Australia: Management Of IT-Related Intellectual Property: What Does The ‘Whole-Of- Government Approach’ Mean For Agencies?

Intellectual Property (IP) refers to the products of human creative endeavours; including copyright, patents, designs, circuit layouts and trade marks. One form of IP regularly dealt with by agencies is Information Technology related IP (IT-related IP).

IT-related IP is defined in the Commonwealth IT IP guidelines as ‘IP rights in, or associated with, such things as software, documentation, databases, websites, algorithms, models, tools, object libraries, methodologies, business systems, circuit layouts, hardware and firmware, as well as confidential information and trade marks relating to any of those things’.

IT-related IP is an important government asset which is often acquired by significant expenditure by agencies. The high level of attention afforded to IP in the Australia United States Free Trade Agreement and the volume of comment the IP chapter received after the agreement was signed, evidence just how important Intellectual Property is to modern economies.

Despite this, IP (including IT-related IP) is commonly not afforded the same level of attention or protection as other agency assets such as real estate, equipment and human resources. In 2004 the Australian National Audit Office (ANAO) report ‘Intellectual Property Policies and Practices in Commonwealth Agencies’ identified that only 30% of agencies had developed policies and procedures for managing IP.

To address the issue, the ANAO report recommended:

• that agencies develop appropriate IP management policies and implement supporting systems and procedures; and
• that a Whole-of-Government (WoG) approach to IP should be developed.

Effective management of IT-related IP involves a range of processes, including:

• identifying IP (agency or third-party);
• creating, purchasing or licensing-in IP;
• valuing, recording and registering IP;
• commercialising IP (selling or licensing-out);
• auditing the use of IP; and
• enforcing IP rights.

In order to ensure that these processes are occurring, agencies should have appropriate IP management policies and systems. An IP management policy should specify, among other things, criteria for assessing which assets are IP assets, staff obligations in relation to IP (including the IP training requirements for staff), guidelines for the commercialisation of IP and audit requirements and enforcement procedures.

The ANAO’s recommendation to implement a WoG approach to IP has been adopted by the Australian Government. The Attorney-General’s Department, IP Australia, the Department of Communications, Information Technology and the Arts and the Department of Finance and Administration are currently working together on its development. The WoG approach aims to improve the way agencies manage their IP through the publication of the Statement of IP Principles and the IP Better Practice Manual.

The Statement of IP Principles is aimed at encouraging government agencies to adopt good practice in the management of IP generally, including:

• sharing IP across agencies;
• commercialisation of IP where appropriate;
• protection of IP; and
• obtaining only the ownership or licensing rights necessary to meet the government’s objectives.

Currently agencies should be managing their IT-related IP in accordance with the Commonwealth IT IP Guidelines, which were published by the Department of Communications, Information Technology and the Arts (DCITA) in January 2001.

The introduction of the WoG approach to IP will include the release of the IP Better Practice Manual (the Manual). The Manual will provide guidance and advice on implementation of the principles in the Statement of IP Principles and will incorporate a revised version of the Commonwealth IT IP Guidelines. The Manual is intended to provide an integrated resource on IP management for all Commonwealth IP, not solely IT-related IP. Additionally, the Australian Government is now providing greater guidance to agencies in the procurement of IT equipment and services with the release by DCITA of ‘A guide to limiting supplier liability in Information and Communications Technology (ITC) contracts with Australian Government agencies’ and the draft release of model IT contracts called ‘Source IT’ in May this year, which when finalised will replace the old GITC4 contracts.

The WoG approach is based on consolidation not creation. As noted by the Attorney-General’s Department, ‘The whole of government approach is not expected to create any new government policy, but rather will assist agencies to interpret and apply existing government policies as they relate to IP.’

While the WoG approach should take some of the legwork out of IP management by rolling a number of existing documents into two documents, the Statement of IP Principles and the IP Better Practice Manual, it will not reduce the need for agencies to implement their own IP management policies, which will require a consideration of all IP, including identification of IT-related IP.

Most notably for agencies, the WoG approach is unlikely to include a template IP management policy or plan that agencies can simply tailor and adopt. An insight into likely agency obligations after implementation of the WoG approach can be seen by evaluating the draft Statement of IP Principles. In their current form they require that:

• each agency should have an IP management policy that reflects its corporate objectives;
• implementation of the IP management policy should be supported by appropriate training and resources, including access to expert advices; and
• agencies should, as appropriate, maintain a register(s) of valuable IP.

The IT-related IP that is owned or licensed by an agency can be difficult to identify because for example in a software development project there is often existing material (which the vendor brings to the agreement and continues to own), in which bespoke material is incorporated (which the vendor creates for the agency). Therefore a comprehensive and informed assessment of the agencies’ ownership and licence rights is required as part of the process of preparing the IP register.

Simple but effective strategies that can be utilised to ensure effective IT-related IP management are:

• review your outsourcing requirements from an IP as well as an operational perspective.
• document likely IP requirements ie what aspects of the service or equipment delivery will utilise or incorporate IP?
• tell tenderers what IP information you want – and keep it simple.
• make sure you understand the real value of each IP item – and incorporate this into your asset management.
• make sure the Contract includes a mechanism for identifying all sources of IP and a mechanism for ongoing IP management, including of licensed and owned IP.
• think realistically about ‘layered’ IP (IP that has multiple sources eg contractor IP that is modified to add new IP) and construct licence/ownership arrangements on that basis.
• think about whether split ownership of ‘layered’ IP is realistically workable and valuable.
• use IP issues in your negotiation strategy eg what benefits do you receive for giving up ownership of new IP?
• build IP management into your change control process.
• consider IP management for a KPI.
• measure compliance with IP management obligations regularly.
• make IP management an important part of transition-out.

Agencies should be addressing management of IP, and in particular valuable ITrelated IP, now. For some agencies this will involve drafting an IP management policy tailored to the specific situation and objectives of the agency including all IT-related IP, for other agencies this will involve a review of their existing policy and systems. Dealing with these issues now will mean that your agency is prepared for the implementation of the WoG approach to IP and, more importantly, will ensure that systems are in place to protect your agency’s ITrelated IP, an important but often neglected asset.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.