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 could read:
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.
