Managing Intellectual Property Issues for Governmentvgso.vic.gov.au/sites/default/files/publications/Managing... · 2014-09-02 · Managing intellectual property in Government agencies

April 2006 Lunchtime Seminar Series Presented by: Isabel Parsons & Sam Funnell Principal Solicitors

This topic was the subject of the monthly VGSO lunchtime seminar held on Thursday 27 April 2006. These notes are published with the permission of the presenters,

Isabel Parsons and Sam Funnell, Principal Solicitors. The notes are not to be regarded as legal advice.

Managing Intellectual Property Issues for Government

Introduction

Intellectual property (IP) rights are increasingly important to all levels of government. A report in 2004 by the Australian National Audit Office in relation to Intellectual Property Policies and Practices in Commonwealth Agencies (ANAO Report) identified five reasons why IP was important to the Commonwealth, and these factors are equally relevant to the State:1

• Government is a significant generator, acquirer and user of IP, eg through engagement in or funding of research.

• The business of government involves collection, storage, analysis, retrieval and publication of information.

• Information and communications technology (ICT) tools have increased the value of IP in registers and data bases owned by government.

• IP is increasingly required by organisations including government

for their ordinary activities (eg computer software systems).

• Given increased corporatisation and outsourcing of government service delivery, IP is an increasingly important aspect of contract management, as agencies contract with third parties to provide services and produce IP for government use.2

Commonwealth and State Governments have acknowledged that IP must be effectively identified, protected and managed by government departments and agencies in accordance with public sector management and best practice guidelines, and to minimise risks associated with IP (including the risk of infringing IP belonging to third parties).

Attention has focussed also on the way in which IP is dealt with under government contracts. In Victoria, the Auditor-General Victoria’s performance audit report on Managing intellectual property in Government agencies (VAG Report), released in mid 2005, identified a number of risks to government where IP was inadequately or inappropriately dealt with, including:

• Loss of government access to funded IP.


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• Lack of clarity in IP ownership arrangements, leading to risks and costs in the need to obtain legal advice or litigation, and additional costs to agencies to acquire further IP rights.

• Inappropriate negotiating positions on government ownership of IP under purchasing or funding contracts, adding to the costs of procurement and/or precluding contracting opportunities.3

This presentation provides a brief overview of the following issues, with particular emphasis on IP issues relating to government contracts:

• What is intellectual property?

• Rights of the State as an owner or user of IP.

• Government IP policies and guidelines.

• Ownership of IP under government contracts.

• IP warranties and indemnities.

• Dealing with other IP risks in contracts.

• Dealing with third party IP claims.

What is intellectual property?

Essential characteristics of IP

IP is a group of rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.4 Those rights have four essential characteristics:

• IP relates to intellectual activity which generates information or ideas.

• IP is an intangible asset, which exists separately from any deliverables which embody the information or ideas (this means that a purchaser does not automatically acquire the IP rights relating to goods or services supplied under contracts, unless the contract says so).

• Some IP rights will only be protected under the law where the IP is embodied in material or non-material form and/or registered under legislation (this means IP management must take into account the need to register different kinds of IP where appropriate).

• IP rights are (generally) a kind of personal property, and give the owner an exclusive right to use or exploit the IP (this means that where a purchaser has been granted the right to use IP under a contract, it needs to confirm through inquiries and/or obtaining warranties under the contract, that the supplier is entitled to grant those IP rights).5

Forms of IP under Australian law

Different forms of IP exist under Australian law. These include:

• Copyright – under the Copyright Act 1968 (Cth) for the original expression of ideas or information in literary (written), artistic dramatic or musical works and other subject matter (including sound recordings, films and broadcasts).


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• Circuit layout rights – under the Circuit Layouts Act 1989 (Cth).

• Patents – under the Patents Act 1990 (Cth) in relation to a novel invention or method.

• Registered trade marks – under the Trade Marks Act 1995 (Cth) which may consists of signs made up of words, symbols, shapes, sounds or smells used to distinguish an organisation’s goods or services.

• Registered designs – under the Designs Act 2003 (Cth) for the shape or appearance of manufactured goods.

• Plant breeders rights – under the Plant Breeder’s Rights Act 1994 (Cth).

• The right to protect confidential information and trade secrets, which is recognised at general law.

• Domain names and registered business names.

• The right to protect unregistered trade marks, such as names and brands, which is recognised at general law.

These different forms of IP are recognised under Australian law in different ways. Some exist under the general law (or common law) – such as rights to protect confidential information and trade secrets, and the goodwill (or reputation) in unregistered trade marks. Others exist under Commonwealth legislation which describes these rights, but does not require the IP to be registered in order to obtain protection – such as copyright and circuit

layout rights. Others exist under Commonwealth legislation which requires the IP rights to be registered as a pre-requisite for protection – such as patents, registered design, registered trade marks and plant breeder’s rights.

IP rights are variable and highly divisible

Rights of the owners of IP are also variable:

• Ownership of IP vests differently (eg copyright in works created by an employee vests in their employer, but the right to obtain a patent in relation to ideas developed by an employee may not; however, both copyright in works and the right to patent ideas produced by independent contractors must be specifically assigned).

• IP is highly divisible (eg copyright can be licensed for a limited area, time and for only some copyright rights; patents can be licensed with respect to a limited area and time).

• The duration of some IP rights under legislation varies.6

• For some IP which exists under legislation, rights less than full ownership can be dealt with or assigned (eg licences may be granted, for which some formalities may be prescribed, and rights under those licences may be registrable).

• Different forms of IP can also overlap with each other. IP in computer software may include copyright in the software as a literary work, and the right to obtain a patent for part of that software. IP rights in a more complex deliverable, such as


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a database, will include copyright in the data base as a compilation of information (a type of literary work), copyright in related software (also a literary work)7 and may include rights to protect the confidentiality of some or all of that data (as confidential information).8

• IP property in products or relating to services delivered under contracts is often an incremental development of existing intellectual property belonging to the contractor, the customer or both, and those contracts need to deal with rights in IP generated during the life of the contract (foreground IP) and also the right to use the underlying IP on which it is based (background IP).

• IP under Australian law is part of a worldwide matrix of IP rights recognised under international conventions in multiple jurisdictions. This means that IP relating to products and services developed in other countries will be recognised within Australia, and can be infringed by unauthorised exploitation of that IP in Australia.

Special position of the Crown in relation to IP

Historically at general law, and in under legislation relating to copyright, patents and registered designs, the Commonwealth and the States have additional rights in relation to some IP.

Some of these rights are currently under review in the light of competition policy and Australia’s obligations under international treaties. Crown rights in

relation to copyright were the subject of the Copyright Law Review Committee’s report on Crown Copyright in 2005 (CLRC Report).9 Crown use rights relating to patents and designs were the subject of the Advisory Council on Intellectual Property’s Review of Crown Use Provisions for Patents and Designs in 2005 (AIPC Report).10 Key aspects of the CLRC Report and the AIPC Report are dealt with below.

Crown copyrights – ownership

Additional Crown rights relating to copyright, known as Crown Copyright, exist in two ways:

• the general prerogative of the Crown in the nature of copyright; and

• specific provisions of the Copyright Act 1968 (Cth), which set out rules for Crown ownership in some circumstances.

The Crown prerogative of copyright applies to legislation, and may extend to judgments. It confers perpetual copyright on those materials. This prerogative has been preserved in the Copyright Act 1968 (Cth).11

Sections 176 and 177 of the Copyright Act 1968 (Cth) confer additional rights on the Commonwealth or State in relation to copyright. These sections do not apply to local government. There is some uncertainty as to how far these sections apply to statutory corporations and authorities of the Commonwealth or States.12

Under s 176, the Commonwealth or a State owns copyright in any works made ‘by or under the direction or control’ of the


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Commonwealth or that State, where copyright would not otherwise subsist under the Copyright Act.13 In effect, this puts the Crown in a special position in relation to works and other subject matter that are commissioned and supplied by independent contractors (copyright in works created by government employees will vest in the Commonwealth or a State under general provisions of the Act). Under s 176, copyright in works created by independent contractors will vest in the Commonwealth or the relevant State where those works could be said to be made ‘by, or under the direction or control of’ the relevant government.

Although under s 179 of the Copyright Act it is possible for the parties to an agreement to negotiate a different position, the CLRC considered that it was not appropriate that the default position in relation to Crown ownership of copyright in works provided by independent contractors should be dealt with under s 176, as this put the Crown in a stronger negotiating position with third parties, in situations where there was often uncertainty as to whether the copyright material created under particular contracts was being made ‘by or under the direction or control’ of the Crown for the purposes of the Copyright Act.14 The CLRC considered that the question of copyright ownership under contracts with independent contractors should be spelt out expressly in the contract.15

Section 177 of the Copyright Act provides that the Commonwealth or a State will own copyright in works first published in Australia if that publication occurs by or under the direction or control of the Commonwealth or that State. The CLRC in its report was critical of the section, as it appears to have the effect that unauthorized

publication of a work by the Commonwealth or State will be sufficient for copyright in that work to be vested in the government.16

Under s 179, the provisions in ss 176, 177 and 178 relating to Crown ownership can be excluded by agreement between the Commonwealth or the relevant State and the author of the work or the maker of the sound recording or film to which the sections apply.

Crown copyright in works, and subject matter other than works, such as sound recordings and films made or first published by or under the direction or control of the Commonwealth or State is of a shorter duration than copyright existing generally under the Copyright Act.17

The CLRC Report includes a number of recommendations:

• Repeal of the Crown copyright ownership provisions.18

• Duration of copyright owned by the Crown to be 50 years.

• Copyright in certain materials produced by governments (including legislation, judgments, Hansard and reports of inquiries) be abolished.

• The Crown be under a statutory duty to disseminate legislation and judgments.

• Prerogative rights in the nature of copyright be abolished prospectively or be the subject of a statutory waiver of copyright.

• For the purposes of the administration of copyright owned by


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government, a non-exhaustive list of entities included as part of the Commonwealth or a State be prepared.

• The Commonwealth develop and implement comprehensive intellectual property management guidelines for the assistance of agencies.19

The CLRC’s recommendations are far-reaching. The Commonwealth Government has yet to respond formally to the report.

Government use of intellectual property – copyright

Although not considered by the CLRC Report, s 183 of the Copyright Act contains a provision allowing for a compulsory licence of third party copyright by the Commonwealth or a State. Under s 183, it will not be an infringement of copyright for the Commonwealth or a State or a person authorised by them in writing to do any act included in copyright owned by a third party, where the act is done ‘for the services of the Commonwealth or State’. This section does not apply to copying by educational institutions or for educational purposes. The expression ‘for the services of the Commonwealth or State’ is very broad, and is likely to include services provided by government as well as activities conducted within government.20

Where s 183 of the Copyright Act applies, the owners of third party copyright must be notified and payment made by the Commonwealth or the relevant State. There are two ways of doing this. For some copying to which s 183 applies, arrangements exist with relevant collecting societies for the keeping of records and

remuneration of the copyright owners under a statutory licence scheme. No notification of individual owners is required where these schemes apply. Otherwise the owner must be notified as soon as possible after use of the copyright work or other subject matter occurs (subject to a public interest exception, and remuneration agreed between the parties or resolved by the Copyright Tribunal).

Government use of IP – patents and designs

The Crown is also entitled to a compulsory licence of patents and designs owned by third parties under s 163 of the Patents Act 1990 (Cth) and s 96 of the Designs Act 2003 (Cth). Under those sections, the Commonwealth or a State, or a person authorised by them in writing, may use the patent or design ‘for the services of’ the Commonwealth or the relevant State.

The definition of the ‘Commonwealth or a State’ under this legislation is wider than that under the Copyright Act, and includes an ‘authority’.21 In one patent case the Federal Court held that the Brisbane City Council was entitled to rely on the Crown use provisions as a defence to a claim for patent infringement.22

Where these compulsory licences apply, no prior consent of the patent owner or the registered proprietor of the design is required, although owners must be notified as soon as practicable of the government use. Remuneration must be paid as agreed between the parties or determined by a relevant Court.

The ACIP in the ACIP Report examined a number of aspects of these compulsory licences, including:


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• The historical rationale for the existence of these Crown rights, being the need for critical IP to be available for the use of the State for the proper provision of services, notwithstanding the rights of the relevant IP owner

• The disruption of the historical balance of rights between the government and the IP owner under the licensing provisions as a result of increasing levels of privatization of government services and the existence of hybrid public private organizations which may be able to take the benefit of the compulsory licence.23

• The inconsistency between Crown use provisions in their present form and Australia’s obligations under international treaties.24

• Competitive neutrality issues raised by the Crown use provisions.

The ACIP made a number of recommendations concerned in the Crown use provisions relating to patents and designs, including:

• Prior to use, the Crown must make efforts to obtain authorization and agree reasonable commercial terms within a reasonable period of time, subject to emergencies.

• Public non-commercial Crown use should only be available to Crown entities operating solely in the public interest, and not to high breed public/private organizations predominately operating for profit.

• There should be an express statutory standard of remuneration, with a prescribed process for the licence.

The Commonwealth Government has yet to respond to these proposals.

Government IP policies and guidelines

In recent years, the Commonwealth and State Governments have sought to develop policies and guidelines relating to the ownership and management of IP. The complexity of IP rights, and the special position of the Crown in relation to ownership and use of some IP, presents challenges for the development of adequate guidelines and materials for the recording, management and acquisition of IP generated within government, and under government contracts.

Historically, government IP policies, guidelines and other resources tended to be developed in Australia for contracts relating to ICT products and services, and to support departments and agencies engaging in the significant funding, creation or use of IP. An early instance was the publication by the Commonwealth of the Commonwealth IT/IP Guidelines in 2000.25 The ANAO Report contains a brief history of IP policies by the Commonwealth and in the States.26

There is now significant focus on management of IP by government, including custodianship of IP as an intangible asset, day to day management of IP (including risk management) and appropriately documenting IP in government contracts. Auditing and review of government management of IP in a number of jurisdictions has identified some common issues:


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• Management of IP should reflect the innovation statements published by the Commonwealth and various States, which stress the need for cost effective policies and practices in IP management, which maximize public and commercial access to IP.27

• Government agencies to which AASB 138 Intangible Assets now applies need to identify and record IP assets.28

• There is an emerging demand for whole of government (WoG) IP policies and guidelines, supported by detailed guidance in departments and agencies, and flexible contract forms.

• There is a need for change to the traditional ‘default’ position of government ownership of IP created under government contracts, including in purchasing and funding arrangements.

Audits of government management of IP

There have been a number of audits undertaken of managing of IP by government agencies. The most recent of these reports is the AGV Report released in July 2005 (and prior to that the ANAO Report released in February 2004).29

The AVG Report reviewed three selected Victorian public sector agencies in detail and surveyed 26 other departments and agencies. Key recommendations made in relation to policy were:

• An agency should be nominated to take responsibility for development of WoG policy or IP, in conjunction

with the relevant departments and agencies.

• That revisions planned to be made to be copyright policy and guidelines for departments on management of Crown copyright be completed.30

• Departments and agencies should provide details guidance on managing IP which are consistent with the WoG framework.

The report considered in detail IP management in relation to purchasing contracts and funding agreements entered into by the State. A number of issues were identified:

• Many agencies had IP policies,31 but there was still a tendency for a ‘default’ position of State ownership for IP created through purchasing contracts or under funding agreements.

• Many guidelines and resources assumed ownership models had already been established.

• Reliance on standard contract clauses often led to consideration of IP issues being deferred until negotiations, adding to expense and potentially diminishing opportunities for government agencies.32

• There is a need for early consideration of IP issues (preferably in the tender process where that applied), and flexible arrangements for IP ownership or access, supported by resources.


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Whole of government IP guidelines and policies

Victoria has the yet to develop WoG IP guidelines and policies, although these exist in some States.33

In early 2005, the New South Wales Government released the Intellectual Property Management Framework for the NSW Public Sector,34 which sets out 11 principles and a Better Practice Guide in relation to intellectual property management. Those principles deal with policy and strategy, creation and rights, identification and recording, publication, commercialisation and reporting for IP.

In September 2005, the Commonwealth released Draft Whole of Government Intellectual Property Principles together with A Whole of Government Approach to IP Management Issues Paper, as a focus for consultation.35 That material indicates that in conjunction with settling the terms of the Commonwealth WoG IP Principles, an IP Better Practice Manual is to be developed and the Commonwealth/IT/IP Guidelines will be revised. The draft Commonwealth WoG IP Principles deal with a number of aspects of IP management, including:

• Corporate framework for IP policy, including management, recording and protection of IP.

• Creation and acquisition of IP, and the need for contracts to deal with IP where relevant, and to give agencies a flexible approach in options for ownership management and use of IP.

• Sharing access and commercialisation of IP.

Some resources for government management of IP in Victoria

Resources for government management of IP in Victoria include:

• Guidelines relating to Victorian Crown copyright (which deal with requests by third parties to reproduce or obtain a licence to use Crown copyright materials).

• Departmental and agency IP guidelines and template contracts.

• Other policies, guidelines and standard form contracts available for use generally, some of which are under review.

The AGV Report provides an insight into existing departmental and agency guidelines and templates in the State. Some of the Victorian Auditor-General’s findings in relation to this material include:

• while two out of the three audited agencies had clear documented and comprehensive policies on IP, only 26 of the 42 agencies surveyed had such policies.36

• although template contracts provided by audited and surveyed agencies contained provisions relating to IP, many of them contain no recognition of both parties pre-existing IP or include a licence to use the contractor’s pre-existing IP or other IP necessary for the agency to obtain full use of the contract deliverables.37

• two out of the three the audited agencies did not deal with IP in funding agreements other than to make a limited Crown copyright claim, and there were a range of


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approaches taken to the vesting of IP under funding arrangements entered into by the 12 of the 26 surveyed agencies engaged in funding activities.38

The AGV Report contains good practice principles for the management of IP in policies, day to day management, purchasing contracts and funding agreements.39

A range of policies, guidelines, standard form contracts and explanatory materials exist for use on a State-wide basis. These include:

• Victorian Government Purchasing Board supply policies guidelines and standard form contracts.40 These are currently under review. Existing template contracts reflect a ‘default’ position of State ownership of all intellectual property ‘in Information created as a result of’ the supply of goods or provision of services under the various agreements, and contain an assignment of such intellectual property rights to the State.

• GITC 4,41 which is included in the standard form contracts available on the VGPB website,42 and is used by many departments as a basic IT procurement contract; it provides for alternative models of ownership of IP created under the contract, including State ownership, various approaches to joint ownership of IP or ownership by the contractor, subject to a licence to the State.43

• Other materials such as those produced for Partnerships Victoria44 and the Alliance framework45 which

emphasize the need for appropriate arrangements for vesting of project IP and licence terms.

Current developments in Victoria

A number of developments relevant to IP polices, guidelines and resources are in underway in Victoria:

• The AGV Report records that revisions are to be made to the Guidelines relating to Victorian Crown Copyright, including the development of a Victorian State Copyright Management Policy, but this appears to be awaiting the Commonwealth Governments’ response to the recommendations of the CLRC in relation to Crown copyright in the CLRC Report.46

• The VGPB website indicates that standard form contracts posted there are under review,47 although it is not yet clear whether further material released by the VGPB will provide more flexible options for ownership of IP created under government contracts.

• The Victorian Government launched its Victorian ICT Industry Plan 2005-2010 in December 2005 and announced that Victorian whole of government ICT policies were to be amended to provide a default position by which ownership of IP in ICT developed under contracts was to vest in the contractor rather than the government (this new default position is to be reflected in new contracts for renewal of the eServices Panel arrangements due in 2006 and in training and guidelines to be provided to support this change to the


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Victorian whole of government ICT policies).48

Ownership of IP under government contracts

State ownership of IP as a ‘default’ position

The ANAO Report and the AGV Report noted that government contracts often incorporated a default provision that the IP developed under those contracts should vest in the State or relevant authority, and both suggested that any properly developed government IP policies should provide flexible alternatives to use of this common default position.49

Default or standard terms and conditions relating to IP ownership can be of assistance in developing contracts, but they should not be seen in isolation. Focus on IP ownership models can often obscure the complexity of IP rights that may be involved in products or services being supplied under contracts. Ownership or licensing provisions are only part of what a contract should provide in relation to IP.50

Before the question of whether it is appropriate that the State owns all IP developed under a government contract can be resolved, it is essential to identify the IP rights that are relevant to the products and services being provided under the contract, and the State’s need to exercise those rights. This needs-analysis can be a complex task for significant procurement or research arrangements, requiring advice from legal advisers in addition to the application of planning tools and policies. An example can be found in the Defence Department’s approach to intellectual property ownership in acquisition projects, referred to in the ANAO Report.51

State ownership of IP developed under government contracts has some significant advantages, which include:

• There will be no restriction on use or exploitation of the IP (the AGV Report noted that agencies use IP vesting arrangements in contracts as a way of managing risk of third party infringement).52

• Unlimited ability to authorise others to use or exploit the IP.

• Simplicity in contract documentation.53

State ownership of IP may be appropriate for ongoing or critical uses, where the IP is likely to be further developed and the department or agency will need enhancements, and/or where exit costs from the contract (and the right to use IP) will be high.54

There are disadvantages to use of State ownership of IP as a default position under contracts, which include:

• Resistance in some sectors to this model (especially in the ICT industry, which traditionally seeks to retain ownership and control of all IP, including IP created under contracts for its customers).

• Additional costs of acquiring goods or services (in some cases reducing the number of suppliers prepared to deal with the department or agency).

• Delays in negotiation.55

Any default or standard position on ownership of IP developed under a government contract will not be adequate if


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the contract relates to deliverables which in corporate complex IP and where background IP and foreground IP cannot easily be separated from each other. Where the foreground IP (IP created in the provision of goods or services or during the course of the contract) is an enhancement or modification of the contractor’s background IP, the State is to obtain a right to use the background IP in addition to any foreground IP in the deliverables. Ownership of the foreground IP will be insufficient to protect the State where the foreground IP makes only a minor modification to a significant body of background IP provided by the contractor (eg minor improvements to existing proprietary software supplied by the contractor).

In these cases, the optimum ownership model may be to vest foreground IP in the contractor and obtain a licence of both background IP and foreground IP in favour of the State. If required the contract could impose restrictions on re-use of the foreground IP by the contractor (eg where the deliverable created by the contractor in which the foreground IP subsists also contains State background IP, such as confidential information).

Where the State owns foreground IP is adopted, it is essential for the contract to contain practical mechanisms (including reporting requirements) to enable the State to identify the IP being developed under the contract or included in the deliverables. General clauses which provide that IP will vest in the State do not assist documentation or recording of that IP as an asset of a department or agency.

Where the State retains ownership of foreground IP under a contract, contractors will often seek to obtain a licence of that IP

from the government department or agency. There are particular risks in becoming a licensor of IP under government contracts.56

Alternatives to government ownership of IP under contracts – joint ownership

Joint ownership has been identified in a number of government policies and guidelines as one alternative to sole government ownership of IP generated under contracts.57

Joint ownership will often arise under the law where IP is created in the course of collaborative activities such as between a government department or agency and a university research institute.

Copyright and patent law recognises joint authorship of copyright works and joint ownership of inventions in certain circumstances, whether or not this is provide for in the contract. There are significant legal complexities that arise when joint ownership of these IP rights occurs. Joint ownership of copyrights and patents is dealt with differently under the relevant legislation:

• The position of joint owners of copyright and patents in relation to exploitation of their rights is different – joint owners of copyright cannot do an act within the copyright, or authorise any other person to do such an act, without the consent of all joint owners, but the joint owner of a patent may exploit that patent for its own benefit without the consent of other joint owners.

• Joint owners of copyright and patents require the consent of all other joint


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owners before licensing a third party to exercise any copyright or rights under the patent.

• There may be different rules in relation to the exercise of copyright and patents which are jointly owned outside Australia, under a law of other countries.58

If foreground IP will be jointly owned, it is essential that the contract deals specifically with these issues.

GITC 4 provides four different kinds of joint ownership of IP under that contract:

• Joint ownership - where background IP is owned by the originator and foreground IP jointly (a model that ties up the IP, requiring the approval of both parties for exploitation or foreground IP).

• Severable ownership – where background IP is owned by the originator but foreground IP can be exploited by both independently (a result that could also be achieved by licensing of background IP and foreground IP between the parties, rather than this joint ownership).

• Consolidated ownership - where background and foreground IP are held by one party to the contract (and if this is the contractor, the State will need a licence).

• Concurrent ownership – where background IP is owned by the originator but foreground IP is owned by the improver (this model theoretically allows each party under the contract independently exploit

versions of the foreground IP as improved by them).

Details of these very complex forms of joint ownership are set out in the Commonwealth IT/IP Guidelines,59 which are currently under review. In practice severable ownership and concurrent ownership are rarely used. The recent issues paper relating to the draft Commonwealth WoG IP Guidelines noted that concerns have been raised, particularly from within the ICT sector, that Australian government agencies do not use the flexibility in IP ownership that is encouraged by the Commonwealth IT/IP Guidelines and that in practice, IP rights tend to be retained by the individual agencies and opportunities for commercialization sharing or reuse are lost.60

Use of joint ownership of IP under government contracts has been highlighted as a risk in recent government reviews. The Victorian Auditor-General recommended through the good practice principles included in the AGV Report that purchasing contract terms should avoid joint ownership of IP, and that joint ownership models used in funding agreements should set out specific rules which clearly address the joint owners’ ability to use and commercialise IP.61

Alternatives to ownership – non-exclusive licences of IP

In some situations it will be appropriate for a department or agency to obtain a non-exclusive licence of both background IP and foreground IP under a contract, rather than to seek ownership or joint ownership of that IP.


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The legal risks involved in non-exclusive licences should be addressed by careful drafting of the scope of the licence,62 and due diligence relating to the licensor. A non-exclusive licence may be an appropriate model where:

• The contract is a one off or isolated arrangement or involves the supply of non-critical goods or services.

• Where alternative solutions may be available to the department or agency in the event of an interruption to supply, or a dispute concerning the IP rights.

• Where exit costs are low.63

Legal risks of non-exclusive licences

There are a number of legal risks relating to non-exclusive licences of IP, including:

• A licensee of IP may not be able to assign its rights under a licence without the permission of a licensor – this means that the terms of the licence must provide that the department or agency has the right to transfer the licence if this will be required.

• The licence should deal with any attempt by the licensor to revoke it, in breach of its terms – the contract should clearly state that the licence is irrevocable, where the department or agency requires ongoing rights.

• The licence should address operational and legal risks that may arise if the licensor becomes insolvent – for non-critical IP, it may be appropriate to bring the licence to an end, if the licensor is no longer in

a position to continue to provide goods and services under the contract, but in many cases the department or agency will require ongoing rights, which should be supported by access to critical IP (eg as access under escrow arrangements to source code, where the IP licence is copyright in computer software).

What should IP licences provide?

In addition to terms relating to payment and other commercial matters, there are some fundamental provisions which must be included in IP licences under government contracts:

• The IP being licensed must be very clearly identified. This IP will typically include background IP of the contractor, which is necessary for the department or agency to enjoy the benefit of foreground IP. In some licences it will be appropriate to specifically provide that the department or agency will have a licence of further enhancements made by the contractor to the foreground IP (whether or not those enhancements are being undertaken by the contractor as part of the services being provided under the contract).

• The licence must clearly state the scope of the rights which the department or agency will be entitled to exercise in relation to the IP. This may be all of the rights included in each of the forms of IP, or it may be limited (eg a limited right to reproduce the copyright work in certain media). It is essential that the scope of these rights is wide enough to meet the department or agency’s


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needs under the contract and in its ongoing operations. In some situations it is necessary to clearly spell out that the department or agency has the right to enhance or develop the IP.

• The duration of the licence should be specified. In some contracts this will be a fixed term (eg licences of proprietary computer software are often limited to the term for which a licence fee is paid). In many other situations the department or agency will require a indefinite irrevocable licence to exploit the relevant IP for the purposes of its operations. (Where the term of an IP licence is not specified, the licensor may be entitled to bring it to an end on reasonable notice. In this situation, the department or agency may lose the benefit of the licence and/or have to incur further costs in obtaining ongoing rights.)

• The rights under the licence must be broad enough to reflect the way in which the department or agency will use the goods or services, or other deliverables, provided under the contract for its own purposes or in arrangements with third parties, particularly in outsourcing arrangements. The licence should not be personal to the department or agency, but should expressly contain an ability for the State to sub-licence all or part of its rights to a third party and/or to collaborate with third parties, and to transfer the benefit of the licence, where this will be required.

IP Warranties and Indemnities

IP Warranties

IP Warranties are a promise from the contractor to the customer in respect of intellectual property. These warranties come in two forms.

Ownership

In a contract for the provision of services, a warranty that the contractor owns or is entitled to use any material used in the creation of the deliverable. This warranty is important because if the contractor breaches this warranty, then the customer may not be entitled to use the deliverable and be subject to third party claims.

No infringement of intellectual property

In a contract which includes the provision of goods, a warranty that the deliverable will not infringe the intellectual property of any third party is advisable. This is a fundamental matter for a customer because it determines whether the customer is free to use the deliverable or not. A customer would reasonably expect not to be the subject of third party infringement claims. However, there are areas of high risk where the contractors are resistant to providing unqualified warranties. If you are negotiating a contract and you meet resistance from a contractor in respect of the IP warranties, then it may be that the contractor is aware of a likelihood of being sued for infringing the intellectual property rights of a third party.

By far the most prevalent intellectual property right subsisting in the deliverables under government procurement contracts is copyright. In respect of copyright, in the practical sense, the copyright owned by a third party may only be infringed by


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actually copying it. Copyright protects a particular expression of ideas or information, and not the ideas or information itself. Consequently, as long as the contractor has not actually copied another work, then the contractor should be able to warrant that the work will not infringe the copyright of a third party. However, the high risk areas are the areas where is an overlap between copyright law and patent law. These overlap areas are particularly relevant to information technology contracts. In these overlap areas, infringement of third party patent rights may occur without any copying or even any knowledge of the relevant patent. This situation makes it more difficult for the customer because it is the contractor who is more likely to have knowledge of existing patents in the field.

There are three high risk areas are:

(a) Patents on computer programs and routines

Since 1984, computer programs have been expressly protected as literary works under the Copyright Act.64 In 1991, the concept of what was a proper subject of a patent was widened to include computer programs.65 If the deliverable includes a computer program then there are two potential avenues for the infringement of the intellectual property rights of third parties, namely, copyright and patent.

If a contractor is resistant to granting an unqualified warranty and indemnity, then the customer should assess the likelihood of infringing any third party patents. The only way to assess is to conduct a patent search.

(b) Patents of business methods

Since 1998, business method patents have been accepted by the US patent office. In 2001, the Amazon.Com ‘one click’ case,66 the US Federal Court confirmed the extension of the scope of patentability to business methods as a class of patents. In that case, Amazon had developed a one click method to streamline online purchasing of goods from their website and replaced the standard shopping cart model which required the purchaser to go through several steps. The defendant copied the single click ordering feature. Amazon was able to obtain an injunction stopping the defendant from using its one click method.

In 2001, the Federal Court of Australia declined to revoke a business method patent.67

A definition of a ‘business method’ is a method of operating any aspect of an economic enterprise.68 It typically involves methods of trading, transacting, financing, resource management, advertising, marketing and customer service. Other examples include:

• A method for targeting the delivery of advertisements over the Internet by compiling statistics on individual users and transmitting advertising material according to this profiling, known as the double click patent.69

• A method of remotely monitoring business activity at a meeting site by automatically recording attendances and using attendee identification to calculate total time costs.70

• A method to use a smartcard for multiple loyalty or retail trading schemes.71


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Since 2001, the Australian Patents Office has been accepting patent applications for software and internet based inventions, therefore the technology that underlies e-commerce is patentable. There has been an explosion in the number of these e-commerce patent applications.

There are two situations to avoid.

• Firstly, if you develop an e-commerce solution which constitutes a patentable invention, if you do not patent it and keep it confidential there is a risk of being gazumped. In this sense, if a third party independently creates the same business method and patents it, you may infringe their patent although you had previously created and used it. The way to avoid this would be to either publish your invention or patent it.

• Secondly, if you become aware of a new e-commerce solution that would work really well in your organisation and you draw specifications based on that other solution, if the other e-commerce system is backed by a business method patent then you may infringe that patent. The way to avoid this is to conduct a patent search to see whether there is a relevant business method patent.

(c) Research

The Patent Act 1990 (Cth) is unclear whether you infringe a patent by using the patented invention for experimental or research purposes without the consent of the patent owner. Again, both the contractor and the customer can be completely unaware of the patented invention but still infringe it nonetheless.

A recent report from the Advisory Council on Intellectual Property recommended amendment to the Patent Act to allow experimental use of an invention. However, until the Act is amended it remains a potential avenue of claims for infringement of patents.

If you are a research provider then it is often appropriate to limit an IP warranty and indemnity to not infringing the IP of any third party to the best of your knowledge.

Conversely, if you are a research consumer then you want to avoid ‘the best of knowledge’ limitation on the warranties and indemnities because this means that you bear the risk of an unknown infringed patent emerging and rendering the deliverable unusable.

IP Infringement Indemnities

Third party claims

A contractor usually agrees to indemnify the customer against the consequences of any legal proceeding instituted against the customer by a third party alleging that the customer’s use of the deliverable infringes that third parties intellectual property. The contractor may seek to impose a number of restrictions.

Conditional on prompt notification

The indemnity may be made limited to circumstances where the customer promptly notifies the contractor of the claim.

Conduct of the proceeding

The indemnity may be made limited to circumstances where the customer hands over the defence of the infringement


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proceeding which has been issued in the name of the customer to the contractor to handle. This is an issue whether the customer is the government because the government has a policy of being a model litigant, and there is the risk that the contractor may not follow this standard. Also, the conduct of the defence may prejudice the insurance cover of the customer.

Co-operation of the customer

The indemnity may require co-operation of the customer.

No modification of deliverable

The indemnity may require that there is no modification of the deliverable.

Remedies

The indemnity may restricted to agreed outcomes in the circumstances where there is found to be infringement of third party intellectual property. Usually, the contractor is required to seek to provide a ‘work around’ that does not infringe the intellectual property of a third party, or acquire for the customer the right to use the intellectual property from the true owner. If neither of these are reasonably obtainable then the customer cannot use the deliverable. If there is liability cap clause then the customer could recover damages at large. Alternatively, if there is an effective liability cap then the customer may recover an amount ranging from a return of a diminished contract price or a specified multiple of the contract price, depending on the relative bargaining power of the parties.

Situation of State granting licence to contractor

If the contract provides that the State owns the intellectual property in the deliverable and the contractor wants a licence to use the deliverable in their business, then care must be taken to ensure that unnecessary risk is not incurred by the State. It would be recommended that limitation of liability provisions are used in relation to any such licence, including a warranty and indemnity against claims by third parties of IP infringement.

Dealing with other Intellectual Property Risks in Contracts

Moral rights

What are moral rights

In 2000, an amendment to the Copyright Act was made to recognise that creators of copyright material retained certain rights. The creator retains his or her moral rights in relation to a work after the sale or the assignment of the work itself, or of its copyright.

There are three moral rights:

• A right of attribution of authorship.

• A right not to have authorship falsely attributed.

• A right of integrity of authorship, in other words, to prevent distortion, mutilation or modification of the work.

Moral rights are a personal right, therefore cannot be sold, signed or bequeathed in a will or transmitted by operation of law. The holder of moral rights may consent to


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acts that would otherwise constitute an infringement of moral rights.

What does the contract need to provide?

The customer needs to ensure that the contract has a provision that obliges the contractor to procure consents from each person involved in the creation of the deliverable, in a form acceptable to the customer and for the contractor to provide the consents documents to the customer.

What are the risks if moral rights are not dealt with?

The remedies available to the holder of moral rights as follows:

• injunction;

• damages for loss resulting from the infringement;

• declaration that the moral rights have been infringed;

• orders that the defendant makes an apology for infringement; and

• orders that the false attribution or derogatory treatment be removed or reversed.

Accordingly, if consents have not been obtained from the holders of moral rights in respect of a deliverable, then the holders of moral rights may launch legal proceedings in respect of the three moral rights. In other words, there are potentially restrictions on your ability to deal with the deliverable by way of stating the name of the author and modification. There is a statutory defence of reasonableness where the defendant can show that it was reasonable in the circumstances not to

identify the author or subject it to the derogatory treatment. The availability of the reasonableness defence will depend on the context. If the copyright work is a poem or a novel then the defence would be relatively unavailable. In contrast, if the copyright work is a technical report delivered by a consultant then the defence would be more available. It is advisable not to rely on the availability of the reasonableness defence and to obtain the consents from the authors of the work.

Confidentiality

Overlap of Copyright and Confidentiality

As mentioned previously, copyright protects a particular expression of ideas or information and not the ideas or information itself. However, the ideas or information may constitute confidential information. As the copyright and confidentiality may overlap in a deliverable then it is important that these rights do not conflict.

Confidential information is protected by:

• general law; and

• contract.

In the absence of a contract, information may be protected as confidential information where it can be shown that:

• the information has the necessary quality of confidence; and

• the information was disclosed in circumstances that indicated confidentiality.

In practice, procurement contracts will contain provisions that supplement the


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general law by providing when and to who the confidential obligations apply.

Need to ensure confidentiality clause aligns with the copyright clause

The situation to avoid is whether the customer owns the copyright in the deliverable but the contractor has imposed obligations of confidentiality on the customer which restricts the publication or other use of the deliverable. If the State is the owner of copyright then the use should not be restricted by confidentiality obligations without good reason.

What should a confidentiality clause provide?

A confidentiality clause should:

• specify information to be confidential information; and

• provide the scope of the obligation not to disclose the confidential information. The following matter should be addressed:

o restrictions on disclosure.

o restrictions on use.

o security procedures.

o restrictions on copying, storing, faxing and emailing.

o indemnity for breach by any permitted disclosees.

o return of documents or media on termination.

o restrictions on disclosure and use after termination.

Privacy

Deliverables may contain personal information

Deliverables in procurement contracts, especially information technology outsourcing, may embody or may be used to manage or communicate information. This information may be protected by the Privacy Laws.

In Victoria, the Information Privacy Act 2000 (IPA) applies to government agencies and the management of personal information in the Victorian public sector. Under the IPA, ‘Personal Information’ is widely defined as information or an opinion, whether true or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion. The presence of Personal Information in a deliverable means that the 10 Information Privacy Principles (IPP) must be observed.

The Health Records Act 2001(HRA) applies to government agencies and the management of health information in the Victorian public sector. Under the HRA, ‘Health Information’ is widely defined as information about a person’s health, injury or disability, or about a health service to be provided to an individual, that is also personal information. The presence of Health Information in a deliverable means that the 10 Health Information Privacy Principles (HIPP) must be observed.

What the contract should provide?

There are two types of clauses that should be considered.


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(a) State Contract clause

If a government is outsourcing one of its functions and a clause in the contract expressly provides that the contractor is bound by the IPA provided the contract falls within the definition of a ‘State contract’, the contract will be effective in rendering the contractor, and not the government, liable for any breaches of privacy by the contractor.

A ‘State contract’ is defined in s 3 of the IPA as meaning:

A contract between an organisation and another person or body (whether an organisation for the purposes of this Act or not) under which services are to be provided to one (the outsourcing organisation) by the other (the contracted service provider) in connection with the performance of functions of the outsourcing organisation, including services that the outsourcing organisation is to provide to other persons or bodies.

Not all outsourcing arrangements by government will be caught by the definition of ‘State contract’ if the agreement does not relate to the performance of the organisation’s functions, or if the services are not provided to the agency, such as directly to individuals in the community.

Section 12 of the HRA provides for the management of personal information if government outsources the provision of providing health services or the collection of, or holding of, health information to a contractor pursuant to a State contract, which is defined in s 3 in similar terms to the IPA.

If a contractor is engaging in acts or practices under a State contract that interfere with an individual’s privacy, then they are taken to have been done or engaged in by it applies to the State and the contractor.

(b) Consent

If the contractor is collecting personal information, then the contractor needs to also collect a written consent from the individual from whom the personal information is being collected. Under the IPA, personal information may only be used for the primary purpose of the collection or a secondary purpose, which is an ancillary purpose.

If the contractor does not collect a consent, or collects an inappropriately worded consent, then the personal information in the deliverable cannot be used.

The personal information must be given by the individual in a genuine exercise of choice.72 This has two significant implications for the collection of consents:

• You must think through all the future uses for the personal information and draft an appropriately worded consent form. A consent form that is inappropriately wide, vague or bundled may subsequently be challenged as not being a valid consent.

• You must ensure that the circumstance of obtaining the consent is fair and without coercion. In sensitive circumstances, customer may want to collect the consents directly from the individuals to ensure that the circumstances are fair.


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Generally, I would recommend that a clause provides that the contractor is obliged to collect consents in a form acceptable to the customer and give those consent documents to the customer.

Dealing with Third Party Claims

If you receive a demand from a third party alleging infringement of intellectual property, then you need to get prompt legal advice for two reasons; firstly, any indemnity from a contractor may require prompt notification; and, secondly, attempts to deal with the third party may be construed as an admission about the validity of their claim.

There have been some recent examples of patent owners sending spurious claims demands of infringement far and wide.

In the USA, an owner of a video streaming patent sent demand to every American university with a distant education program using the internet, demanding 5 % of their income derived from distance education.

In Australia, an owner of a patent of biological material sent demands to research institutes. Although, the licence fee demanded was a small amount, if an institute had paid the amount then this is an admission that the patent is valid, and opens way for further claims in respect of any invention created by the institute.

If you receive a demand alleging infringement of third party intellectual property, then I suggest that you seek legal advice to secure your position as much as possible.

1 In this paper, ‘State’ means the Crown in the right

of the State of Victoria. 2 Australian National Audit Office Report No.25

Intellectual Property Policies and Practices in Government Agencies (2004) [1.28 to 1.32], http://www.anao.gov.au.

3 Auditor-General Victoria Managing intellectual

property in Government agencies (2005) [2.4], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

4 Convention establishing World Intellectual

Property Convention (Signed at Stockholm on July 14, 1967 and as amended on September 20, 1979) Article 2, http://www.wipo.int/treaties.

5 See the discussion of IP Warranties and IP

Infringement Indemnities, below. 6 For example, copyright, with some exceptions,

exists for works for a period of 70 years from the death of the author or first publication, and for other subject matter for 70 years from the making of those materials (except for published editions, where the term is 25 years). For patents, the term of protection is 20 years for a standard patent and 8 years for an innovation patent.

7 And any overlapping right to patent the software

or any related business method – see IP Warranties: No infringement of intellectual property (a) Patents on computer programs and routines and (b) Patents of business methods, below.

8 See Confidentiality: Overlap of Copyright and

Confidentiality, below. 9 Copyright Law Review Committee, Crown

Copyright (2005), http://www.ag.gov.au/clrc. 10

Australian Intellectual Property Review Committee Review of Crown Use Provisions for Patents and Designs (2005) http://www.acip.gov.au.

11 Copyright Act 1968 (Cth) s 8A.

12 This issue was referred to in the CLRC Report in some detail. See Copyright Law Review Committee, Crown Copyright (2005) and the discussion of the ‘shield of the crown’ and ‘federal test’ approaches to identifying whether various authorities or other organisations are within the definition of the ‘Commonwealth’ or a ‘State’ for the purposes of the Copyright Act and the case study comparing the position of the National Gallery and the National Museum[8.14 to 8.22], http://www.ag.gov.au/clrc.


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13

Copyright Act 1968 (Cth) s 178 contains a similar provision for copyright in subject matter other than literary, dramatic, artistic and musical works (eg sound recordings or films).

14 For example, it is not clear whether the provision of government funding would be sufficient to meet the ‘direction or control requirement’, or whether that requirement is satisfied only where the Government Department or agency is more actively involved in a project.

15 Copyright Law Review Committee, Crown Copyright (2005) [9.05 and 9.07], http://www.ag.gov.au/clrc.

16 Ibid [5.49 to 5.52].

17 Crown copyright in literary, dramatic or musical works which are unpublished is indefinite but in relation to published works is 50 years from the date of publication. For artistic works, Crown copyright exists for 50 years after the work is made and for engravings, photographs, sound recordings and films, Crown copyright exists 50 years after publication or in some instances the end of the year of publication (with regard to duration of copyright generally under the Act, the relevant period is 70 years from the year in which the author of the work died, for unpublished works, and 70 years from the end of the year of first publication within the year the work was made for published works, and the supply to the public of other copyright subject matter).

18 The State of Victoria in its submission to the CLRC Crown Copyright Issues Paper that preceded the CLRC Report had argued that ss 176, 177 and 178 should be retained, but with deletion of the ‘direction or control’ test. State of Victoria Submissions to Copyright Law Reform Committee on Crown Copyright Issues Paper p 5 and 6, http://www.ag.gov.au/agd/WWW/clrHome.nsf/Page/Present_Inquiries_Crown_copyright_Submissions_2004_Sub_No_64_-_Victorian_Government.

19 Copyright Law Review Committee, Crown Copyright (2005) pages xix to xxxiii, http://www.ag.gov.au/clrc.

20 As noted in relation to ss 176 and 177 of the Copyright Act 1968 (Cth) above, it is not clear how far this right applies to statutory corporations and authorities.

21 Patents Act 1990 (Cth) s 162; Designs Act 2003 (Cth) s 95(2).

22

Stack v Brisbane City Council (1994) 131 ALR 333, discussed in the ACIP Report, Australian Intellectual Property Review Committee Review of Crown Use Provisions for Patents and Designs (2005) [4.2.1], http://www.acip.gov.au.

23 The ACIP was also concerned that a large number of research institutions, to which the compulsory licence might be thought to apply, were unlikely to qualify as the Crown for the purpose of the Crown use provisions, and this may lead to misuse of the provisions and possibly compromise the principles of competitive neutrality. The ACIP noted that where any agency could be considered the Government body, simply because it derives its authority from legislation, but for all other purposes is a competitor in the market, the Crown use provisions could potentially give those type of bodies an unfair competitive advantage in the marketplace. Ibid [4.2.1].

24 The ACIP referred to Article 30 of the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS Agreement) which requires prior authorization of such use on reasonable commercial terms (subject to an exception for emergency use or public non-commercial use), and to Articles 17.9.7 and 17.9.3 of the Australia and United States Free Trade Agreement (AUSFTA), which requires exceptions to the rights of the IP owner, such as the Crown use provisions, not to unreasonably conflict with, or unreasonably prejudice the legitimate interests of the third party. Ibid [3.7.1 and 3.7.2].

25 Department of Communications Technology and the Arts The Commonwealth IT IP Guidelines: Management of commercialisation of Commonwealth intellectual property in the field of information technology (2000), http://www.dcita.gov.au/ip/commonwealth_it_ip_guidelines/the_commonwealth_it_ip_guidelines.

26 Australian National Audit Office Report No.25 Intellectual Property Policies and Practices in Government Agencies (2004) [1.47-1.63], http://www.anao.gov.au.

27 In Victoria, see Victorian Government Innovation Statement Victorians. Bright Ideas. Brilliant Future (2002), which announced that ‘The Government will follow new intellectual property guidelines to ensure that the knowledge generated by innovation across government is developed and shared more broadly for the benefit of all


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Victorians.’ p 74, http://192.148.120.96/CA256C530000A4BF/ImageLookup/PDFS/$file/Innov_all.pdf.

28 This was introduced on 1 January 2005, and is applicable to annual reporting periods beginning on or after 1 January 2005, to both for-profit and not for profit entities, including public sector entities. See ‘Accounting for Intellectual Property’ in Auditor-General Victoria Managing intellectual property in Government agencies (2005)[4.5], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

29 See n 2 and 3.

30 DOJ and other Departments in their responses to the AGV Report recognized the need for concurrent development of the WoG policy on IP and revisions to the Crown copyright policy, and the need for that to await the Commonwealth Government’s response to the CLRC Report on Crown Copyright: Auditor-General Victoria Managing intellectual property in Government agencies (2005) p 36 to 38, http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

31 The report noted 26 of the 42 agencies surveyed had clear documented and comprehensive IP policies, ibid [3.3.1]. Compare the ANAO Report, which noted 30% of agencies surveyed had policies addressing the management of IP, although 90% rated IP of medium or high importance to their operations: see Australian National Audit Office Report No.25 Intellectual Property Policies and Practices in Government Agencies (2004) p 19, http://www.anao.gov.au.

32 The Victorian Auditor-General noted that the three audited agencies used State ownership of IP as a starting point, except in IT contracts, where this was rarely acceptable to suppliers. However, the three audited agencies had no guidance as to what to take into account in negotiations (including risk management) or preferred models of rights allocation, once this position had been departed from: see Auditor-General Victoria Managing intellectual property in Government agencies (2005) [3.4.1], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au. The ANAO in its report stated that 55% of agencies surveyed had mechanisms in place to decide on appropriate levels of IP ownership, but that although some key agencies adopted a flexible approach, the

majority of standard clauses presented Government ownership of IP as a preferred option: see Australian National Audit Office Report No.25 Intellectual Property Policies and Practices in Government Agencies (2004) p 21, http://www.anao.gov.au.

33 A number of these are referred to in the ANAO Report which reflects the position as at early 2004: see Australian National Audit Office Report No.25 Intellectual Property Policies and Practices in Government Agencies (2004) [1.53 to 1.63], http://www.anao.gov.au. One of the earliest WoG policies was that developed by Western Australia, in 1997, which has since been revised see Government of Western Australia Government Intellectual Property and Best Practice Guidelines (2003), http://www.doir.wa.gov.au/documents/businessandindustry/IPpolicy_may2003(1).pdf.

34 New South Wales Government Premier’s Department Intellectual Property Management Framework for the NSW Public Sector, http://www.premiers.nsw.gov.au/our_library/business/IntellectualProperty05.pdf.

35 Attorney General’s Department Whole of Government Intellectual Property Principles DRAFT (2005), http://www.ag.gov.au/agd/WWW/rwpattach.nsf/VAP/(CFD7369FCAE9B8F32F341DBE097801FF)~k21+OctIP+Principles+-+Draft+for+stakeholder+comment.pdf/$file/k21+OctIP+Principles+-+Draft+for+stakeholder+comment.pdf and Attorney General’s Department A Whole of Government Approach to IP Management Issues Paper (2005), http://www.ag.gov.au/agd/WWW/rwpattach.nsf/VAP/(CFD7369FCAE9B8F32F341DBE097801FF)~k21+OctA+whole+of+government+approach+to+IP+management+-+issues+p%E2%80%A6.pdf/$file/k21+OctA+whole+of+government+approach+to+IP+management+-+issues+p%E2%80%A6.pdf.

36 Auditor-General Victoria Managing intellectual property in Government agencies (2005) [3.3.1], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

37 Ibid Figure 5A Standard Contracts Terms Summary [5.4].

38 Ibid [6.2.1].

39 Ibid p 123 to 126.


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40

See VGPB website - Templates and Tools, Tendering and Contracting, http://www.vgpb.vic.gov.au/CA256C450016850B/0/2FDE6099CEA66C7ACA256F4800072DCD?OpenDocument.

41 Government Information Technology and Communications Framework version 4.

42 See http://www.vgpb.vic.gov.au/CA256C450016850B/WebObj/GITCv4/$File/GITCv4.1.doc.

43 The various alternative models of joint ownership in GITC4 are extremely complex. They are explained further in the Commonwealth IT/IP Guidelines referred to in n 25 and discussed below. Licensing provisions in GITC 4 assume that details, which are critical to the scope of the licence, will be completed in the Schedule as the contract is prepared, which can lead to difficulties in the absence of department or agency guidelines as to the scope of the licence.

44 Partnerships Victoria Detailed Guidance Material Standard Commercial Principles (2005) [39], http://www.partnerships.vic.gov.au/CA25708500035EB6/WebObj/PVStandardCommercialPrinciplesFinal/$File/PV%20Standard%20Commercial%20Principles%20Final.pdf, and Partnerships Victoria Guidance Material Practitioner’s Guide (2005) [20.5], http://www.partnerships.vic.gov.au/CA25708500035EB6/WebObj/PVGuidanceMaterial_PracGuide/$File/PVGuidanceMaterial_PracGuide.pdf.

45 Department of Treasury and Finance Project Alliancing Practitioner’s Guide (2006) [6.2.16], http://www.dtf.vic.gov.au/DTF/rwp323.nsf/0/dff461e4c4547280ca256d2b000813ef/$FILE/2Complete%20Project%20Alliance%20Guide.pdf.

46 Auditor-General Victoria Managing intellectual property in Government agencies (2005) [3.2.1] (and see also Department of Justice response to Recommendation 2 p37), http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

47 See VGPB website – Templates and Tools, Tendering and Contracting,http://www.vgpb.vic.gov.au/CA256C450016850B/0/2FDE6099CEA66C7ACA256F4800072DCD?OpenDocument.

48 State of Victoria Victorian ICT Industry Plan 2005-2010 (2005) p 27,

http://www.mmv.vic.gov.au/uploads/downloads/ICT_Industry/ICTIndustryPlan2005-10.pdf.

49 Australian National Audit Office Report No.25 Intellectual Property Policies and Practices in Government Agencies (2004) [4.1.6], http://www.anao.gov.au and Auditor-General Victoria Managing intellectual property in Government agencies (2005) [5.5], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

50 See below for an analysis of issues relevant to IP Warranties and Indemnities, and Dealing with Other Intellectual Property Risks in contracts. These issues discussed in those sections below be relevant whether IP under Government contracts is vested in the State or licensed to it.

51 Australian National Audit Office Report No.25 Intellectual Property Policies and Practices in Government Agencies (2004) Example 4a at p 74-75, http://www.anao.gov.au.

52 Auditor-General Victoria Managing intellectual property in Government agencies (2005) [4.2], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

53 This apparent simplicity is deceptive. Ownership of IP is only one issue that should be dealt with in Government contracts - see n 50.

54 New South Wales Government Premier’s Department Intellectual Property Management Framework for the NSW Public Sector p 15, http://www.premiers.nsw.gov.au/our_library/business/IntellectualProperty05.pdf.

55 See comments concerning Government purchasing contracts in Auditor-General Victoria Managing intellectual property in Government agencies (2005) [5.5], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

56 This is referred to below in the discussion of IP Warranties and Indemnities, Situation of State granting licence to contractor.

57 Auditor-General Victoria Managing intellectual property in Government agencies (2005) Figure 3C Options for ownership and use of intellectual property rights at [3.4], http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au, see also Australian National Audit Office Report No. 25 Intellectual Property Policies and Practices in Government Agencies (2004) Figure 4.1 p 70, http://www.anao.gov.au and Department of


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Communications Technology and the Arts The Commonwealth IT IP Guidelines: Management of commercialisation of Commonwealth intellectual property in the field of information technology (2000) [7.24 to 7.34], http://www.dcita.gov.au/ip/commonwealth_it_ip_guidelines/the_commonwealth_it_ip_guidelines and Government of Western Australia Department of Industry and Resources Commercialising Government Owned Innovations A Guide for the Commercialisation of Government Owned Innovations and Intellectual Property Draft January 2005 [4.5 - Commercialising jointly-owned IP], http://www.doir.wa.gov.au/documents/businessandindustry/Draft-IP-Commercialisation-Guide-for-external-comment.DOC.

58 Some of these legal difficulties are discussed in Meltzer, A, Howard, P, Lau, P and de Alwis, M, Joint ownership of IP – is it the best option for collaborators? (2005) 18 Australian Intellectual Property Law Bulletin, 37.

59 Department of Communications Technology and the Arts The Commonwealth IT IP Guidelines: Management of commercialisation of Commonwealth intellectual property in the field of information technology (2000) [7.24 to 7.34], http://www.dcita.gov.au/ip/commonwealth_it_ip_guidelines/the_commonwealth_it_ip_guidelines.

60 A Whole of Government Approach to IP Management Issues Paper (2005) [14], http://www.ag.gov.au/agd/WWW/rwpattach.nsf/VAP/(CFD7369FCAE9B8F32F341DBE097801FF)~k21+OctA+whole+of+government+approach+to+IP+management+-+issues+p%E2%80%A6.pdf/$file/k21+OctA+whole+of+government+approach+to+IP+management+-+issues+p%E2%80%A6.pdf.

61 Auditor-General Victoria Managing intellectual property in Government agencies (2005) Figure 5C Good practice principles p 78 and Figure 6C Good practice principles p 95, http://www.audit.vic.gov.au/reports_par/agp10700.htmlhttp://www.audit.vic.gov.au.

62 In addition to the licence provisions, contracts should contain other IP related provisions, discussed below.

63 New South Wales Government Premier’s Department Intellectual Property Management Framework for the NSW Public Sector p 15, http://www.premiers.nsw.gov.au/our_library/business/IntellectualProperty05.pdf.

64

The 1984 amendment to the Copyright Act 1968 (Cth).

65 International Business Machines Corp v Cmr of Patents (1991) 105 ALR 388.

66 Amazon.com Inc v BarnesandNoble Inc (2001) 239 F 3d 1343.

67 Welcome Real-Time v Catuity (2001) 51 IPR 327.

68 ACIP report, Report on a Review of the Patenting of Business Systems, September 2003, p6, available at www.acip.gov.au.

69 US 5948061, Double Click Inc.

70 US 6220512 Cooper.

71 Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327.

72 Guidelines to the Information Privacy Principles, May 2002, Office of the Victorian Privacy Commissioner.

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Managing Intellectual Property Issues for Governmentvgso.vic.gov.au/sites/default/files/publications/Managing... · 2014-09-02 · Managing intellectual property in Government agencies