Ownership of Work Product: Broad Transfer
(a) Reporting of Inventions. Vendor shall promptly disclose to Customer all computer software programs, other works of authorship, formulas, processes, compositions of matter, databases, mask works, improvements, logos, symbols, designs, and other inventions that Vendor makes, conceives, reduces to practice, or creates, either alone or jointly with others, during the period of the Vendor’s engagement with Customer (collectively, “Inventions”), whether or not in the course of such engagement and whether or not such Inventions are patentable, copyrightable, protectable as trade secrets, or otherwise subject to intellectual property protection.
(b) Customer Ownership of Work Product. An Invention will be considered “Work Product” and will be Customer’s sole property if it fits any of the following three criteria: (1) it is developed using equipment, supplies, facilities, or trade secrets of Customer; (2) it results from Vendor’s work for Customer; or (3) it relates to Customer’s business or its current or anticipated research and development.
(i) Work-for-Hire. To the extent permissible under applicable law, Work Product will be considered work made for hire pursuant to the U.S. Copyright Act, 17 U.S.C. §§ 101 et seq., and any foreign equivalent thereof.
(ii) Assignment. To the extent, if any, that Customer does not own full right, title and interest in and to the Work Product pursuant to Subsection __(b)(i) above, Vendor hereby assigns to Customer all of its ownership, right, title, and interest in and to all Work Product, including, without limitation: (A) all copyrights, patents, rights in mask works, trademarks, trade secrets, and other intellectual property rights and all other rights that may hereafter be vested relating to the Work Product, arising under U.S. or any other law, together with all national, foreign, state, provincial, and common law registrations, applications for registration, and renewals and extensions thereof; (B) all goodwill associated with Work Product; and (C) all benefits, privileges, causes of action, and remedies relating to any of the foregoing, whether before or hereafter accrued (including without limitation the exclusive rights to apply for such registrations, renewals, and/or extensions, to sue for all past infringements or violations of any of the foregoing, and to settle and retain proceeds from any such actions).
(c) Backup License. To the extent, if any, that this Section __ does not provide Customer with full ownership, right, title, and interest in and to the Work Product, Vendor hereby grants Customer a perpetual, irrevocable, fully paid, royalty-free, worldwide license to reproduce, create derivative works from, distribute, publicly display, publicly perform, use, make, have made, offer for sale, sell or otherwise dispose of, and import the Work Product, with the right to sublicense each and every such right. Exercise of Customer’s rights pursuant to this Subsection __(c) does not excuse any breach of Vendor’s obligations pursuant to Subsection __(b) above or its breach of the warranty in Section __ of this Agreement (Ownership/Infringement Warranty).
(d) Prior Inventions. Vendor represents that Attachment __ (Prior Inventions) attached to this Agreement is a list of all Vendor’s Inventions prior to the Effective Date which Vendor has not separately assigned to Customer (collectively “Prior Inventions”), and that if Attachment __ is blank or not included, there are no Prior Inventions. Vendor shall not incorporate any Prior Invention into the Work Product or otherwise use any Prior Invention in its work pursuant to this Agreement without Customer’s prior written consent.
(e) Moral Rights. In addition to the foregoing transfers and allocations of rights, Vendor hereby irrevocably transfers and assigns to Customer any and all “moral rights” Vendor may have in or with respect to the Work Product. Vendor also hereby forever waives and agrees that it shall never, even after termination of its engagement with Customer, assert any moral rights with respect to the Work Product. “Moral rights” include any rights to claim authorship of or credit on a work of authorship, to object to or prevent the modification or destruction of a work of authorship, or to withdraw from circulation or control the publication or distribution of a work of authorship, and any similar right, existing under judicial or statutory law of any country or subdivision of a country, or under any treaty, regardless of whether or not such right is described as a “moral right.”
(f) Further Assistance. Vendor shall help Customer obtain and enforce patents, copyrights, rights in mask works, trade secret rights, and other legal protections for the Work Product in any and all jurisdictions throughout the world. Vendor shall execute any documents Customer reasonably requests for use in obtaining or enforcing such rights and protections. To the extent that such assistance occurs after Vendor’s engagement with Customer, Customer shall compensate Vendor at a reasonable rate for time and expenses spent at Customer’s request pursuant to this Subsection __(f). Vendor hereby appoints Customer or its designated representative as Vendor’s attorney-in-fact to execute documents on Vendor’s behalf for the purposes set forth in this Subsection __(f).
(g) Survival. The rights and obligations of this Section __ will survive any termination or expiration of this Agreement or of Vendor’s engagement with Customer.
Subsection (a) in the clause box above addresses a particular concern for customers (and employers): How will the customer know what software and other assets the vendor has created, which the customer might be able to claim as work product? The solution is for the vendor (or employee) to report all software and other inventions created during the engagement, even if they’re not related to the work for the customer.
Next, the clause determines which “Inventions” are work product—software and other assets owned by the customer. Subsection (b)’s definition includes any software or other asset related to the customer’s business, even if it’s created after hours, and any asset created with the customer’s computers or other facilities, even if it has nothing to do with the customer’s business. That’s a common definition, but it’s also pretty favorable to the customer. The vendor might try to narrow it. For instance: “‘Work Product’ refers to any Invention conceived, developed, or reduced to practice during Vendor’s work for Customer.” Or, to narrow the definition even further: “‘Work Product’ refers to any software related to the Pest Management Industry created during Vendor’s work for Customer.” (That assumes the contract defines “Pest Management Industry.”)
The example in the clause box above includes both a work-for-hire clause and an assignment, in Subsections (b)(i) and (b)(ii). Work-for-hire only relates to copyright, so the assignment helps the customer claim patentable inventions and other IP rights. The assignments also serve as backup for the work-for-hire terms. If the latter can’t be enforced, everything is assigned. Whatever happens, the customer should own all work product. And in case both the assignment and work-for-hire terms fail, Subsection (c) provides a backup license.
Subsection (f) in the clause box requires that the vendor help obtain patents, copyright registrations, and other IP law tools. It also provides that the customer will be the vendor’s “attorney-in-fact.” In other words, if the vendor ever can’t sign IP ownership or enforcement documents, the customer can sign them as the vendor’s representative.
Subsection (e) of the clause box addresses a similar concern. Some foreign countries give authors “moral rights” over their work. (The United States does too, but to a very limited extent.) Moral rights vary, but they often include rights to be identified as the author and rights to prevent mutilation or revision. They apply more to artistic works than software, but if you’re the customer, why risk leaving any such rights with the vendor? Subsection (e) of the clause box waives moral rights, to the extent possible.
Finally, Subsection (d) asks the vendor to list all his or her prior inventions. Work product assignments cover new work only, and often the vendor couldn’t assign prior inventions even if he or she wanted to, because third parties own them. So customers want to identify prior inventions in advance, in order to head off disputes, and they want those inventions kept out of the vendor’s work. Some work product clauses go a step further. If the vendor includes a prior invention in the work product despite all these precautions, the vendor grants the customer a broad license to exploit it (like the backup license in Subsection (c)). Vendors, of course, should hesitate before granting a license like that, particularly if third parties own some or all of their prior inventions.