It may seem that discussion of Intellectual Property, a form of
intangible asset, does not belong in the context of construction
agreements. Contrary to that perception, intellectual property
issues are especially relevant wherever designs, methodologies and
analytical data support the goods and services being delivered.
Construction agreements directly involve these factors.
The term "Intellectual Property" broadly encompasses
discrete categories such as copyright, patent, trade-mark and
industrial design, as well as general categories such as trade
secrets, proprietary methodologies and confidential information.
Commercial value is derived from Intellectual Property by
controlling its use and being able to monetize its outcomes. In
other words, where creativity, knowledge or experience can be
captured and applied to produce valuable results, the discussion
necessarily involves Intellectual Property.
Copyright is commonly at issue where construction services are
provided. For instance, when a design drawing is completed, whether
in hard copy or digital format, copyright immediately attaches to
that drawing as a "work". Copyright is the exclusive
right to reproduce a work and to derive commercial benefit
therefrom. The law provides guidance as to who owns the copyright
attaching to a work. The owner is most often the author of the work
or the author's employer if the work was created within the
scope of employment duties. The copyright owner holds certain
"proprietary rights" in the work and can deal with those
rights just as an owner may deal with any hard asset. Given that
significant resources may have been invested in creation of the
work, from specialized CAD software to the general overhead costs
of any business, a copyright owner should be aware of and seek to
exert control over its intangible asset.
However, it is possible for a construction agreement to compel a
change in copyright ownership without accounting for the inherent
value lost to the first owner. For instance, a contractual term
The Contractor acknowledges and agrees that all Contractor
Documents developed by the Contractor in connection with the
Project Work shall become the property of the Project Owner as they
are prepared [...] The Contractor shall keep the Project Owner
advised and updated on the status and specific location of all
Contractor Documents and the Contractor shall provide copies
thereof to the Project Owner upon demand.
Assuming this contractual term was accepted, the Contractor, as
first owner of the copyright attaching to the Contractor Documents,
would lose its ability to use, reproduce or deal with the
Contractor Documents in any way outside of the particular Project.
Depending on the contents of the Contractor Documents, such a
restriction on future use by the Contractor could prove to be
costly, inconvenient or even prohibitive to commercial gain outside
of the particular Project. Rights to continued use outside of this
project, whether limited or expansive in scope, should be part of a
Contractor's legal strategy.
It is important to be aware of Intellectual Property issues in
the construction context just as one would pay attention to the
management of hard assets. Focus should be placed on commercial
value of such intangible assets, for both the short and long term,
so that no investment is wasted.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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