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2. Copyright and IT Contracts
Lisa Abe-Oldenburg
April 28, 2015

3. 3
Copyright and IT Contracts
1. Introduction
2. What is Copyright? An explanation through
Common Problems
3. Key IT Contracts and Terms

4. 4
INTRODUCTION
• “Intellectual Property” or “IP” is a term used to describe
the many types of intangible rights, which can co-exist
in same thing or process
• Statutory rights differ in each country
– In Canada, we have a Copyright Act, Trade-marks Act and a
Patent Act
– Other statutory IP, e.g. Industrial Designs, Integrated Circuit
Topographies, Plant Breeders’ Rights
• Common law rights, e.g. Trade Secrets (created through
duties of confidence or contract) and common law TMs

5. 5
Introduction
• Each type of IP comes with its own bundle of rights
• Anyone who creates, hires someone to create, buys,
sells, distributes, licenses or uses/exercises the IP must
understand who owns it, what specific rights they have
and what they don’t
• Buyer/user risk of infringement claims and serious
damages or increased license fees/royalties if you don’t
have the rights you need up front
• Seller/licensor risk of giving away too much and leaving
money on the table if you don’t clarify the IP rights

6. 6
COMMON COPYRIGHT PROBLEMS
• Scenario 1 – Software license giving “right to use” software – what does
that mean???
• Copyright protects every original literary (includes computer programs and
databases), dramatic, musical and artistic work
• The “right to use” is not a right under the Copyright Act
• Owner’s exclusive statutory rights include:
– Produce
– Reproduce/copy
– Perform
– Publish
– Translate
– Communicate by telecommunication
– Also for computer programs, to rent

7. 7
Common Copyright Problems
• Statutory rights can be further dissected by scope, e.g.
territory, line of business, product, machine/equipment,
online/Internet/electronic vs. hardcopy, number/volume,
term/duration, etc.
• Is it worldwide? Unlimited? Perpetual?

8. 8
Common Copyright Problems
• Scenario 2 – You hired a developer
• Just because you paid for it, doesn’t mean you own it
• No “work for hire” rule in Canada
• Copyrights exist automatically under Copyright Act - works are first
owned by the author/creator (or their employer if created in the
course of employment)
• Subcontractors and freelancers own the work they create unless
they sign a written assignment
• What rights are being assigned/transferred?
• Otherwise might be just an implied license – what is its scope???

9. 9
Common Copyright Problems
• Scenario 3 – Your company is selling or buying IP licenses to/from
a third party and the license agreements don’t prohibit
assignment/transferability
• Is the IP transferable or sublicensable?
• Similarly, what happens if you need to give/receive the IP to/from a
customer, outsourcer or service provider?
• Copyright license grants are personal to the licensee – need express
permission from the licensor to transfer/assign or sublicense. Silence is
not acceptable.
• Can you give proper reps and warranties as to ownership and/or
licensability?
• Have you checked the confidentiality restrictions in the licenses?

10. 10
Common Copyright Problems
• Scenario 4 – You try to change the original work which you do rightfully own
and still get sued by the author
• Violation of author’s “moral rights” – what are those???
• You cannot modify a copyright work unless you have a written waiver of
moral rights from all authors
• Waiver not the same as an assignment
• One waiver may not cover all future owners/assignees and licensees
• Moral rights include:
– Right to integrity of the work (can’t modify it)
– Right to remain anonymous
– Right to be associated with the work by name or under a pseudonym

11. 11
Common Copyright Problems
• Scenario 5 – Your company receives/gives a non-exclusive sole
license to exercise the right to….
• What does that mean???
• Know the difference between exclusive vs. non-exclusive vs.
sole license rights
– “Exclusive” means to the exclusion of all others including the licensor
themselves (creates a monopoly) – licensor can no longer exercise
those rights or license those rights to others
– “Non-exclusive” means the licensor can continue to exercise those
rights and can further sublicense others the same rights (creates
competition)
– “Sole” means the licensor can continue to exercise those rights (some
competition) but cannot further sublicense others the same rights

12. 12
Key IT Contracts
• Development Agreements - Software, App, Website, Content or
Database, etc.
• License Agreements - Software, App, Content or Database, etc.
• Software as a Service (SaaS), Cloud Computing, Hosting
Agreements
• Source Code Escrow Agreement
• Hardware Purchase or Sale Agreements (Procurement or Supply
Contracts)
• Maintenance and Support Agreement
• IT Outsourcing, Infrastructure, Master Services (MSA) or Consulting
Agreements
• Service Level Agreement (SLA) or Schedule

13. 13
Key IT Contracts (cont.)
• Transition Services Agreement
• Distribution Agreement
• Data Processing or Access Agreements
• Wireless Communications, Internet Access, Online Service or
Connectivity Agreements
• Colocation Agreement
• Website Terms and Conditions, Internet Use Policies, Linking
Agreement
• Online Advertising and Purchase Agreements
• Domain Name Transfer or Service Agreements
• Privacy, IT, BYOD, Open Source, Social Media Policies

14. 14
IT Contract Terms
• General terms: parties, effective date, term, termination,
renewal, governing law
• Unique IT terms: pricing models, services, IP licenses,
deliverables, SLAs, transitioning, privacy and regulatory
requirements
• Custom terms: ownership, reps & warranties,
indemnities, limitations on liability, disclaimers, remedies,
dispute resolution
Tip: All contracts are negotiable – don’t sign a “standard
form”

15. 15
Pricing Models
• Fixed – e.g. up front, monthly, milestones, successful acceptance
testing, %
• Variable – e.g. t&m, performance metrics, volumes
• CPI and other adjustments
• Service level credits vs. refunds
• License/royalty fees vs. support/services fees – tax implications
• Currency
• Taxes
• Reporting and audit rights
• Impact of dispute over fees – how critical is the IT?

16. 16
Services
• Scope (who, what, when, where, how) and deliverables –
demarcation points, specifications, functional and technical SLAs
• Testing, installation, integration, configuration ,monitoring, reporting,
security, disaster and backup obligations
• Data configuration, conversion, segregation, access and storage
location
• Dependencies (customer and third party) – responsibility matrix
• Force majeure / exclusions, e.g. Internet communications, hacking
• Who benefits? Affiliates? End user/customers? Subcontractors?
Locations?
• Survival or transitioning after expiry or termination?
• Right to subcontract?

17. 17
Ownership
• Type of IP and jurisdictional issues
• Pre-existing IP/IT
• Developed IP/IT – includes work in process?
• Future modifications and derivative works
• Data
• Assignments and waivers of moral rights
• Licenses back to developer/other party
• Warranties
• Indemnities for third party claims

18. 18
IP Licenses
• Who are licensees?
• Which specific IP rights?
• Territory
• Sole, exclusive vs. non-exclusive
• Assignable/transferable?
• Sublicensable?
• Perpetual? Which rights need to survive? For cause or convenience
• Restrictions, e.g. location, product, process, quantity, etc.

19. 19
Limitations on Liability and Disclaimers
• Risk of loss? Amount of potential damages? Which
party is in best position to mitigate?
• Maximum cap on liability, e.g. value of contract
• Direct damages from breach of contract or related tort
• Indirect and consequential damages typically excluded
(no liability), but is loss of profits a risk?
• No cap on (Unlimited) liability, e.g. IP infringement
claims, breach of privacy or security, other third party
claims

20. 20
Checklists
• Contact us for a detailed checklist relevant to the
specific IT contract you need
• Things you need to think about to take your business to
the next level
– Are all your IT contracts in place to deal with risk and create
certainty?
– Have you educated your employees/subcontractors?
– Do you own all critical IP?
– Have you maximized the commercial value of your technology
and therefore your business?

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