First scenario: late at night in the final stages of a corporate transaction. You are asked to produce IP-related documents for completion (closing). The documents are to include a know-how assignment. You look on your office computer system but can’t find a suitable template. What do you do? It may be tempting to use a patent assignment, deleting the word patent wherever it appears and replacing it with the word know-how. But is this good enough?
Second scenario: negotiation of a contract to perform R&D services. The customer requests that a clause be inserted in the contract stating that the customer owns the data produced in the course of performing those services.
In both cases, the required assignment/clause appears to be based on the premise that know-how or data is property that can be owned and transferred. Under English law, our understanding is that know-how and data are simply information, and there is no property in information as such, in the absence of specific categories of intellectual property such as patents or copyright. The position may be different under other countries’ laws (eg under US trade secrets legislation?), and we would welcome readers’ comments on this aspect.
Thus, in scenario 1 above, we have occasionally drafted documents that are called know-how assignments for the sake of convenience, but where the content is rather different to a conventional IP assignment. The content may include:
- an obligation to communicate the know-how to the “assignee”
- a warranty that the know-how was generated by the “assignor” alone and without use of third party information or IP
- a warranty that the know-how is confidential, has not been publicly disclosed and in the future will not be disclosed or used by the assignor
- a transfer of the right to sue third parties who breach the confidence of the information, including an undertaking by the assignor to cooperate in any action brought by the assignee against third parties for breach of confidence, with the assignor lending its name to the action if required
In scenario 2 above, a statement that the data is “owned” by the customer is often seen in US-drafted contracts, but causes IP Draughts concerns from an English law perspective, as it is not clear what it means. Any paper on which the data is printed out may be owned, as this is physical property. If the print-out of data is a copyright work, the copyright can be owned. If the data is recorded in a database, there may be database right in that database. Any inventions that are disclosed in the data (although this may be unlikely if it is raw data) can be owned, under patent legislation. But the data itself is pure information, and not property.
What is the customer trying to protect by stating that the data is its property? Perhaps it wants to be clear that:
- The data will not be used or disclosed by the party that generates it (in effect, confidentiality obligations)
- Any inventions generated using the data will belong to the customer
- Anything else?
We dislike wording in contracts that we don’t understand, and for this reason resist statements that data is owned. Please let us know your thoughts.