Background intellectual property: Overview, definition, and example
What is background intellectual property?
Background intellectual property (IP) refers to any intellectual property that is created, owned, or developed by one party before entering into a business agreement or collaboration, and is not part of the specific deliverables or products being developed in that agreement. This type of intellectual property is typically used to support or complement the work being done under the contract but remains the property of the original creator.
For example, a software company may have existing software tools or code that it uses to develop a new product for a client. These pre-existing tools or code would be considered background intellectual property, as they were created before the collaboration and are not part of the new product but are used as part of its development.
Why is background intellectual property important?
Background intellectual property is important because it helps define ownership and usage rights for pre-existing ideas, technologies, or assets. It ensures that each party understands what IP they can use, what they must protect, and what is considered to be "owned" before the collaboration begins. This clarity helps prevent disputes over ownership, usage rights, and licensing of intellectual property during the collaboration or after its completion.
For businesses, managing background IP properly is essential for protecting valuable intellectual property assets and ensuring that neither party oversteps their rights or obligations regarding pre-existing technologies or creations. It also helps preserve the value of an organization's IP portfolio.
Understanding background intellectual property through an example
Imagine a graphic design firm enters into a contract with a startup to design a new website. The design firm uses its existing logo design software (which it has developed and owns) as part of the web design project. This logo design software, created by the design firm before the agreement, is considered background intellectual property. While the design firm is using it to create a new website for the startup, the ownership of the software remains with the design firm.
Additionally, the contract may specify that the startup has no rights to use the logo design software outside of the website project, ensuring that the design firm retains control over its background intellectual property.
Example of a background intellectual property clause
Here’s how a background intellectual property clause might appear in a contract:
“The Parties acknowledge that all intellectual property created, developed, or acquired by [Party Name] prior to the execution of this Agreement, including but not limited to software, designs, trademarks, and patents, shall remain the sole property of [Party Name]. Nothing in this Agreement shall grant the other Party any rights or ownership in such Background Intellectual Property, except as expressly provided for in this Agreement for the purpose of fulfilling the terms of the project.”
Conclusion
Background intellectual property is a critical concept in contracts, collaborations, and partnerships. It ensures that each party’s pre-existing IP is protected and clearly defines the usage rights for any intellectual property created before the agreement.
For business owners and managers, understanding background IP is essential to protect your company’s valuable intellectual assets and ensure fair use of any existing technologies or creations when entering into new projects. Defining and addressing background intellectual property in contracts can help avoid potential legal disputes and provide clarity for all involved parties.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.