10 words and phrases you should never use in IP contracts

As most people know by now, Mr Pettifog likes an open fire in his study.  His trainee’s first duty each morning is to rake out the ashes of the previous day’s fire, before setting paper and kindling in a regular tetrahedron, ready to be lit when Mr Pettifog arrives.

The trainee’s second task is to print out any draft contracts that have arrived via the interweb since Mr Pettifog left the office the previous afternoon, and to mark them up with any changes that she thinks Mr Pettifog may require. Woe betide any trainee who allows any of the following list of words to appear in a draft IP contract.  When Mr Pettifog spots them, the entire contract is likely to be hurled into the fire.

This causes the trainee several problems.  First, she has to stand by with a Schweppes soda syphon to put out any stray flames.  Extinguishing the flames in this way makes it much messier to clean up the fireplace the next morning.  And then there is the problem of refills.  Mr Pettifog won’t accept that Schweppes no longer provides replacement bottles, so the trainee has to resort to refilling the bottle herself using a SodaStream.  On bad days, Mr Pettifog has been known to mutter incomprehensibly about getting 7 shillings and sixpence back on the bottle, and replacing the money in the petty cash box before Betty finds out.

While IP Draughts prefers a slightly more modern approach to trainee management, he shares Mr Pettifog’s dislike of these words and phrases.

  1. Covenant. Contractual obligations are best indicated by use of the word “shall”, as in “the Consultant shall deliver a report”.  Covenanting to deliver a report adds nothing the legal effect, at least under English law.  The word should be avoided, except in land transactions where it has a specific meaning.
  2. Should.  We have encountered lawyers who have replaced “shall” with “should” during negotiations if they wish a proposed contractual obligation to lose its contractual force and become instead an aspiration or statement of intent. We would be nervous that a judge might assume a defect of grammar rather than a conscious choice of words (particularly under the English system where drafts of contracts are not usually admitted in evidence), so instead we would state explicitly that the provision is not legally binding.  This assumes that there is any need for it in the contract; usually contracts contain only contractual obligations.
  3. Sideground.  Most IP lawyers are familiar with contractual definitions of Foreground IP and Background IP.  These expressions may have originated in the standard contract terms of EU Framework research grants, or at least have been popularised by their inclusion in those terms.  Typically, Background IP is pre-existing intellectual property that a party brings to a research project, while Foreground IP is intellectual property generated in the research project.  Sometimes, parties wish to address a further category, namely IP that is generated during the term of the research project but outside of the project.  Some people refer to this as Sideground IP, but IP Draughts would rather stick pins in his eyes than use such a horrible phrase.  This category of IP can easily be included in the definition of Background IP, if required.  [IP Draughts has similar views about the word “copyleft” (as distinct from copyright), but he has heard his junior partner, who is very knowledgeable about open source licensing, referring to copyleft without grimacing, so he will keep this view to himself.]
  4. Have sold.  Unlike some of the other examples in this list, this one is more of a policy issue than a problem with the words themselves.  Licences to “have made” are commonly seen as part of the grant clause of a licence agreement.  This allows the licensee to engage a subcontractor to undertake manufacturing of the licensed products.  If the licensee is also licensed to “have sold”, a possibility arises that the licensee will subcontract all of its commercial activities under the licence (manufacture, marketing and sale) to one or more other organisations.  Distinguishing this type of arrangement from a sub-licence may be difficult.  Typically, rights to sub-license are made subject to detailed conditions, yet by slipping in the words “have sold” into a typical licence grant clause, the need for formal sub-licensing may be avoided.  The words “have sold” may look innocent enough in a long list of permitted activities under the licence, but they are potentially  dangerous for a licensor, and considerable care and further drafting may be required if they are included.  Usually, these words should be omitted.
  5. Hold harmless.  This phrase is often seen in indemnity clauses.  It should usually be avoided.  See our earlier posting on this subject here.
  6. Mutatis mutandis.  This is a horrible Latin phrase, which is used as lawyers’ shorthand for “I am too lazy to retype an earlier clause and make changes to it to make it suitable for a different situation, so I will state the new obligation very briefly and cross-refer to the earlier clause where you can get more detail on roughly what I have in mind.”  The phrase should be avoided by all right-thinking contract drafters.
  7. Hereinafter.  There is no need for words like this in contracts.  Including them makes lawyers an easy target for cruel jibes and bullying.  Get rid of all the hereinafters, whereofs, parties of the first part and other pompous expressions, and make the world a safer place for lawyers.
  8. Determine.  Isn’t it bizarre that contracts sometimes use the word determine in the sense of terminate, when the rest of the world stopped using determine in this sense about a century ago?  Kick the habit!
  9. Successors and assigns.  Tucked at the back of the contract, one sometimes sees a boilerplate clause that states that the contract is binding on a party’s successors and assigns.  Leaving aside questions of why such a clause is necessary, and whether it conflicts with a separate assignment clause, let’s just focus on the word itself.  Assigns is being used here to mean assignees.  Why don’t all lawyers put the “ee” back into the word?  Particularly IP lawyers who are familiar with assignors and assignees.  Nobody uses assigns in this sense in everyday speech.  Another of IP Draughts’ favourites in the boilerplate section is “inures to the benefit of”, which sometimes appears in the “successors and assigns” clause.  On more than one occasion, IP Draughts has seen this mistyped as “insures to the benefit of”, probably because the spellchecker couldn’t believe there was such an old-fashioned word as “inure”.
  10. In witness whereof.  This phrase reads like something out of the King James Bible.  A simple “agreed by the parties” should suffice, perhaps expanded to “agreed by the parties through their authorised signatories” if you want to make the signers think about whether they are, in fact, so authorised.

9 Comments

Filed under Contract drafting, Licensing

9 responses to “10 words and phrases you should never use in IP contracts

  1. sasaka

    Reblogged this on thesikri.

  2. Michael Berkson

    I normally avoid Latin phrases but mutatis mutandis can be useful if used carefully, especially when you are referring to a whole group of provisions.
    However, I once used the phrase when negotiating a contract with a Greek company – one of the few Western European languages where the lawyers would not understand the phrase.

  3. David Kuper

    I agree that ‘Sideground IP’ is a fairly ugly construction, but as the first comment above suggests, it is easy to envisage a situation – particularly when drafting for a large and disparate entity such as a University – where you might want to differentiate between Pre-Existing IP that a party brings to a Research Project (which for example another party might be entitled to licence on fair and reasonable terms if necessary for exploitation of Foreground) and IP generated during the term of but outside a Research Project (which another party may have no automatic right to licence whatsoever). And I can’t see any easier way of acheving this than by distinguishing between ‘Background IP’ and ‘Sideground IP’ (any resulting pin-related damage to your eyes notwithstanding…).

    Apart from that: keep up the good work – a most enjoyable and useful blog.

  4. David

    sideground is an interesting one; I’ve used it because I don’t want to include the “sideground” IP in the definition of “background IP” as I want to licence it differently ….

  5. In case it’s of any interest, here’s a link to my 2006 post on successors and assigns: http://www.adamsdrafting.com/2006/09/18/successors-and-assigns/.

    I find a little scary Foreground IP and Background IP. I was relieved to see that the former term occurs in only 21 “material contracts” filed on the U.S. Securities and Exchange Commission’s EDGAR system in the past year.

    • Ken, Interesting thoughts on successors and assigns, and interesting to see what the commenters thought on your blog article. The clause appears less frequently in UK boilerplate than in US boilerplate, in my experience. I have heard yet another reason for including a reference to benefitting successors and assigns. Consider an indemnity by party A against losses suffered by party B. If party B assigns to party C, then (depending on how the clause is worded), the clause may indicate that it is party C’s losses that are to be covered by the indemnity and not party B’s. This reason seems as weak as the others you mention in your article – why would a court think you have to interpret an obligation as applying to a former party rather than the current party?

      Foreground and Background IP tends to appear in European research contracts, which are probably rarely material contracts for US-listed companies.

  6. Guest

    All good principles. I note that Sideground IP is explicitly envisioned by a more recent EU development the Innovative Medicines Initiative (IMI), and has a specific meaning in IMI similar that described above. Hence, like its EU-born predecessors, Fore- and Back- Ground IP, it might be here to stay. For more background see: http://www.euresearch.ch/fileadmin/documents/PdfDocuments/IMI_IP-Policy_Guidance-Note.pdf

  7. HighlandLawyer

    “In Witness Whereof” is still a standard start to a testing clause in Scots law; we’ll get rid of it providing the English lawyers in exchange replace “Without Prejudice” with an expanded specification of what that means.

    “hereinafter” is easily replaced with “here after”

    However, you can have “mutatis mutandis” when you pry it ex meis frigidis et mortuis manibus ;-)

    Completely agree on all the rest…

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