Intellectual Property: Who Owns & How To Manage

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Author: Margaret Gilbert

Intellectual Property (IP) This is an area that is not managed well and this can be understandable to a certain degree because of the nebulous nature of IP. There can be assumptions that the buyer will keep and use but assume it is ‘free’ and surprised when it isn’t.

It has to be acknowledged that there is – or should be – a value to IP and that there has to be a better way than now. What often occurs is that the buyer assumes the IP is a part of the services. Suppliers are not aware or informed and provide the IP without charging or even having a discussion.

The common thinking is that each party brings their expertise and IP with them. Work jointly undertaken during the contract then both parties should jointly own the IP – but often does not occur in practice.

Suppliers often put IP into their proposals due to their willingness to be helpful. They are not totally aware of doing this or even recognising that they have IP at all.

So, how can IP be valued?  This is not easy to find an answer. There are organisations that can assist here but in some situations it is up to the person to put a value on IP – it is a case of being realistic. You can have a figure but it is up to the other party to accept – or not – it is a market type decision.

Useful checklist:

  1. Do you ‘take’ IP?
  2. Do you offer to pay for IP?
  3. Do you ‘share’ if jointly developed work occurs during the contract term?

There has to be acknowledgement of supplier expertise and the IP attached to the goods or services.  It is time to take a look at this and to have an honest discussion  This should not be treated as ‘scope creep’ often is which is another story – but for both parties to ‘win’.

By ‘taking’ shows an arrogance and lack of respect. This is not helpful in respect to the buyer/supplier relationship which can affect the longer term relationship.

Suppliers have a choice to walk away if this becomes a habit. Suppliers have a choice and you might not like the choice. It might be useful to look at leasing the IP – this is an option.

Another way has to be found. IP has a value and buyers should recognise this.

It is time for a debate and honest discussion. Silence often occurs with the expectation that suppliers will manage – somehow. This occurs in relation to risk, ‘scope creep’ and in relation to IP. This is not transparent or fair.

The question is: why does this occur?  You can likely find that suppliers find a way i.e. higher price so in effect the buyer pays especially in relation to risk.

The above shows that there has to be a better way to manage so that all parties consider that the decision and manner works for both parties. It is not in the best interest of either side for their to be a situation where innovation was not put forward due to suppliers not wanting to ‘give away’ their expertise and thinking.

This would be a disaster if this occurred for all concerned.

A way has to be found. It should not be difficult. The question is: why is this issue not managed well and the managing difficult?

It does not have to be that way.

We have more to gain but we may lose more if we cannot think strategically.

  • Margaret’s books ‘Contract Matters: A Future for Procurement’ and ‘Contract Matters: Changing the Buyer/Supplier Conversation: A Paradigm Shift’ both look at a different ways of working to achieve better outcomes. Available from:
    www.contractmatters.com or Margaret@corpcontracts.co.nz ($30.00 e-book and $60.00 for hard cover book).   

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