There’s no beating around the bush—intellectual property clauses are complicated. They’re even more complex to negotiate. How do you decide who owns what when hiring someone to create something for you? How contract professionals should approach negotiating intellectual property clauses is a tough conversation that Jeanette Nyden and Lawrence Kane happily tackle in this episode of Negotiations Ninja. If you’re ready for a deep dive into the nuances of IP clauses, give this episode a listen.
DISCLAIMER: Always be sure to seek qualified legal counsel. This episode is purely for informational purposes.
Outline of This Episode
- [2:03] Learn more about Jeanette Nyden + Lawrence Kane
- [3:16] Learn about The Contract Professional’s Playbook
- [5:00] The definition of intellectual property
- [8:33] The difference between intellectual property and work product
- [12:34] The differing perspectives of the vendor versus procurement
- [22:43] The complex questions of ownership
- [23:43] How to protect intellectual property clauses
- [28:36] The challenges faced around intellectual property
- [34:45] How contract professionals should approach intellectual property
- [37:07] How to connect with Jeanette and Lawrence
What is intellectual property?
Intellectual property is an asset. It can be a trademark or service mark (like the Nike swoosh). It can also be trade secrets (like secret sauce, supplier lists, etc.). There are copyrights, like when books are protected by copyright. Then there are patents for designs. Patents are typically public knowledge so that people know something already exists as protected intellectual property.
There are also things called critical technical information that must be kept so secret that they aren’t patented. Lawrence points out a fictional example—the “Iron man suit.” It’s a known product, but the underpinning intelligence is something no one can access. Critical technical information isn’t just what makes money; it gives you a leg up over the competition.
Whoever designed or developed these assets are protected through intellectual property law.
The difference between intellectual property and work product
Intellectual property is the outcome. Work product could also be intellectual property. But if Jeanette has hired someone to do something for her, the outcome of that work product is intellectual property that she owns.
If Boeing hires someone and they work tirelessly on a product, it’s still the intellectual property of Boeing. However, if that same person works in their garage and creates products for themself—and it has nothing to do with their job at Boeing—then it is their intellectual property.
Where do the lines get blurred? Suppose you’re a technical engineer for Boeing, and you take what you’re doing and make deviations in your work. In that case, it’s possible the knowledge, composites, drawings, etc., that could be sold to a competitor could be your work product—or could belong to Boeing. There are a lot of nuances that must be considered when you decide who owns what:
- What are you trying to accomplish with the supplier relationship?
- What’s fair about splitting things during the duration of the contract?
- What do you need to own to protect yourself?
- How will work incentivize the supplier to do good things for you?
- How is that done in a reasonable way to get to the strategic outcome you’re looking for?
It’s also where lawyers who specialize in intellectual property law come into play. Ownership is a complex conversation—keep listening to hear Jeanette and Lawrence discuss it.
How contract professionals should approach intellectual property clauses
Once you get the redline back—if you issued standard terms and conditions and multiple bidders are involved—what’s the common theme? Are they all reacting to derivative products or structures? So the first thing you need to do is look for themes and identify them for the legal team.
Secondly, make sure your subject matter experts understand whether they’re buying or licensing the intellectual property. The less you’re willing to spend, the less you’re going to get. If you don’t have the money to buy IP, you have to figure out what each party owns.
If it’s something that’s going into a product or service that you’re selling, you’re probably going to treat it differently than if it’s a back-office. Try to look at it holistically and question the what-ifs. Are there things you haven’t thought of?
Resources & People Mentioned
Connect with Jeanette Nyden and Lawrence Kane
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