired by client feedback.

Licensing Terms

Defining the scope and nature of licenses is critical for clarity and IP protection. These details must be carefully outlined in the agreement to prevent misunderstandings or disputes. Key considerations include:

• Whether the license is free or fee-based.
• Whether it is exclusive or non-exclusive.
• Whether it is revocable or irrevocable.
• Whether sublicensing is permitted.
• Whether it is transferable.
• The duration of the license.

Conclusion

While the immediate focus for many companies is simply securing a new client, it is important to remember that intellectual property is a business-critical asset that requires equal attention. Robust IP clauses are often the first and only line of defense in an industry where many solutions are not patented, making proper contract drafting indispensable.

With over a decade of experience reviewing contracts for technology and service providers, the Ax Legal team has a deep understanding of the standard clauses included by major mining companies across Latin America. We work closely with clients to protect their intellectual property rights during contract negotiations, ensuring their interests are safeguarded without jeopardizing the agreement or causing unnecessary delays.

Ax Legal helps industrial technology, engineering, and service companies to navigate the legal and commercial aspects of operating their business in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve how they operate in the region, and to protect their interests.

Over the years, our team of legal and commercial advisors have developed a track record of working with companies of all sizes from Australia, Canada, the U.S., and Europe. The one common factor that connects our 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