How to Protect Your Legal Rights When Sharing IT Services
To get the benefits from shared services, you need to address the risks to your company's intellectual property.
Fri, August 28, 2009
CIO — In a cross-organization IT shared services arrangement, two or more companies partner to provide the shared technology infrastructure or services. While there are several benefits to such agreements, there are risks that need to be understood and addressed. One of the most significant risks relates to the ownership and protection of intellectual property (IP).
In a traditional services arrangement, where a customer partners with a vendor, the "battle lines" are clearly drawn. Typically, either the customer or the vendor owns the IP. Most often, the service provider owns any intellectual property developed during the relationship unless the IP is developed exclusively for the customer. But ownership is not as clear when services are shared across multiple organization. Accordingly, it is critical that participating companies negotiate who is responsible for developing IP for the partnership and who will own it later.
You Build It, You Own It
Generally, independent contractors such as vendors, service providers and consultants own IP they develop. Although there are some differences between patents and copyrights, employers own—or at least have the right to use—IP developed by their employees.
To read more on this topic, see: From Cloud Computing to Shared Services: Why CIOs Are Taking a New Look at Sharing IT Infrastructure and Applications and Where Are the Legal and Intellectual Property Bodies Buried in Open Source Adoption?
If multiple companies are involved, the lack of an agreement may unintentionally result in partners owning new IP jointly, depending on whether one partner develops most or all of the IP in question. This is determined based on the relationship between the new IP and the core technology of each company.
For instance, employees of one participant may contribute to the development of IP that more properly relates to or is derivative of technology owned by another participant. Joint ownership can lead to uncertainty and complexity regarding each party's rights to use, license, sell and otherwise exploit this jointly developed IP, as well as their respective obligations if the IP is later found to infringe on the intellectual property rights of a third party.
Therefore, an agreement should specify which company or companies own the IP, along with any applicable license rights and each company's indemnity obligations. Additionally, if the IP is to be jointly owned, the parties should describe whether they must account to each other for profits they derive from it. The parties must also consider the ownership rights of any vendors involved. There may be valid reasons for a participant other than the one whose employees developed the IP to own it, or at least share rights to use it. In such cases, the owner would need to grant the participant a written license.
