Habit, not logic, in IP transactions

We are all creatures of habit. In commercial transactions, we like to use templates and clauses that we have seen before. It is comforting to use familiar concepts and wording in our contracts. We choose not to think so carefully about them.

We dignify our preference for the familiar with wise-sounding arguments. This clause is “market”. That clause has been tested in the courts, so using different wording is risky. Usually, these arguments are spurious nonsense.

So many examples come to mind. Here are the first 10 that IP Draughts thought of, assuming the agreement is made under English law:

1. Parties. Adding Affiliates to the description of the parties (see popular blog article here).
2. Interpretation. Including a long list of interpretation clauses in your contract, probably because they are in an office template. Making this drafting nonsense worse by putting the clauses “front and centre” in clause 1.2, rather than hiding them at the back of the contract.
3. IP. In a technical services agreement, stating that the customer “owns the Results”, in addition to clauses that state that IP in the Results belongs to the customer, and the Results are to be considered the customer’s confidential information. IP Draughts has no idea what this statement means.
4. Confidentiality. Refusing to accept unlimited duration to confidentiality obligations “because we need to know when we can close our file”.
5. Statutory warranties. Including the phrase “with full title guarantee” in an IP assignment, probably because it is in your firm’s template assignment, without stopping to consider whether the statutory warranties that are implied by this phrase are appropriate in context.
6. Representations. Starting a list of warranties with the phrase “represents and warrants” so as to give your client the opportunity to sue in tort instead of breach of contract.
7. Indemnities. Requiring indemnities against breach of contract.
8. Exceptions to limited liability. Carving out from the limitation of liability clause a long list of breaches, eg of confidentiality obligations, just because you have seen this in other agreements.
9. Insurance. Requiring a party to have insurance against all risks arising from the contract. This is almost certainly impossible to achieve, as every policy has a financial cap, exceptions, and circumstances where the policy won’t pay out (eg non-disclosure).
10. Block capital letters. Putting some clauses in block caps, because you’ve seen it before (probably in a US contract).

Some of the above examples might be justified in context. If you have thought carefully about the clause before including it, fine. IP Draughts’ objection is to clauses that are “there because they are there”.