Protecting Intellectual Property of Mining Suppliers

The mining industry is in the middle of a digital transformation. Mining equipment, technology and service providers (METS) from across the world are helping the industry with this transformation by introducing solutions that create more efficient operations, maintain or grow production, and provide safer work environments.

The technology being offered today requires information from real world setting to be relevant. Mining operations are complex with many moving parts. The information collected from sensors, equipment, and people are used by solution providers to improve their technologies and in some cases to create new solutions. There is really no substitute for real world information.

Although the solution provider will own their intellectual property, whatever it may be, the information being collected will belong to the mining companies. This creates a situation where there is competing interests. The mining companies will naturally want to protect their information and technology provider will want to use this information.  

Generally, most conversations around intellectual property owernship do not take place until the contract stage. It is common for technology providers to focus their attention on the goods or services being provided, pricing, and the commercial schedules when negotiating the contract. The result is that often intellectual property considerations do not get the attention they deserve.

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

Intellectual property (IP) 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? 

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. If the information from a client will be used to improve the technology then it is critical for service providers to have permission to do so. 

What happens when an intellectual property 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 be exposed to litigation if intellectual property 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 used in future projects. In most cases, a company will be open to civil legal action as a result of IP infringements. 

What happens when an intellectual property 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 intellectual property 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 the intellectual property when the contract ends. These clauses should include restrictions on use, and destruction or return of intellectual property 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: 

• 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. 
• Third Party IP – is 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. 
• Project IP – is 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 intellectual property, then contractual mechanisms, and lastly, legal action.  Many times intellectual property cannot be registered so most companies will need to rely on contractual mechanisms to protect themselves and ensure they can use the data that is collected while working with a client.  

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 and often discussions with the client over the wording will need to take place. The goal is to find a middle ground where the client feels their information will be protected while also giving the provider the ability to use the information to improve their solution. 

Conclusion: 

Mining technology and service providers are bringing their valuable intellectual property to 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 first step is for every provider should understand what they can or not accept around intellectual property which is dependent on the technology being offered and how they plan to use information that comes from clients.

The next step is to have careful discussions with the client and to find a middle ground that protects both parties interests.  IP does not need to be a one way street but it does need be carefully considered when negoiating a contract with a mining client. 

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 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