Intellectual property clause

An intellectual property clause is the provision of a contract, most often a services, development, research or employment contract, that governs ownership, use and protection of the intellectual property rights that exist or arise from performance of the contract. It is not a separate statutory category and draws its regime from the general law of contract and from the rules specific to each right, in particular Article L. 131-3 of the French Intellectual Property Code for copyright and Article L. 613-8 IPC for patents.

Background knowledge and results

The clause first distinguishes each party’s background knowledge, which it reserves to its owner, from the results created in performance of the contract. For the latter, it chooses between vesting them in the client, retention by the contractor coupled with a licence, or co-ownership. Absent a clause, the copyright in software, a website or a graphic charter remains with the contractor, and the client has only an implied permission to use, whose boundaries are uncertain. The same reasoning applies to inventions and know-how, which is why the clause is standard in software development and research agreements.

Formal requirements

Where it effects an assignment of copyright, the clause must comply with the formalities of Article L. 131-3 IPC and state separately the rights of reproduction, performance and adaptation, together with the extent, purpose, place and duration of the assignment. A general clause transferring “all intellectual property rights” is insufficient for copyright and leads to a restrictive interpretation. For patents and trade marks, writing is required on pain of nullity and the assignment is enforceable against third parties only once recorded in the register. The clause must also provide for delivery of what is needed for exploitation, such as source code, native files or documentation.

Warranties and enforcement of rights

The clause usually contains a warranty by the contractor as to title to the rights assigned and the absence of infringement of third-party rights, backed by an obligation to take over the client’s defence in the event of an infringement action. It also specifies who may sue infringers, who bears the costs of filing and maintaining the titles and how open source components incorporated into the deliverables are treated, since their licences may contaminate the whole. In employment and internship contracts, the clause cannot circumvent the nullity of a global assignment of future works or the statutory regime for employee inventions.

Key points

Without an intellectual property clause, a contractor’s client does not acquire the rights in what it has paid for. The clause must distinguish background knowledge from results, comply with copyright formalities, provide for delivery of source code and include a warranty against eviction. Before signing, check that each right and each intended mode of exploitation is expressly covered and that the open source licences used are compatible with the assignment.

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This glossary entry is general in scope and does not constitute legal advice.

Dhenne Avocats litigates patent disputes before the Paris Judicial Court, the Paris Court of Appeal and the Unified Patent Court. When the question arises in a real case, the right moment is almost always before proceedings are issued.

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